CORPORATE TRANSPARENCY ACT

Starting January 1, 2024 most small businesses will have to report information regarding their beneficial owners. Small businesses will need to report to the Financial Crimes Enforcement Network (FinCEN). The passage of the Corporate Transparency Act (CTA) aims at updating and modernizing the mechanisms to combat money laundering, terrorism financing, and organized crime related financial crimes.

Who has to report? “Reporting Companies” are entities that are registered by filing a document with the secretary of state (or similar office). This includes LLCs and Corporations. Reporting companies will need to report information regarding the beneficial owners and company applicants.

What information is reported? Information about the company such as legal name, trade name, U.S. address, jurisdiction of format, and the tax ID. The beneficial owners and company applicants will need to provide their legal name, date of birth, residential address, and an ID number.

Who DOES not report? There are twenty-three types of entities that are exempt. One important exemption is for “large operating companies” which includes companies that have more than 20 full time employees, more than $5 million in annual gross receipts, and a physical operating presence in the US.

When must information be reported? Existing companies have until January 1, 2025. Companies formed in 2024 will have 90 days and those formed after 2024 will have 30 days.

More information can be found on the FinCEN website:  https://www.fincen.gov/boi