Not sure if your business needs to comply with the Corporate Transparency Act (CTA) or if it qualifies for a CTA exemption? You’re not alone—many businesses are checking to see if they’re exempt from BOI reporting to avoid unnecessary filings.

This guide lists all the Corporate Transparency Act Exemptions to help you quickly determine if your business has to file a BOI report. This can save your time, effort, and the potential hassle of penalties.

Now, let’s understand what it means to be exempt under the CTA.

Disclaimer: We’ve reviewed the FinCEN official documentation and tried to explain it here in the simplest way possible.

Entities Exempt from the Corporate Transparency Act

There are 23 types of entities exempt from the Corporate Transparency Act, and they don’t need to file the Beneficial Ownership Information Report.

Note: Sole Proprietors and general partnerships, which are businesses that are not created by registering with any state, are not subject to the Corporate Transparency Act.

Exemption #1: Securities Reporting Issuer

An entity qualifies for this exemption if it meets either of these two criteria:

1. The entity is an issuer of a class of securities that are registered under Section 12 of the Securities Exchange Act of 1934.
2. The entity is required to file supplementary and periodic information under Section 15(d) of the Securities Exchange Act of 1934.

Exemption #2: Governmental Authority

An entity qualifies for this exemption if both of the following are true:

1. The entity is created under the laws of the United States, an Indian tribe, a State, a political subdivision of a State, or through an agreement between two or more States.
2. The entity performs governmental functions on behalf of the United States, an Indian tribe, a State, or a political subdivision.

Exemption #3: Banks

An entity qualifies for this exemption if it’s recognised as a “bank” under any of the following:

1. The Federal Deposit Insurance Act (typically covering federally insured banks).
2. The Investment Company Act of 1940 (often covering banks involved in securities investments).
3. The Investment Advisers Act of 1940 (usually covering banks offering investment advice).

Exemption #4: Credit Union

An entity qualifies for this exemption if it meets either of these conditions:

1. It is a Federal credit union (typically a credit union chartered and regulated at the federal level).
2. It is a State credit union (generally a credit union chartered and regulated by state law).

Exemption #5: Depository Institution Holding Company

An entity qualifies for this exemption if it meets either of these conditions:

1. It is a bank holding company (typically a company that controls one or more banks, as defined in the Bank Holding Company Act of 1956).
2. It is a savings and loan holding company (generally a company that controls savings and loan associations, as defined in the Home Owners’ Loan Act).

Exemption #6: Money Services Business

An entity qualifies for this exemption if it meets either of these conditions:

1. It is a money-transmitting business registered with FinCEN under 31 U.S.C. 5330 (typically businesses that transfer funds).
2. It is a money services business registered with FinCEN under 31 CFR 1022.380 (generally includes businesses that provide financial services like currency exchange or check cashing).

Exemption #7: Broker or Dealer in Securities

An entity qualifies for this exemption if it meets both of these conditions:

1. The entity is a broker or dealer as defined in Section 3 of the Securities Exchange Act of 1934 (typically involved in buying, selling, or trading securities).
2. The entity is registered under Section 15 of the Securities Exchange Act of 1934 (meaning it has federal approval to operate as a broker or dealer in securities).

Exemption #8: Securities Exchange or Clearing Agency

An entity qualifies for this exemption if it meets both of these conditions:

1. The entity is an exchange or clearing agency as defined in Section 3 of the Securities Exchange Act of 1934 (typically involved in facilitating or clearing securities transactions).
2. The entity is registered under Sections 6 or 17A of the Securities Exchange Act of 1934 (usually meaning it operates under federal regulations for securities exchanges or clearing activities).

Exemption #9: Other Exchange Act Registered Entity

An entity qualifies for this exemption if it meets both of these conditions:

1. The entity is not a securities reporting issuer, broker or dealer in securities, or a securities exchange or clearing agency (as defined in Exemptions #1, #7, and #8).
2. The entity is registered with the Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934 (meaning it is approved by the SEC to operate under this Act but does not fall under the previously listed categories).

Exemption #10: Investment Company or Investment Adviser

An entity qualifies for this exemption if it meets both of these conditions:

1. The entity is an investment company (typically a company that pools funds to invest in securities) as defined in Section 3 of the Investment Company Act of 1940, or an investment adviser (a person or company that offers investment advice) as defined in Section 202 of the Investment Advisers Act of 1940.
2. The entity is registered with the Securities and Exchange Commission (SEC) under either the Investment Company Act of 1940 or the Investment Advisers Act of 1940 (meaning it follows SEC regulations under these Acts).

Exemption #11: Venture Capital Fund Adviser

An entity qualifies for this exemption if it meets both of these conditions:

1. The entity is an investment adviser for venture capital funds as defined in Section 203(l) of the Investment Advisers Act of 1940 (typically a person or firm providing financial advice specifically for venture capital investments).
2. The entity has filed Item 10, Schedule A, and Schedule B of Part 1A of Form ADV, or an equivalent form, with the Securities and Exchange Commission (SEC) (meaning it has submitted required registration documents to the SEC).

Exemption #12: Insurance Company

An entity qualifies for this exemption if the following condition applies:

1. The entity is an insurance company as defined in Section 2 of the Investment Company Act of 1940 (typically a company that provides insurance policies to cover various risks).

