Corporate Transparency Act (CTA): What You Need to Know for 2024

What is the Corporate Transparency Act (CTA)?

The CTA mandates that specific U.S. entities disclose their beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN). A beneficial owner is defined as someone who:

• Owns or controls 25% or more of the company’s ownership interests.
• Exercises substantial control over the company (e.g., CEO, manager).

This measure prevents the misuse of anonymous entities for illegal activities.

Who Must File a BOI Report?

Entities required to file include:

• Corporations and LLCs registered in the U.S.
• Foreign entities registered to operate in the U.S.

Exemptions:

Certain businesses are exempt, including:

• Large companies with over 20 full-time employees and $5 million+ in revenue.
• Inactive entities formed before January 1, 2020, meeting specific criteria.
• Certain nonprofits and financial institutions.

Deadlines for Filing

• Existing Entities: File by January 1, 2025.
• New Entities: File within 30 days of formation starting January 1, 2024.

What Information Must Be Reported?

Entities must disclose:

Entity Information:

• Legal name
• Principal business address
• Formation jurisdiction
• Taxpayer Identification Number (TIN)

Beneficial Owner Information:

• Full legal name
• Date of birth
• Residential address
• Identification document (e.g., passport, driver’s license)

How to File a BOI Report

1. Gather Required Information: Collect details about your entity and its beneficial owners.
2. Access the Filing Portal: Visit the FinCEN BOI Filing Portal.
3. Submit the Report: Complete all fields and upload documentation electronically.

Penalties for Non-Compliance

Non-compliance can result in severe penalties:

• Civil Penalties: Up to $500 per day for late or incomplete filings.
• Criminal Penalties: Fines up to $10,000 and/or up to 2 years imprisonment for willful violations or false reporting.

How the CTA Affects Your Business

The CTA introduces new administrative requirements, especially impacting small and mid-sized businesses. Compliance is crucial to avoid penalties and maintain operational transparency.

Next Steps: How to Stay Compliant

1. Determine Filing Requirements: Review exemption criteria.
2. Collect Beneficial Ownership Data: Ensure accurate information.
3. Set Filing Reminders: Existing entities—January 1, 2025; New entities—within 30 days of formation.
4. Consult Experts: Seek professional help if needed to ensure compliance.

We’re Here to Help

Navigating the Corporate Transparency Act can be complex. Our experienced team is ready to assist with BOI report preparation and compliance strategies.
Contact us today to schedule a consultation and ensure your business meets all CTA requirements.

Sources:

Based on information from the Financial Crimes Enforcement Network (FinCEN) and IRS guidelines. Visit the official FinCEN website for more details.