Each business entity registered with the Secretary of State must submit one Beneficial Ownership Information Report. This report furnishes identifying details about individuals who own or control the business to the Financial Crimes Enforcement Network, ensuring compliance with legal obligations outlined in the Corporate Transparency Act.

FileGuru will notify you when it’s time to file your report, tailored to your business and formation date. We’ll compile an accurate report containing identifying information about the individuals who own or control your business. Following this, we’ll promptly file your report with the Financial Crimes Enforcement Network and confirm successful completion, ensuring effortless compliance and peace of mind.

A beneficial owner is someone who either directly or indirectly:

1. possesses or manages at least 25% of your company’s ownership interests, or
2. exerts significant control over your business.

If you’re uncertain, you can always consult with an attorney from our legal network.

Instances of beneficial ownership and individuals with substantial control encompass:

• Key decision-makers within the reporting company
• High-ranking officers (e.g., president, chief executive officer, chief financial officer, general counsel, chief operating officer, or officers with similar functions)
• Individuals empowered to appoint or dismiss officers or directors (or equivalent governing body) of the company

The Beneficial Ownership Information Reporting Rule, established within the Corporate Transparency Act, requires the identification of individuals who derive benefits from a legal entity. This rule aims to enhance transparency and assists the federal government in combating various financial crimes and frauds, including money laundering, corruption, human trafficking, drug trafficking, tax fraud, and fraud against employees, customers, and other businesses.

Starting January 1, 2024, beneficial ownership information reporting becomes mandatory under the Corporate Transparency Act, reinforcing the continuous efforts of the U.S. government to discourage individuals or entities from concealing or profiting from actions that cause harm to others.

A beneficial owner must furnish their full legal name, date of birth, address, percentage of ownership, and a photograph of an acceptable identification document, such as a passport or driver’s license. Additionally, details regarding the issuing jurisdiction and the document’s ID number are required.

The Financial Crimes Enforcement Network provides a list of 23 categories of exempt business entities that do not meet the criteria as reporting companies under the reporting requirement:

• Securities reporting issuer
• Governmental authority
• Bank
• Credit union
• Depository institution holding company
• Money services business
• Broker or dealer in securities
• Securities exchange or clearing agency
• Other Exchange Act registered entity
• Investment company or investment adviser
• Venture capital fund adviser
• Insurance company
• State-licensed insurance producer
• Commodity Exchange Act registered entity
• Accounting firm
• Public utility
• Financial market utility
• Pooled investment vehicle
• Tax-exempt entities
• Entity assisting a tax-exempt entity
• Large operating company
• Subsidiary of certain exempt entities
• Inactive entity

Businesses are deemed tax-exempt entities if they meet one of the following conditions:

• They are recognized as exempt entities by the IRS under section 501(c) of the Internal Revenue Code, encompassing many entities with nonprofit organization status.
• They have lost tax-exempt status under the code within the last 180 days.
• They qualify as political organizations as outlined in section 527(a) of the code.
• They meet the definition of trusts according to section 4947(a) of the code.

The agency characterizes a large operating company by fulfilling the following criteria:

• Being subject to a federal regulatory regime.
• Employing over 20 individuals in full-time positions within the U.S.
• Generating more than $5 million in gross receipts or sales on the previous year’s tax return filed with the IRS, excluding foreign receipts.
• Maintaining a physical operating presence in the U.S.
• Being owned by an entity already exempt under the Corporate Transparency Act.
• Otherwise being designated as exempt by the Secretary of the Treasury and the U.S. Attorney General.

Active businesses are obligated to report, whereas inactive entities are exempt. The Financial Crimes Enforcement Network outlines an inactive entity as fulfilling the following conditions:

• Established prior to January 1, 2020.
• Not actively engaged in business operations.
• Not owned by a foreign individual, resident, domestic partnership, corporation, or other estate or trust.
• Not involved in transactions exceeding $1,000 in the past year.
• Lacks assets, including ownership of other companies, in the U.S. or abroad.

