Overview
The Corporate Transparency Act (CTA), applicable from January 1st, 2024, requires U.S. and foreign entities operating in the U.S. to file Beneficial Ownership Information (BOI) reports with the Financial Criminal Enforcement Network (FinCEN) a dedicated U.S. bureau, carrying reporting deadlines and Failure to comply may lead to penalties, such as fines or imprisonment. This legislation, affecting an estimated 32 million companies and expected to impact 6 million annually, particularly affects small businesses, which may face challenges in meeting the additional administrative burden. ORCA is your trusted partner in successfully navigating CTA compliance.
Do I have to file a report?
If your business was formed in the U.S. or registered to operate in the U.S., it's very likely it is subject to the CTA and is required to comply with the reporting requirements. However, there are businesses exempt from reporting, such as Banks, Tax-Exempt entities, Insurance businesses, etc. Please consult the Small Entity Compliance Guide produced by FinCEN for the whole list of exemptions.
What do I have to report?
There's a specific set of information you need to submit to FinCEN about who owns or controls your business. This is all about making sure that the real people behind businesses are known.
The information to be disclosed to FinCEN includes three main categories:
- the Reporting business, i,e. the business itself,
- the Beneficial Owners and
- the Business Applicants.
Who is a Beneficial Owner?
These are the people who have substantial control over the business, which include but are not limited to:
- Any individual with at least 25% direct or indirect ownership in the business,
- Any individual with at least 25% voting rights in the business,
- Senior officers, like the CEO or President,
- Anyone who can hire or fire these officers or has a major influence over the business's direction.
Some people are not considered Beneficial Owners, given they do not satisfy the criteria above, such as:
- Minor children (but their legal guardians need to report it),
- People acting just as intermediaries or agents,
- Employees,
- People whose connection to the business is only through inheritance rights,
- Creditors.
How ORCA defines the Beneficial Owner
CTA Beneficial Owner Definition
Orange font >> not available in ORCA
A Natural Person that has | Observation | |
direct ownership equal to or above 25% | ||
OR | total effective ownership equal to or above 25% | confirmed by example 4 page 34 |
OR | direct voting powers equal to or above 25% | confirmed by calculations in page 30, combined = ownership and voting / total ownership and voting. If there are both, we need to account for the highest |
OR | capital / profit interest above 25 % | |
OR | convertible, options, warrants above 25% | assuming they have been converted |
OR | role: Director | |
OR | role: C-level | |
OR | role: General Counsel | |
OR | role: Trustee | |
OR | role: Settlor / Grantor | with the right to revoke trust assets that own the entity |
OR | role: Board Member (chairman) | confirmed by example 4 page 34, Individual F |
OR | role: President | |
OR | role: Secretary | |
OR | role: Treasure | |
OR | role: VP | |
OR | role: AVP | |
OR | role: Manager | |
OR | legal guardian of an underage BO | if the person age is <18year, then legal guardian |
AND | there is no exempt entity in between | if that is the case, the exempt entity is shown as BO instead |
Excluded automatically if they do not fit into the above:
- minors, nominees, intermediaries, employees, custodian / agents, inheritors, creditors, standard lawyers / advisors work.
Reference | |
page 24 | |
Reporting Company Information to report
Refer to this Knowledge Center Article to find where in ORCA, Reporting Company information is found
- The business's name and any other names it goes by.
- Its current address in the U.S.,
- Jurisdiction of where the business was formed, and
- A Tax identification number.
Who is a Business Applicant?
If the business was formed after January 1, 2024, you'll need to share details of up to two people who set up the business.
What information do I need to report?
For each person who fits into the above categories, you are required to provide:
- Their full legal name,
- Their date of birth,
- Their current address, and
- A copy and an identifying number from a government-issued ID document (like a driver's license or passport).
For the business itself, you need to share:
- The business's name and any other names it goes by.
- Its current address in the U.S.,
- Jurisdiction of where the business was formed, and
- A Tax identification number.
Where do I file it?
To report the required information under the Corporate Transparency Act, you need to visit the FinCEN Beneficial Ownership Information (BOI) E-Filing website https://boiefiling.fincen.gov.
You can either fill in the online form or download the PDF template and upload it on the same website. Regardless of the option you choose, after the submission, you will be given a Confirmation Certificate.
When do I have to file it?
Deadlines for reporting:
- For businesses formed before 2024: If your business was formed or registered before January 1, 2024, you have until January 1, 2025, to submit your initial report.
- For businesses formed or registered in 2024: If your business is created or registered in the year 2024, you are given 90 days from the notice that your business formation or registration is officially recognized to file your report.
- For businesses formed or registered after 2024: Starting from January 1, 2025, if your business is newly created or registered, you must file your report within 30 days of receiving notice of your business's official formation or registration.
Types of reports required:
- Initial report: This must be filed within the timeline specified based on your business's formation or registration date.
- Corrected report: If you find any mistakes in a previously filed report, you need to submit a corrected report as soon as you discover the error. Details regarding Corrected report found on FinCEN Website
- Updated report: If there are any changes to your business or its beneficial owner's information, you must file an updated report within 30 days of the change. Details regarding Updated report found on FinCEN Website
- Exempt report: If a business becomes exempt, FinCEN also needs to be informed. Details regarding Exempt report found on FinCEN Website
Is annual reporting required?
Once the initial report is filed, there's no requirement for an annual report unless there are changes to the information previously reported. It's expected, however, that most businesses will need to file updates occasionally due to changes in ownership, beneficial owner, or business’ updated details.
How to fill out the BOI Report
Found in this Knowledge Center Article