The Corporate Transparency Act requires many small US entities to report beneficial ownership information to FinCEN. The rule targets anonymously owned companies by identifying individuals who own or control them. Knowing whether your business must file, when the report is due, and which exemptions apply is essential to meeting obligations without unnecessary burden.

Who must file and what to report A “reporting company” generally includes corporations, LLCs, and similar entities created by filing a document with a secretary of state (or tribal office), plus foreign entities registered to do business in the United States. Sole proprietorships and general partnerships formed without a filing usually are not in scope. Reports include company details (legal name, trade names, principal US address, jurisdiction, and TIN/EIN) and personal information for each beneficial owner: full legal name, date of birth, residential address, and a unique ID number and image from an acceptable document (such as a US driver’s license or passport). Companies formed on or after January 1, 2024 must also report up to two “company applicants” (the individual who files the formation/registration and, if different, the person directing the filing). Pre-2024 entities do not report applicants.

Beneficial owner definition An individual is a beneficial owner if they either: (1) own or control at least 25% of the ownership interests, or (2) exercise “substantial control.” Substantial control can include serving as a senior officer, having authority to appoint/remove senior officers or a majority of the board, directing or influencing important decisions, or exercising control through intermediary entities, financing arrangements, or other contracts. Minors, nominees, employees (who are not senior officers), and certain passive heirs can be excluded in specific circumstances.

Core deadlines and ongoing updates • Existing domestic or foreign reporting companies created or registered before January 1, 2024: initial report due by January 1, 2025. • Entities created or registered during 2024: initial report due within 90 calendar days after receiving actual or public notice that formation or registration is effective. • Entities created or registered on or after January 1, 2025: initial report due within 30 calendar days after such notice. After filing, you must submit an updated report within 30 days of any change to reported information, including changes in ownership percentages, control, address, or identifying document details. Corrections to inaccuracies should be filed promptly once discovered.

Common exemptions to consider There are 23 statutory exemptions. Many small entities will not qualify, but common carve-outs include: publicly traded issuers, banks, credit unions, money services businesses, broker-dealers, investment companies and investment advisers registered with the SEC, insurance companies, public accounting firms registered with the PCAOB, public utilities, financial market utilities, pooled investment vehicles, tax-exempt organizations, and certain subsidiaries of exempt entities. A notable category is the “large operating company” exemption: generally requiring at least 20 full-time US employees, a physical office in the United States, and over $5 million in US-sourced gross receipts or sales reported on the prior year’s federal tax return. An “inactive entity” exemption also exists but requires meeting strict criteria (such as no ownership changes and no assets) that many legacy entities will not meet.

Privacy, access, and enforcement BOI data is not publicly accessible. FinCEN may disclose it to US law enforcement, certain federal regulators, national security and intelligence agencies, and—under defined safeguards—to financial institutions conducting legally required customer due diligence, typically with the reporting company’s consent. Willful failure to report, update, or correct can trigger civil penalties (accruing daily) and criminal penalties, including fines and potential imprisonment. Keeping internal records and a change-tracking process helps manage the 30-day update window.

Investments: what changes for capital planning?

If you use holding companies or special purpose entities as part of long-term investments, map out who qualifies as beneficial owners and how changes will trigger updates. Capital infusions, convertible instruments, or preferred equity rounds can shift ownership or control. Document thresholds, board rights, and vetoes that might constitute “substantial control,” and align investor communications with BOI data collection practices to avoid delays.

Stocks: does equity count as ownership interests?

For BOI purposes, “ownership interests” include more than common stocks. They can encompass membership interests, options, profits interests, and certain convertible instruments. Look through indirect stakes held via parent entities or trusts to identify individuals who ultimately own or control at least 25%. When equity waterfalls or voting agreements are complex, prepare cap tables that show both percentage ownership and control rights to support accurate reporting.

Trading entities and reporting duties

Entities set up for trading activities—whether for digital assets, commodities, or securities—are treated like other reporting companies if they were formed by state filing. If a registered broker-dealer or another exempt financial entity owns the vehicle directly, the entity may be exempt as a subsidiary of an exempt entity; otherwise, it likely must report. Track control rights in trading mandates, side letters, and management agreements, as those can create substantial control even without majority equity.

Dividends and indicators of control

Dividends, distributions, and special allocations can reveal who benefits economically but are not, by themselves, the only measure of control. A minority investor receiving dividends might still be a beneficial owner if their cumulative instruments equal or exceed 25% ownership, or if they hold blocking rights over key decisions. Conversely, a senior officer with decisive authority can be a beneficial owner even with limited dividend participation. Review both payout policies and governance rights together.

Portfolios and layered ownership

Portfolios of subsidiaries and SPVs often introduce multi-tier structures. BOI reporting generally requires “look-through” analysis until you identify natural persons at the top who meet ownership or substantial control tests. Where multiple jurisdictions and trusts are involved, gather identification documents early, consider using FinCEN Identifiers for recurring owners, and maintain a change log so portfolio rebalances, redemptions, or board changes are reflected within 30 days.

Filing process and practical tips File electronically through FinCEN’s BOI filing system. Many small entities choose to collect owner IDs securely using encrypted portals or vetted in-person checks, store images of acceptable documents, and keep a record of when each owner was last verified. Align BOI updates with other corporate housekeeping events—like board meetings, equity issuances, address changes, or leadership transitions—to avoid missing the update window. If an exemption might apply, document how the criteria are met and re-check annually, especially the “large operating company” thresholds tied to employee counts and revenue.

Legal landscape note There have been legal challenges to the Corporate Transparency Act, and some court orders limit enforcement for specific parties. FinCEN has indicated it continues implementation for other entities. Monitor official FinCEN updates and consult qualified counsel if your circumstances are unusual or you are party to litigation affecting applicability.

Conclusion For most small entities formed by state filing, BOI reporting is now a standard compliance obligation with clear deadlines, a broad definition of beneficial ownership, and well-defined exemptions. Early planning, precise documentation, and a reliable update process reduce risk and administrative friction while aligning governance with the rule’s transparency goals.