The Corporate Transparency Act (CTA) took effect on January 1, 2024, and with it came a new requirement for certain businesses to file Beneficial Ownership Information (BOI) reports. However, not all companies need to submit this report. The law outlines 23 specific exemptions that, if met, relieve businesses from this filing requirement.
In this post, we will explain the key exemptions to help you determine whether your business qualifies.
Editor’s note: On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction, temporarily halting enforcement of the Corporate Transparency Act’s Beneficial Ownership Information (BOI) reporting requirements. This is not a final ruling: the injunction pauses FinCEN’s enforcement powers but does not eliminate the requirement to file BOI reports. FinCEN continues to accept BOI submissions, and the Department of Justice is expected to appeal this decision. At US Filing Services, we encourage businesses to stay proactive. Filing your BOI report now ensures compliance should enforcement resume.
What is a “Reporting Company”?
First, defining what is considered a “reporting company” under the CTA is important. A reporting company is any corporation, LLC, or other entity created by filing a document with a Secretary of State or similar office. This also includes foreign entities registered to do business in the U.S.
However, if your business meets one of the 23 exemptions in the Corporate Transparency Act, you may not be required to file a BOI report. Below, we’ve outlined the key exemptions.
23 BOI filing exemptions
- Securities Reporting Issuer: Public companies already complying with the Securities Exchange Act of 1934.
- Governmental Authorities: Entities formed under U.S., state, tribal, or local laws that exercise governmental authority.
- Banks: Any bank defined by the Federal Deposit Insurance Act or similar legislation.
- Credit Unions: Federally or state-licensed credit unions.
- Depository Institution Holding Companies: Bank holding companies and savings and loan holding companies.
- Money Services Businesses: Businesses registered with FinCEN, such as money transmitters.
- Broker or Dealer in Securities: SEC-registered brokers or dealers.
- Securities Exchanges or Clearing Agencies: SEC-registered exchanges or clearinghouses.
- Other SEC-Registered Entities: Entities registered under the Securities Exchange Act that don’t fall into previous categories.
- Investment Companies or Advisers: Entities registered under the Investment Company Act or Investment Advisers Act.
- Venture Capital Fund Advisers: SEC-registered venture capital fund advisers.
- Insurance Companies: Entities operating under the Investment Company Act.
- State-Licensed Insurance Producers: Licensed insurance producers with a physical U.S. presence.
- Commodity Exchange Act Registered Entities: Entities registered with the Commodity Futures Trading Commission.
- Public Accounting Firms: Firms registered under the Sarbanes-Oxley Act.
- Public Utilities: Regulated utilities providing essential services like telecommunications, electricity, or water.
- Financial Market Utilities: Financial market utilities designated by the Financial Stability Oversight Council.
- Pooled Investment Vehicles: Investment funds advised or operated by exempt financial entities.
- Tax-Exempt Entities: Organizations exempt from tax under section 501(c) of the Internal Revenue Code.
- Entity Assisting Tax-Exempt Entities: U.S.-controlled entities supporting tax-exempt organizations.
- Large Operating Companies: Companies with more than 20 full-time U.S.-based employees, physical office presence, and over $5 million in gross receipts.
- Subsidiaries of Exempt Entities: Subsidiaries of companies that fall under one of the exemptions.
- Inactive Entities: Entities that have been inactive since January 1, 2020, with no recent ownership changes or significant transactions.
Does your business qualify for an exemption?
Navigating these exemptions can feel complex. The first step is determining whether your entity is a reporting company under the CTA. Then, review the above exemptions to see if your business fits any of these categories. If it does, you won’t need to file a BOI report.
If your business qualifies for an exemption, it’s critical to document this to avoid potential compliance issues in the future. If your business is not exempt, US Filing Services offers an easy-to-use platform and expert support to complete your BOI filing.
As always, remember that this article is for informational purposes only and should not be considered legal advice. Please consult with a qualified attorney regarding any legal concerns regarding BOI reporting.
Stay compliant, and let us handle the details so you can focus on growing your business.