Beneficial Ownership Information Report
Shuttered Businesses & CTA Reporting Requirments
by Trent Cotney, Partner, Adams & Reese, LLP
(Editor’s Note: Trent Cotney, partner at Adams & Reese, LLP, is dedicated to representing the roofing and construction industries. Cotney is General Counsel for the Western States Roofing Contractors Association and several other industry associations. For more information, contact the author at (866) 303-5868 or go to www.adamsandreese.com.)
As you know, the Corporate Transparency Act (CTA) took effect earlier this year, and most companies are required to complete a Beneficial Ownership Information (BOI) Report and submit it to the Financial Crimes Enforcement Network (FinCEN) by the January 1, 2025, deadline. But what about companies that are formed in 2024 but then close? On July 8, FinCEN published an FAQ that answers that question.
What the Requirement States
It may be surprising to learn that if you create a company in 2024 but close its operations before the filing deadline, you must still submit a BOI report. Otherwise, you will be considered noncompliant.
The requirement on the FinCEN website reads as follows:
- 14. If a reporting company created or registered in 2024 or later winds up its affairs and ceases to exist before its initial BOI report is due to FinCEN, is the company still required to submit that initial report?
Yes. Reporting companies created or registered in 2024 must report their beneficial ownership information to FinCEN within 90 days of receiving actual or public notice of creation or registration. Reporting companies created or registered in 2025 or later must report their beneficial ownership information to FinCEN within 30 days of receiving actual or public notice of creation or registration. These obligations remain applicable to reporting companies that cease to exist as legal entities, meaning wound up their affairs, ceased conducting business, and entirely completed the process of formally and irrevocably dissolving, before their initial beneficial ownership reports are due. If a reporting company files an initial beneficial ownership information report and then ceases to exist, then there is no requirement for the reporting company to file an additional report with FinCEN noting that the company has ceased to exist. [Issued July 8, 2024]
Companies that shuttered before January 1, 2024, are not required to file a BOI report.
Which Companies Are Required to Report
As a reminder, most businesses incorporated or registered to operate in a state must provide details about their officers, owners, and other significant stakeholders. Almost every small business is required. These include primarily limited liability partnerships, limited liability companies (LLCs), limited liability limited partnerships, and business trusts. Single-owner LLCs must report, but sole proprietors not registered as LLCs are not mandated.
Many larger companies operating in highly regulated industries are subject to other requirements, so they are not required to complete the CTA reporting. These are included in 23 categories, such as bank holding companies and savings and loan holding companies, financial market utilities, banks, public utilities, domestic credit unions, and large operating companies.
Advice for Most Companies
Businesses not exempt from the CTA must submit information such as the following:
- Name of the reporting company, including applicable trade names, registration jurisdiction, physical address, and tax identification number.
- Names of the reporting company’s beneficial owners, including their addresses, birthdates, and copies of government-issued identification.
- Names of those who filed the application documents to create the business or directed another person to do so.
A beneficial owner refers to someone with substantial control over the company or who has a considerable interest in the company, at least 25 percent.
If you are required to complete a BOI report, visit the FinCEN website for filing instructions. If you fail to do so or provide inaccurate information, you can face criminal and civil penalties, such as fines or even imprisonment.
