18 Nov The Corporate Transparency Act: A Follow-up
In January of 2024, we published an article about the Corporate Transparency Act (CTA), which was written by our attorney client, Rudy Minasian.
Here’s a recap of what we shared about the Corporate Transparency Act back in January. If your business is a corporation, LLC, or similar entity formed in the U.S., you may need to report your beneficial ownership information to FinCEN to comply with the CTA. This involves identifying individuals with significant control or ownership in the company and submitting their details by the applicable deadline
A reminder: make sure you’re in compliance with the Corporate Transparency Act!
At this time, we wanted to remind our community of small business owners that the deadline for filing the beneficial ownership information is fast approaching. There are big fines for noncompliance! The deadlines for filing under the CTA depend on when the business was created.
For Entities Formed or Registered Before January 1, 2024:
These entities must file their beneficial ownership information by January 1, 2025.
For Entities Formed or Registered On or After January 1, 2024:
These entities must file their beneficial ownership information within 30 days of their formation or registration.
Report any changes in beneficial ownership
Additionally, if there are any changes in beneficial ownership, the business must report the update within 30 days of the change.
Check with Small Business Resources | FinCEN.gov. to see if you need to comply with the CTA. The CTA generally applies to corporations, limited liability companies (LLCs), and similar entities formed in the U.S. or foreign entities registered to do business in the U.S. There are certain exemptions to the CTA’s reporting requirements, including:
- Large operating companies with over 20 full-time U.S.-based employees, over $5 million in gross receipts or sales, and a physical presence in the U.S.
- Certain regulated entities (e.g., banks, credit unions, insurance companies, securities firms).
- Sole proprietorships and certain small, unincorporated partnerships may not need to report if they do not meet the criteria of corporations or LLCs.
Based on the above information, if you think you need to file, here’s what you need to do:
1. Identify Beneficial Owners
You need to identify any individuals who have substantial control or own 25% or more of the company. This includes direct or indirect ownership, voting rights, or other means of control.
2. Prepare Required Information
Gather the following details for each beneficial owner:
- Full legal name
- Date of birth
- Residential address
- Identification number (from driver’s license, passport, etc.)
3. Complete Filing with FinCEN
You will need to file with the Financial Crimes Enforcement Network (FinCEN). This information is confidential and will only be accessible to specific government entities and financial institutions for compliance and investigative purposes.
Don’t forget that failing to comply may lead to fines (up to $500/day, max $10,000) and potential imprisonment in cases of intentional noncompliance.
