Do Inactive Business Entities Need To File A BOI Report?

business

Clarity and FAQs on the Corporate Transparency Act

Many business owners are wondering if they need to file a beneficial ownership information (BOI) report if their business ended before the BOI reporting rules started on January 1, 2024. The Financial Crimes Enforcement Network (FinCEN) has provided some clarity on this issue.

What You Need to Know

  1. Businesses Dissolved Before January 1, 2024
    If a business completely ended and formally dissolved before January 1, 2024, it does not need to file a BOI report. Since the company was no longer active before the new rules took effect, it is exempt from reporting.
  2. Businesses That Stopped Before January 1, 2024, but Dissolved Later
    If a business stopped operating before January 1, 2024, but only completed its formal dissolution after that date, it must file a BOI report by January 1, 2025. This applies if the company is classified as a reporting company.
  3. New Companies Created in 2024 or Later
    Companies formed in 2024 or after must file their BOI report even if they dissolve before their first report is due. The reporting requirement stands, regardless of whether the company ceases operations before the report deadline.

Updates from FinCEN

On July 8, 2024, FinCEN updated its FAQs about BOI reporting. Here’s what they’ve clarified:

Is a company required to report its beneficial ownership information if it ceased to exist before January 1, 2024?
No, if a company fully and officially dissolved before January 1, 2024, it does not need to report its beneficial ownership information. The company was never subject to these reporting rules if it ended before the deadline.

How does a company formally and irrevocably dissolve?
Typically, this involves filing the right paperwork with the relevant authorities, getting confirmation of dissolution, paying any owed taxes or fees, stopping business activities, and closing all accounts.

What about companies that were active after January 1, 2024?
If a company continued to exist on or after January 1, 2024, it must report its beneficial ownership information, even if it stopped business operations or completed its dissolution before the reporting deadline.

Do new companies need to file reports if they dissolve before their initial report is due?
Yes. Companies created in 2024 need to file their BOI report within 90 days of their creation or registration notice. For companies created in 2025 or later, the report is due within 30 days. This requirement remains, even if the company dissolves before the report is due. Once a report is filed, no additional report is needed if the company later ceases to exist.

For more specific details on how to determine when a company ceases to exist legally, check the laws of the jurisdiction where the company was formed or registered. Administrative dissolutions or suspensions usually don’t count as a complete end unless they become permanent.

If you need help understanding these requirements, reach out to The J.M. Dickerson Law Firm. We’re here to assist you with navigating these new rules and keeping your business compliant with our Business Minder Pro Plan service. Want to find out more? Contact us today or CLICK HERE for more information.