Lexlaunch.com has been designed to help small businesses navigate the LLC formation easier, while still getting our clients the legal help they need.  So, when FINCEN (basically the IRS criminal enforcement division) decided to require entities to disclose beneficial ownership information, we dove in to help you figure this out.  

We’ve summarized, below, what you will need to know about this new reporting requirement for small businesses and are here to help you stay compliant.  Please make sure you do stay in compliance, as there are some pretty severe penalties in place if you are not.  

Reach out to Denker Law Firm LLC directly to assist with compliance.  (816) 434-6610 or tdenker@denkerlawfirm.com.  We’ll be working on a more streamlined approach for you once we have access to the filing system.  

What is it, and why are they requiring this?  

You may, or may not, have heard that the U.S. Treasury Financial Crimes Enforcement Network (FINCEN) has enacted what they call the Corporate Transparency Act.  Essentially, they have put into place a reporting requirement due to the fact that individuals will use business entities for illicit activities (i.e. money laundering, terrorism, fraud, etc.).  

Their stated goal is to set a federal standard for incorporation practices, protect commerce, help national security and bring the U.S. into compliance with international standards.  The Secretary of the Treasury will maintain the information, and they are only to make it available to authorized government authorities.

Ultimately, they want to know who owns what company.

What entities have to report?

All entities formed within a State or registered to do business in the U.S. are required to report, unless they meet one of the exceptions.  While there are several exceptions listed, basically it can be summed up to only include:

  • Those entities already registered with or providing this information to the federal government in some way;  
  • Non-profits
  • Entities with more than 20 employees, more than $5,000,000 in revenue and are physically located in the U.S (all must apply);
  • Entities controlled by another exempt entity;
  • Entities that have been around for more than 1 year, are not engaged in active business, not owned by a foreign person, have not changed ownership in the last 12 months, have not received more than $1,000 in the last 12 months, and does not own another entity (all must apply); or
  • Entities that get the Secretary of the Treasury, the Attorney General and Homeland Security to agree don’t have to report.

This seems like a lot of exceptions, but generally speaking, if you actively operate a small business in any state in the U.S., you will more than likely need to report.

When do you have to report?

If your entity was formed before January 1, 2024, you will need to file your initial report no later than December 31, 2024.

If you are forming a new entity on or after January 1, 2024, but before January 1, 2025, the report will need to be filed within 90 days from when the new entity was formed.

If you are forming a new entity on or after January 1, 2025, the report will need to be filed within 30 days from when the new entity was formed.

In addition, if there is any change to the ownership of your entity, they do require that you report that within one year from that date in which that change in ownership occurred.  

What do I have to report?

Essentially, they want to know basic information about the company, as well as who everyone is that owns at least 25% of the entity or exercises substantial control over the entity.  For entities formed after January 1, 2024, the company applicant will also need to be reported (the person that filed the entity with the state).

A beneficial owner cannot be: 

  • a minor child, 
  • a person acting on behalf of another person, 
  • a person who is only an employee of the entity who’s control is only as a result of that employment status, 
  • a person who’s interest is only through an inheritance, 
  • a creditor of the entity (unless the creditor has substantial control or at least a 25% ownership)

What exactly is “substantial control”?  FINCEN’s chart that they provide on their site to explain this is below.  If you fall into any of these categories, it applies to you.  

Substantial Control


Senior Officer

Any individual holding the position or exercising the authority of a:

  1. President
  2. Chief Financial Officer (CFO)
  3. General Counsel (GC)
  4. Chief Executive Officer (CEO)
  5. Chief Operating Officer (COO)

or any other officer, regardless of official title, who performs a similar function as these officers.


Appointment Or Removal Authority

Any individual with the ability to appoint or remove any SENIOR OFFICER or a majority of the board of directors or similar body.

decision maker

Important Decision-Maker

Any individual who directs, determines, or has substantial influence over important decisions made by the reporting company, including decisions regarding the reporting company’s:

1. Business, such as:

  • Nature, scope, and attributes of the business.
  • The selection or termination of business lines or ventures, or geographical focus.
  • The entry into or termination, or the fulfillment or non-fulfillment, of significant contracts.

2. Finances, such as:

  • Sale, lease, mortgage, or other transfer of any principal assets.
  • Major expenditures or investments, insurance of any equity, incurrence of any significant debt, or approval of the operating budget.
  • Compensation schemes and incentive programs for senior officers.

3. Structure, such as:

  • Reorganization, dissolution, or merger.
  • Amendments of any substantial governance documents of the reporting company, including the articles of incorporation or similar formation documents, bylaws, and significant policies or procedures.


Any other form of substantial control over the reporting company. Control exercised in new and unique ways can still be substantial. For example, flexible corporate structures may have different indicators of control than the indicators included here.

What is reported about the entity?

  • Legal name
  • Any d/b/a’s
  • Current street address (no PO Box)
  • Where it is formed/registered; and
  • It’s Taxpayer ID number

What is reported about the owners?

  • Legal name
  • Date of birth
  • Residential address (no PO Box)
  • An identifying number from an acceptable government issued ID, as well as an image of that ID.
    • Acceptable forms of ID include a non-expired driver’s license, passport, or non-expired ID issued by a state, local government or Indian Tribe.

How often does beneficial ownership information have to be reported?

Once the initial report is filed, there’s no regularly recurring requirement (i.e. no annual or monthly filing).  However, if there is a change to the beneficial ownership of the company, an update will need to be filed.

Some likely triggers for a required update can include:

  • Any change to the information already reported (i.e. new business name),
  • A change in beneficial owners,
  • A change to a beneficial owner’s name, address, or unique identifying number previously provided, or
  • Your entity becomes an exempt entity.

If I own multiple entities, do I have to file for each one?

Unless an entity is exempt, each entity will have to file its own report.

Possible penalties

If you violate the BOI reporting requirements, you could be subject to penalties of up to $500 per day, as well as criminal penalties of up to 2 years in prison, and a fine of up to $10,000.

This is not something you should ignore.

Contact Denker Law Firm LLC directly for compliance assistance at (816) 434-6610 or tdenker@denkerlawfirm.com. Once we gain access to the filing system, we will implement a more efficient approach for your needs.