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What is the Corporate Transparency Act (CTA)?

The Corporate Transparency Act (CTA) is a significant piece of US legislation aimed at preventing and combating financial crimes such as money laundering, terrorism financing, and tax evasion. The CTA requires certain US businesses to provide detailed information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), a bureau of the US Department of the Treasury.

Who are Beneficial Owners?

A beneficial owner, as defined by the CTA, is any individual who owns at least 25% of the company or exercises substantial control over it. This could include senior officers like CEOs or individuals who have significant influence over the company's operations.

What is the Beneficial Ownership Information (BOI) Report?

The BOI report is a document that certain US businesses must file under the CTA. This report includes detailed information about the individuals who own, control, or significantly influence the company. The purpose of the BOI report is to provide transparency about the true ownership of businesses and deter criminals from using complex company structures to hide illicit activities.

Who Needs to File a BOI Report?

Not all businesses need to file a BOI report. The requirement primarily applies to smaller private companies and entities like LLCs and corporations. Publicly traded companies and other entities that already operate under significant regulatory oversight are generally exempt. Specific exemptions are also provided for larger companies meeting certain criteria, such as having more than 20 full-time employees in the US and over $5 million in annual revenue.

When Do I Need to File a BOI Report?

• New businesses: If you start your business after January 1, 2024, you'll need to submit your owner information within 90 days.
• Existing businesses: If your business was set up before January 1, 2024, you have until December 31, 2024, to file your information.

How to File a BOI Report?

Businesses required to file a BOI report must register with FinCEN and submit their information electronically. The report must include details such as the legal names and addresses of the beneficial owners, their date of birth, and an identifying number from a legal document like a passport or driver's license.

What Happens if I Don't Comply?

Failure to comply with the CTA, including not filing the BOI report or filing inaccurate information, can result in severe penalties, including hefty fines and possible criminal charges.

What Do I Need to Do?

Here's a simple breakdown of the steps you need to take to comply with the CTA:

• Collect information: Gather details about anyone who owns or controls your company. This includes names, addresses, and how much of the company they own.
• File the report: Submit this information to FinCEN. If you're starting a new business after the law takes effect, do this within 90 days of opening your doors. For existing businesses, make sure you file by the end of 2024.
• Keep records updated: Any changes in ownership or control must be reported to FinCEN within 30 days.

Next Steps

Understanding the Corporate Transparency Act (CTA), FinCEN, and the BOI reporting requirements is crucial for business owners to ensure compliance and avoid penalties. Corporations Today provides a one-time, immediate compliance service to handle the initial BOI report filing with FinCEN, as well as ongoing compliance management to monitor for updates and remind businesses of important compliance and state filing deadlines.