NEW ORLEANS – The New Orleans Chamber of Commerce advises local companies to disclose beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN). Under the federal Corporate Transparency Act, which went into effect on Jan. 1, 2024, many small businesses are affected and must register by Jan. 1, 2025. The law, which sets its sights on shell companies, is designed to fight attempts by criminals who hide their identities and launder money.
The New Orleans Chamber says that while a Texas federal district court’s preliminary injunction puts this requirement on hold, many experts expect the injunction to be overturned. In that event, failure to file with FinCEN could lead to fines of $500 per day, up to a maximum of $10,000, and possible criminal penalties.
According to ZenBusiness, which provides an all-in-one platform app for small business owners and can help businesses manage BOI concerns, a “beneficial owner” is an individual who ultimately owns or controls a company, either through direct or indirect ownership of at least 25%, and benefits from its operations or assets, even if not listed as the legal owner. For example, the owner of a New Orleans travel agency who holds a 40% stake and actively manages the agency’s operations, including making significant business decisions, qualifies as a beneficial owner.
The New Orleans Chamber says that a ‘reporting company’ is any small business, corporation, or LLC that is registered with the state, unless it is exempt. A local restaurant in New Orleans, for example, would likely need to file a BOI report.
Exemptions apply to publicly traded companies, banks, and charities. In fact, there are 23 exemptions from the Corporate Transparency Act, including businesses that qualify as securities reporting issuers, government authorities, banks, credit unions, bank holding company or a savings and loan holding company as defined in the Bank Holding Company Act or the Home Owners’ Loan Act, money transmitter businesses, broker or securities dealers, securities exchange or clearing agencies or other entities registered under the Exchange Act, investment companies or investment advisers, venture capital fund advisers, insurance companies and state licensed insurance producers, venture capital fund advisers, public accounting firms, public utilities, financial market utilities, pooled investment vehicles, tax-exempt entities or an entity assisting one, large operating companies with 20 full-time employees (permanent workers who work an average of 30 hours per week, subsidiary of certain exempt entities, and Inactive entities.
A limited liability company or a corporation is one of the most common types of companies required to file BOI reports but almost any business entity that files formation paperwork or a registration document with a Secretary of State or similar office will be classified as a domestic reporting company or foreign reporting company. Such companies will be required to submit information about their ownership interests if the Texas injunction is overturned.
For existing businesses, the deadline for filing BOI reports with the FinCEN is Jan. 1, 2025. New companies that were established in 2024 will need to file within 90 days of formation while new companies established after Jan. 1, 2025, must file within 30 days of formation.
