The Corporate Transparency Act (CTA) is a hot topic this year, and it’s crucial for business owners to stay informed. This legislation, passed as part of the Anti-Money Laundering Act of 2020, is now fully in effect, and compliance deadlines are here. Here’s a quick breakdown of what’s happening:
What is the Corporate Transparency Act?
The CTA requires “reporting companies” to disclose information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). This is aimed at preventing money laundering, fraud, and tax evasion by increasing corporate transparency.
Who Needs to File?
If your business is a corporation, LLC, or similar entity registered in the U.S. or doing business in the U.S., you may need to file. Exceptions include:
- Large companies with more than 20 full-time employees and over $5 million in gross receipts.
- Certain nonprofits, publicly traded companies, and regulated entities.
What Information is Required?
Businesses must report:
- The name, birthdate, address, and ID type/number of each beneficial owner (anyone with at least 25% ownership or substantial control).
- Filing deadlines depend on when your business was formed:
- Existing companies (prior to 2024): File by January 1, 2025.
- New companies (formed after 2024): File within 30 days of formation.
Why Does This Matter?
Failure to comply can result in:
- Fines up to $500/day.
- Criminal penalties, including $10,000 fines and jail time.
What Should You Do Now?
- Confirm if your company qualifies as a “reporting company.”
- Gather the required information for beneficial owners.
- Set up systems to ensure ongoing compliance for future updates.
The CTA adds a layer of responsibility for many small businesses. If you have questions or need assistance, our team is here to ensure you’re compliant and avoid costly penalties. Visit the FinCen site or contact us today for help with your reporting requirements!
