With any new law or regulation, there are challenges with interpretation and application. And the Corporate Transparency Act (“CTA”) is no different.
As of January 1, 2024, the CTA became effective and almost all small businesses must comply or risk severe penalties. Under the CTA, businesses are required to file reports about their beneficial owners, known as the Beneficial Ownership Information (“BOI”) report. As we continue to assist clients with filing their BOI reports, we have had some frequently asked questions regarding the CTA. Below are some of these questions, and the answers:
My business has less than 20 employees. Does my business have to file a BOI report?
Yes, companies with 20 or fewer full-time employees must file a BOI report.
What is the “Large Operating Company” exemption?
For a business to qualify for the “Large Operating Company” exemption, the business must (1) employ more than 20 full-time employees in the U.S. (which is defined as an employee that works at least 30 hours per week); (2) have a physical office in the U.S.; and (3) have at least $5,000,000 in gross sales (excluding any income earned outside the U.S.). If any one of these requirements is missing—including less than 20 employees working full-time in the U.S.—then the exemption does not apply, and the business must file a BOI report.
Does the CTA apply to foreign entities?
Yes, foreign businesses that do business in the U.S. and are registered with at least one state (i.e. registered as foreign entity with a Secretary of State) are required to comply with the CTA.
Is my information secure?
Yes, FinCEN will securely store all BOI reports and the information will not be publicly available. However, FinCEN may be required to disclose data (1) to a federal agency engaged in law enforcement or national security; (2) local law enforcement agency with court authorization; (3) to your banks and other financial institutions with your permission; and (4) foreign law enforcement supporting national security and intelligence activities under international agreements.
What if the information in the BOI report changes?
If any of the information reported changes, an amended BOI report must be filed within 30 days of that change. Failure to do so could potentially result in fines or imprisonment.
Here at Ser & Associates, we have been preparing and filing BOI reports for our clients since the New Year. If you would like assistance with the preparation or review of your business’s BOI filing, please contact us at 305-222-7282 or at Info@Ser-Associates.com.
Also, please be sure to visit us at www.Ser-Associates.com and follow us on Instagram, Facebook, and/or LinkedIn to learn more about how we can assist you and your business.