Exemption #13: State-Licensed Insurance Producer

An entity qualifies for this exemption if it meets both of these conditions:

1. The entity is an insurance producer authorized by a state and supervised by the state’s insurance commissioner or a similar official (meaning it is legally approved to sell insurance within that state).
2. The entity has an operating presence at a physical office within the United States (meaning it conducts business regularly from a distinct physical location it owns or leases in the U.S.).

Exemption #14: Commodity Exchange Act Registered Entity

An entity qualifies for this exemption if it meets either of these conditions:

1. The entity is a registered entity as defined in Section 1a of the Commodity Exchange Act (typically includes exchanges and clearinghouses for commodity trading).
2. The entity is one of the following, registered with the Commodity Futures Trading Commission (CFTC) under the Commodity Exchange Act:
   • Futures commission merchant (firms that handle the buying and selling of futures contracts),
   • Introducing broker (firms that introduce clients to futures trading),
   • Swap dealers (firms that engage in swaps or derivatives),
   • Major swap participant (large firms with substantial swap exposures),
   • Commodity pool operator (managers of pooled investment vehicles in commodities),
   • Commodity trading advisor (firms providing advice on commodity trading), or
   • Retail foreign exchange dealer (firms involved in foreign currency trading for retail customers).

Exemption #15: Public Accounting Firm

An entity qualifies for this exemption if the following condition applies:

1. The entity is a public accounting firm registered under Section 102 of the Sarbanes-Oxley Act of 2002 (typically firms authorized to audit public companies and ensure compliance with financial regulations).

Exemption #16: Public Utility

An entity qualifies for this exemption if it meets both of these conditions:

1. The entity is a regulated public utility as defined in 26 U.S.C. 7701(a)(33)(A) (typically a company that operates under government oversight to provide essential services).
2. The entity provides telecommunications, electrical power, natural gas, water, or sewer services within the United States.

Exemption #17: Financial Market Utility

An entity qualifies for this exemption if the following condition applies:

1. The entity is a financial market utility designated by the Financial Stability Oversight Council under Section 804 of the Payment, Clearing, and Settlement Supervision Act of 2010 (typically an organization that supports the stability of the financial system by handling payments, clearing, or settlement transactions).

Exemption #18: Pooled Investment Vehicle

An entity qualifies for this exemption if the following condition applies:

1. The entity is a pooled investment vehicle operated or advised by a person or entity described in any of these exemptions:
   • Exemption 3: Bank
   • Exemption 4: Credit Union
   • Exemption 7: Broker or Dealer in Securities
   • Exemption 10: Investment Company or Investment Adviser
   • Exemption 11: Venture Capital Fund Adviser (This means the entity pools money from multiple investors and is managed or advised by qualified financial institutions or advisers.)

Exemption #19: Tax-Exempt Entity

An entity qualifies for this exemption if it meets any of the following conditions:

1. The entity is an organization under Section 501(c) of the Internal Revenue Code of 1986 and is exempt from tax under Section 501(a) (typically includes charities and nonprofits).
2. The entity was previously tax-exempt under Section 501(c) but lost this status within the last 180 days.
3. The entity is a political organization as defined in Section 527(e)(1) of the Code and is exempt from tax under Section 527(a) (usually includes political parties or campaign committees).
4. The entity is a trust described in Section 4947(a)(1) or (2) of the Code (typically includes charitable trusts and split-interest trusts).

Exemption #20: Entity Assisting a Tax-Exempt Entity

An entity qualifies for this exemption if it meets all four of the following conditions:

1. The entity operates solely to provide financial support to, or hold governance rights over, a tax-exempt entity (as described in Exemption #19).
2. The entity is a U.S. person as defined in Section 7701(a)(30) of the Internal Revenue Code of 1986.
3. The entity is entirely owned or controlled by one or more U.S. citizens or lawful permanent residents.
4. The entity receives at least the majority of its funding from U.S. citizens or lawful permanent residents.

Exemption #21: Large Operating Company

An entity qualifies for this exemption if it meets all six of the following conditions:

1. The entity has more than 20 full-time employees in the United States (full-time generally means working at least 30 hours per week).
2. These employees are employed in the United States.
3. The entity has a physical office in the United States where it regularly conducts business, separate from any other company.
4. The entity filed a U.S. federal income tax return for the previous year, showing over $5 million in gross receipts or sales.
5. The entity reported over $5 million in gross receipts or sales on IRS forms like Form 1120 or Form 1065.
6. Sales from sources outside the United States do not reduce the amount below $5 million in gross receipts or sales.

Exemption #22: Subsidiary of Certain Exempt Entities

An entity qualifies for this exemption if it is fully owned or controlled (directly or indirectly) by one or more entities that are already exempt from filing BOIR, as listed in Exemptions #1 to #21 above.

Exemption #23: Inactive Entity

An entity qualifies for this exemption if it meets all six of the following conditions:

1. The entity was in existence on or before January 1, 2020.
2. The entity is not engaged in active business.
3. The entity is not owned by a foreign person in any way.
4. The entity has had no change in ownership in the past 12 months.
5. The entity has not sent or received more than $1,000 in funds, directly or through any financial accounts, in the past 12 months.
6. The entity does not hold any assets or ownership interests in any other entity, either in the U.S. or abroad.

If your business does not qualify for any of the exemptions listed above, be sure to file your BOI report by January 1, 2025. Missing this deadline could lead to substantial penalties of $591 per day, up to a maximum of $10,000, and even up to 2 years of imprisonment. Don’t wait—file your BOI report with ComplyCTA now.