What Business Owners Need to Know About the Corporate Transparency Act

/ Freidel & Associates, LLC/

The Corporate Transparency Act: A Snapshot

The Corporate Transparency Act (CTA) was signed into law on January 1, 2021, as part of the National Defense Authorization Act. It introduces the Beneficial Ownership Information (BOI) Rule that applies to many domestic and foreign entities, which will take effect starting January 1, 2024. The rule mandates entities to report their beneficial owners and company applicants to the Financial Crimes Enforcement Network (FinCEN). This information will form a national registry, accessible to authorized users, to identify individuals with ownership interest and significant control over a company.

Here's what you need to know about filing a Beneficial Ownership Information Report (BOIR):

·       Corporations, LLCs, and other entities created by filing documents with a secretary of state or similar office - reporting companies - are required to submit details such as the names, dates of birth, home addresses, and ID numbers of their beneficial owners.

·       Only companies that are formed in 2024 are required to disclose details about the individuals who played a role in their formation and registration within the United States, known as company applicants.

·       Entities created before January 1, 2024, have until December 31, 2024, to file their report. Entities created in 2024 are required to file their report within 90 days of their creation. Those entities created on or after January 1, 2025, must file their initial report within 30 days of establishment.

·       Reporting companies are required to submit updated reports within 30 days of any changes to the details of their beneficial owners. Such changes requiring an updated report could include an owner moving to a new address or the appointment of a new senior officer.

·       Non-compliance and provision of false information incur substantial penalties including $500 per day until the violation is solved (capped at $10,000) and/or imprisonment of up to 2 years.

Businesses must be prepared to report accurate information on beneficial owners and company applicants, and to promptly update this information as changes occur. Now’s the time to establish a plan for timely reporting! Please contact us for any questions you may have regarding this legislation, and how it may apply to you. We plan on helping our clients comply with these new requirements and will be prepared to help you get compliant in 2024!

We have partnered with Secure Compliance (which Paul Freidel co-founded) to offer technology solutions both for our firm and for our clients in this area. Visit www.securecompliance.us to learn more about the CTA.