A new federal law called the Corporate Transparency Act went into effect on January 1, 2024. This law includes new reporting requirements for small businesses. If you have an LLC, corporation or another business entity, you will probably be required to file information with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) bureau by December 31, 2024 about all individuals who have ownership in the company and/or who exercise control in the company as determined by FinCEN. Different timeframes apply to companies created after January 1, 2024.

There are significant civil and criminal fines and penalties for failing to file a report if your business is required to do so. These include possible fines of up to $500 a day and/or jail time.

Below is some important information that all business owners need to know about the Corporate Transparency Act. If you have any questions about how this law impacts your business, the Law Office of E.C. Lewis is here to help. Elizabeth Lewis is a small business lawyer with over 15 years of experience assisting small and medium sized businesses in Denver and throughout Colorado, and she can help you navigate the requirements of this new law.

What Is the Corporate Transparency Act?

The Corporate Transparency Act is a law enacted to crack down on illegal activities performed by businesses, including tax fraud, money laundering and the financing of terrorism. To accomplish this goal, the law requires businesses which meet established criteria to submit a Beneficial Ownership Information (BOI) Report to the FinCEN. These reports will allow the government to collect ownership information for a wide range of businesses operating in the United States.

The purpose of the Corporate Transparency Act is to prevent individuals with malicious intent from hiding or benefiting from the ownership of their U.S. businesses in an attempt to commit illegal activities. Congress has identified these common practices as a significant threat to our economic integrity and national security.

Who Is Considered a Beneficial Owner of a Company?

Under the Corporate Transparency Act, individuals who directly or indirectly have a significant ownership stake in a company are considered to be a beneficial owner. Individuals who meet the criteria:

  • Have a major influence on the company’s decisions or operations, even if the person does not have ownership in the company
  • Own at least 25% of the company (i.e. through shares, membership interests, or other means)
  • Have a similar level of control over the company’s equity

Who Needs to File a BOI Report?

Corporations, LLCs and other entities established by filing a document with a Secretary of State or similar office under the law of a state or Indian tribe must file a BOI report unless the business qualifies for an exemption. In addition, certain businesses established in foreign countries that are registered to conduct business in the United States are required to file a BOI.

What Are the BOI Report Filing Exemptions?

There are 23 types of entities that are exempt from the reporting requirements. FinCEN’s Small Entity Compliance Guide includes checklists for each of the 23 exemptions that may help determine whether your company qualifies for an exemption. You may visit www.fincen.gov/boi to access the guide and check if your company is exempt.

Please note, most small businesses ARE NOT exempt and will need to file.

What Information Must Be Included in Your BOI Report?

The information you must include in the BOI report depends on the date your company was created. Companies created prior to January 1, 2024 must provide information about the company and its beneficial owners. Companies created after January 1, 2024 must provide these same details and also provide information about their company applicants.

A company applicant refers to the person who files the document creating the domestic reporting company and the person primarily responsible for directing or controlling the filing if multiple people are involved in this process.

Company information that must be reported includes:

  • Full legal name
  • Any trademark or “doing business as” (DBA) names
  • Street address of the principal place of business
  • Jurisdiction of formation
  • Taxpayer ID number

Foreign companies will need to provide the address information for their U.S. operational location.

Information regarding beneficial owners and company applicants (when applicable) includes:

  • Full legal name
  • Date of birth
  • Current residential street address
  • Unique identifying number and issuing jurisdiction from a current U.S. passport, state or local ID document, driver’s license, or a foreign passport (if the individual doesn’t have any of the other documents)
  • Image of the document chosen for the requirement above (passport, state ID, etc.)

Updating Your BOI Report to Reflect Changes in the Reported Information

You will need to file an updated report within 30 calendar days if any changes in the information reported about the company or beneficial owners occur. This includes:

  • Changes associated with any beneficial owners, including the required information associated with existing beneficial owners and the addition or subtraction of beneficial owners to the company
  • Changes to the reporting company which result in the company becoming eligible for an exemption

How Do I File a BOI Report?

If you are required to file a report, you may be do so electronically through FinCEN’s website. Please note, if you use a search engine to find the site to report information to, you may be directed to a privately owned site that either:

  • Requires payment to help you complete the registration, and/or
  • Is not legitimate and is being used to steal your identity

Just like when dealing with the IRS or the state, it is essential that you go to the government website provided.

Please note that once you have registered, there are requirements that you keep the information current. These requirements can be found on www.fincen.gov.

Beware of Scams

If you receive any solicitations by email, US mail, or phone from someone other than your CPA or attorney regarding the Corporate Transparency Act reporting requirements, please do not follow any instructions on these solicitations. Many of them are not legitimate.

With this new law, there most likely will be an uptick in the number of these solicitations that you will receive. If you have any questions about whether something you get in the mail is legitimate (whether about the new FinCEN reporting requirements, labor law posters, corporate seals, or anything else), you should always consult with an experienced Denver business law attorney such as Elizabeth Lewis prior to paying any third party for unsolicited services or providing any personal or business-related information.

Elizabeth Lewis Can Help Ensure You’re Compliant with Colorado Laws Impacting Businesses

In addition to the new BOI reporting requirements, there have been a lot of changes to Colorado law in the past few years. If you have not had your contracts, employment agreements, employment handbooks or company documents (bylaws, operating agreements, etc.) reviewed recently, it may be time for a checkup. Elizabeth Lewis can help make sure your business remains compliant with all the latest changes to state laws.

The Law Office of E.C. Lewis provides a wide range of legal services for businesses, and we can help set your business up for success. We can assist with the following services:

  • Business organization documents such as bylaws, operating agreements, buy-sell agreements, and partnership agreements
  • Leases for both commercial tenants and commercial and residential landlords
  • Help purchasing or selling a building 
  • Employment documents
  • Employee handbooks
  • Contracts
  • Terms of use and privacy policies for websites
  • Buying or selling a business

Contact us today to schedule a consultation. The Law Office of E.C. Lewis serves small and medium-sized businesses in Denver and throughout Colorado.