Do I Need to Report Ownership of a Business in the U.S.?

Most states in the U.S. do not require direct reporting of who owns a business. However, business ownership may be required to be disclosed through state and IRS tax returns, particularly through K-1 forms.

In addition, as of January 1, 2024, most small businesses in the U.S. must register with the federal agency FinCEN (Financial Crimes Enforcement Network), part of the U.S. Treasury Department, to report who owns the business.

This requirement is part of the Corporate Transparency Act (CTA), enacted in 2021. The CTA targets money laundering and illicit financial activities by necessitating the disclosure of individuals with substantial ownership interests or significant control over a company—commonly referred to as beneficial owners. The following is based on the FinCEN Beneficial Ownership Information (BOI) Reporting Rule.

Which businesses are subject to reporting?

The following business types are required to report beneficial ownership to FinCEN:

  • Corporations: Both C and S corporations
  • Limited Liability Companies (LLCs)
  • Other Similar Entities: The CTA extends to entities that provide limited liability and are similar in structure to corporations and LLCs.

Which businesses are exempt from reporting?

Certain businesses are exempt from the CTA’s reporting requirements, taking into account their nature or existing regulatory oversight. Exemptions include:

  1. Business With More Than 20 Employees & More than $5M Revenue: This exemption is called the “Large Operating Companies” exemption. The CTA recognizes that certain large operating companies already undergo extensive reporting. As such, these entities may be eligible for an exemption, provided they meet specific criteria demonstrating substantial reporting and transparency.
  2. Publicly Traded Companies: Businesses already subject to reporting requirements under the Securities Exchange Act of 1934 are exempt from additional reporting under the CTA.
  3. Nonprofit Organizations: Entities designated as 501(c) organizations under the Internal Revenue Code are not considered reporting companies.
  4. Financial Institutions: Entities regulated by federal banking agencies, such as banks, credit unions, and select financial service providers, are exempt.

Who is a beneficial owner?

A beneficial owner is an individual who either directly or indirectly: (1) exercises substantial control over the subject company, or (2) owns or controls at least 25% of the reporting company’s ownership interests.

What information do I need to report?

A reporting company must report:

  1. Its legal name
  2. Any trade names, “doing business as” (DBA), or “trading as” (TA) names
  3. The current street address of its principal place of business if that address is in the United States (for example, a U.S. reporting company’s headquarters), or, for reporting companies whose principal place of business is outside the U.S., the current address from which the company conducts business in the U.S. (for example, a foreign reporting company’s U.S. headquarters)
  4. Its jurisdiction of formation or registration
  5. Its Employer Identification Number (EIN) or Taxpayer Identification Number (or, if a foreign reporting company has not been issued a TIN, a tax identification number issued by a foreign jurisdiction and the name of the jurisdiction).

For each individual who is a beneficial owner, a reporting company must provide:

  1. The individual’s name
  2. Date of birth
  3. Residential address
  4. An identifying number from an acceptable identification document such as a passport or U.S. driver’s license, and the name of the issuing state or jurisdiction of identification document. The reporting company will also have to upload an image of the identification document used to obtain the identifying number.

Will the information be available to the public?

No, beneficial ownership information reported to FinCEN will only be available to certain government agencies (see below).

Who can access beneficial ownership information?

FinCEN will give access to beneficial ownership information to federal, state, local, and tribal government officials, as well as certain foreign officials who submit a request through a U.S. federal government agency. Such requests must be related to national security, intelligence, and law enforcement. Financial institutions will have access to beneficial ownership information in certain circumstances, with the consent of the reporting company. Those financial institutions’ regulators will also have access to beneficial ownership information when they supervise the financial institutions.

What are the penalties for not reporting?

Possible penalties for not complying with the Corporate Transparency Act include both of the following:

(a) criminal penalties: a fine of up to $10,000, up to two years in prison, or both, and

(b) civil penalties: a fine of up to $500 per day.

Further Resources

For much more on business law, see our Guide to the Law for Entrepreneurs and Business Owners.

See what other registration requirements your business may have at Do I Need to Register My Business?

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