Certain individuals are exempt from the definition of beneficial owner as per the Corporate Transparency Act, including:

• Minors
• Individuals serving as nominees, intermediaries, custodians, or agents on behalf of others
• Non-senior officer employees whose interest or control solely stems from their employment
• Individuals whose interest in a reporting company is solely based on inheritance rights
• Contingent trust beneficiaries
• Creditors whose interest solely involves business debt recovery

Corporations and limited liability companies (LLCs) must furnish identifying details about individuals who own or control their business to the Financial Crimes Enforcement Network, in accordance with the Corporate Transparency Act. This obligation extends to most business entities unless exempted.

The Corporate Transparency Act is a legislative measure altering the reporting obligations concerning beneficial ownership information for business proprietors within the United States. It mandates businesses to identify and record any individual holding a 25% or greater ownership interest or wielding significant control over the company.

In compliance with the Corporate Transparency Act, the majority of reporting companies are required to submit details on each beneficial owner to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN). FinCEN has established a database housing information on every beneficial owner documented by a reporting company.

Members, or owners, of a limited liability company (LLC) are typically classified as beneficial owners as per the definition outlined in the rule, necessitating the submission of the new report to the federal agency. They must furnish fundamental contact details regarding the company and its owners.

This obligation is applicable to both single-member and multi-member LLCs, where all members may be deemed beneficial owners. Hence, they must be identified in the Beneficial Ownership Information Report and filing, along with their pertinent identifying information.

If there are modifications to the owners or controlling members of a business, or alterations to their identifying details, updated reporting of beneficial ownership information is necessary. For instance, an updated Beneficial Ownership Information Report is mandated when a controlling member transitions from a minor to reaching the age of majority, or if a company obtains tax-exempt status. Similarly, an updated report is required in cases where initially reported information is found to be inaccurate or if entities amend their formation documents. Businesses are granted a 30-day window from the date of the change or amendment to file an updated Beneficial Ownership Information Report.

Ensuring your business remains compliant is vital for preserving its good standing and averting penalties, fines, and legal repercussions. With our Compliance Filings package, you can effortlessly meet the newly introduced beneficial ownership information reporting mandate along with other compliance filing requirements:

• Annual Reports: Seamlessly navigate through the setup and completion of official filings necessary to keep your business information—such as its name, address, managers, and other particulars—up to date with the state. Filing prerequisites vary by state.
• Personalized Alerts: Receive tailored alerts informing you of your specific filing obligations and deadlines, streamlining the process of business compliance.
• Amendments: Submit up to two official changes concerning your business annually to the Secretary of State, which may include alterations to the business name, address, or ownership structure.
• Updated Beneficial Ownership Information Reports: Submit additional filings to reflect any changes to the identifying information of your business.

Ensuring your business remains compliant is crucial for upholding its good standing and evading potential penalties, fines, and legal entanglements. With Compliance Filings plus Licenses & Permits, you not only fulfill the new beneficial ownership information reporting mandate but also address all additional compliance filing requirements offered in our Compliance Filings package. Additionally, we assist you in obtaining the necessary business licenses and permits:

• Tailored overview outlining the federal, state, and local licenses and permits required for your business
• Direct access to all requisite applications, streamlining and expediting the application process
• Capability to upload, view, and share business licenses directly from your FileGuru account
• Notifications regarding upcoming expiration dates and any new license prerequisites

The Corporate Transparency Act stands as a significant legislation impacting small business owners, with its latest requirement, the Beneficial Ownership Information Reporting Rule, taking effect on January 1, 2024. This rule mandates that most limited liability companies and corporations file a report detailing their beneficial owners.

For small business owners already focused on managing and expanding their ventures, grappling with this new law can prove to be both confusing and burdensome. FileGuru’s service aims to alleviate this burden by offering customers a streamlined solution to promptly address this requirement and ensure compliance with the law, thus mitigating the risk of facing criminal and civil penalties, which may include imprisonment, fines, and daily penalties.

Through FileGuru, customers can navigate the compliance process seamlessly in three simple steps, ultimately minimizing their exposure to risk while optimizing efficiency. It begins with customers answering straightforward questions regarding the individuals who own or control their business, ensuring the report is tailored and precise. Subsequently, a customized report satisfying the beneficial ownership information reporting mandate is meticulously crafted and filed. Upon filing the personalized report with the Financial Crimes Enforcement Network, FileGuru promptly delivers confirmation of completion to the customer.