FinCEN Corporate Transparency Act Explained

The Corporate Transparency Act (CTA) came into effect on January 1, 2024, requiring companies to report beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN). The purpose of this rule is to prevent illicit financial activities like money laundering through shell companies and legitimate businesses.

This guide dives into the FinCEN Corporate Transparency Act, clarifying the main requirements and other details you should know. You’ll also learn how Harbor Compliance simplifies the reporting process to save you a significant amount of time and energy.

Corporate Transparency Act—Key Requirements

As per the CTA, reporting companies must list beneficial owners and provide their identifying information. A beneficial owner is an individual who meets either of the following two requirements:

1. Owning at least 25% of the company’s ownership interests (stock, voting rights, capital or profit interest, etc.)
2. Having substantial control over the company

Substantial control is defined through several criteria and encompasses the following groups:

1. Senior officers
2. Individuals who can appoint/remove senior officers
3. Important decision-makers
4. Anyone who exercises other forms of substantial control

There’s no limit to the number of beneficial owners you can include in your report, so you must identify everyone who falls under the aforementioned categories.

If your company was formed on or after January 1, 2024, you also need to include company applicants in your BOI report. A company applicant is a person who either directly filed a document that registered your organization or was responsible for controlling or directing the filing action.

After submitting the BOI report, you need to make sure all information stays up to date. Any changes to your company’s beneficial ownership structure or individual owners’ information must be reported to FinCEN.

Who Is Affected by the Corporate Transparency Act?

You only need to submit a BOI report if your organization falls under the definition of a reporting company. This encompasses corporations, LLCs, and other legal entities formed by submitting a relevant document to the secretary of state or an equivalent regulatory body.

Several types of legal entities (23 in total) are exempt from the BOI reporting requirement, including:

• Large operating companies
• Tax-exempt entities
• Governmental authorities
• Banks
• Inactive entities

You can find the complete list of exceptions alongside the qualification criteria in FinCEN’s Small Entity Compliance Guide.

What Information Does Your BOI Report Need To Include?

A BOI report must include the following details about your company:

• Full legal name
• Any trade name or DBA (Doing Business As)
• Complete current address
• Jurisdiction of formation
• If your company was formed outside the U.S., you also need to include the jurisdiction of the first formation.
• Taxpayer Identification Number (TIN) and Employer Identification Number (EIN)
• Foreign companies without a TIN need to report a tax ID number and the jurisdiction that issued it.

As for the company’s beneficial owners, FinCEN requires the following information:

• Full name
• Date of birth
• Current address
• Image, unique number, and issuing jurisdiction of an identification document (any of the following):
• Driver’s license
• U.S. passport (foreign passport if the individual doesn’t have a domestic one)
• Another government-issued identification document

BOI Reporting Due Dates

Unless you qualify for an exemption, you must file your BOI report within the prescribed time frame, which is determined by the date of your company’s formation. To find your reporting window, refer to the following table:

If your initial report contains any errors, you should submit a corrected report within 90 days of noticing the error or having a reason to be aware of it. In case of any changes to your company’s BOI, you must file an updated report within 30 days.

Missing any of the above-mentioned deadlines will most likely result in civil or criminal penalties. You need to constantly look for changes, which can be challenging if your company has many beneficial owners.

The good news is that you can avoid such ongoing stress and eliminate all guesswork from BOI reporting by delegating this process to a team of experts like Harbor Compliance.

Harbor Compliance—Efficient, Risk-Free BOI Reporting

Harbor Compliance is one of the nation’s leading providers of compliance solutions, including a comprehensive BOI Reporting Service. When you sign up for it, we’ll take over all the manual work involved in the reporting process to help you save time and focus on core business operations.

Besides filing the initial report on your behalf, we provide ongoing support to ensure you don’t forget to update your company’s BOI. By doing so, we minimize your risk of CTA violations and the related penalties.

The service is available to all reporting companies, so you can leverage it regardless of your organization’s size, type, or ownership structure.

Benefits of Partnering With Harbor Compliance

There are three reasons why using our BOI Reporting Service is superior to handling the process yourself:

1. Time savings—FinCEN estimates that it can take up to three hours to read and complete your BOI report per entity, and our service lets you put that time to better use and spend it on impactful work.
2. Accurate and up-to-date reports—When we submit your initial report, we’ll send you automated periodic reminders to check whether your company’s BOI needs to be updated. Let us know if anything needs to be corrected or changed, and we’ll submit an updated report in your name.
3. Easy information tracking—Our optional Records Manager add-on lets you keep track of your company’s ownership and leadership information effortlessly by centralizing it in a user-friendly hub.

How To Order the BOI Reporting Service

If you want to leverage our BOI Reporting service, all you need to do is complete a simple signup wizard—here’s how:

1. Choose the applicable option based on your business specifics:
1. Single business
2. Nonprofit that is not 501(c) exempt
3. Multiple entities
2. Enter your company details and contact information in the provided form
3. Check out

After you purchase the service, we’ll gather all the necessary information, submit your initial BOI report, and manage any corrections and updates on your behalf.

Explore Our Extensive Service Portfolio

BOI reporting is only one of our many areas of expertise. We’ve helped numerous organizations meet many other obligations effortlessly through a wide array of services. Whether you’ve only registered your company or have been operating for decades, we can help through comprehensive entity lifecycle management that includes the following:

• Name reservation
• Document amendments
• DBA management
• Initial and annual report filing
• Withdrawal and dissolution

You can also use our Drop-Off Filing Service to expedite filing with the secretary of state or another governing body. Our team can retrieve various documents on your behalf, including your certificate of good standing and authority, articles of reinstatement, and certified copies.

If you’re forming a nonprofit, we can complete the incorporation or charitable registration process from start to finish. If your organization is eligible for the 501(c) tax exemption, we can secure it on your behalf.

Harbor Compliance also handles other tax-related services, most notably:

• EIN obtaining
• Sales and use tax registration
• Payroll tax registration

Our Registered Agent Service is another highly sought-after solution that helps you stay on top of legal or government correspondence. We can accept service of process and other relevant notices on your behalf and forward them swiftly, making sure you don’t miss them. The service is available even if you already have an agent as we can complete the agent change in your name.

Our team can also obtain your business licenses, whether you need a general license or an industry-specific one (construction, engineering, etc.).

BOI Reporting FAQs

Below, you’ll see some of the most commonly asked questions about BOI reporting and the CTA. If you need more information, you can visit FinCEN’s FAQ page and our Information Center.

Simplify BOI Reporting With Harbor Compliance

Outsourcing BOI reporting to a team of experts is an excellent way to meet FinCEN’s requirements without stress and wasted time. Order our BOI Reporting Service, and we’ll take the entire process off your plate.

If you need clarity on your other regulatory obligations and want to make sure none of them went unnoticed, get a free Harbor Compliance Score™ and check your organization’s current standing.

We can help you check all the necessary boxes and ensure your organization operates in accordance with the law, so feel free to inquire about our additional services.

We also offer a robust software solution that lets you take full control of your obligations effortlessly. To see how it works, schedule a demonstration today.