Originally published on June, 4, 2024, updated on October 1, 2024.
What is the Corporate Transparency Act (CTA)?
The Corporate Transparency Act, passed by Congress in 2021, created a new beneficial ownership reporting requirement for companies. This initiative aims to enhance transparency by disclosing the individuals who own or control reporting entities, aiding in the detection and prevention of money laundering, fraud, and other unlawful activities.
Key Takeaway: If you’re a business owner, your company might need to file a BOIR, depending on its formation date and certain exemptions.
Watch the Video Summary:
Watch our quick video summary to get up to speed on the key points of the Corporate Transparency Act and its beneficial ownership reporting requirements.
Who Needs to Report Under the CTA?
Reporting Companies are defined as:
- Domestic Entities: Any company that has been formed by registering with the Secretary of State or a similar office.
- Foreign Entities: Any foreign entity that has registered to do business in the United States by filing a document with the Secretary of State or similar office.
Unless exempt, these companies must file their BOIR.
23 Exemptions: Some companies may be exempt from reporting if they fall into one of the CTA’s 23 exemptions, which primarily involve highly regulated industries like finance, insurance, and companies with revenues exceeding $5 million.
Deadlines to Remember
If your entity was formed before January 1, 2024:
- The initial BOI report must be filed by January 1, 2025.
If your entity was formed in 2024:
- You have 90 days from the date your creation or registration is effective to file your report.
If your entity is formed on or after January 1, 2025:
- You will have 30 days from the date of formation or registration to file your report.
Reminder: Filing is free and can be done through FinCEN’s online electronic filing system. Don’t miss these deadlines to stay compliant!
What Information Must Be Reported?
Reporting companies must provide information about:
- Themselves
- Beneficial Owners
- Company Applicants
Details to be Reported:
- Tax Identification Number (TIN or SSN): Depending on the nature of the business.
- Forms of Identification for Beneficial Owners and Company Applicants: Such as a driver’s license or passport copy.
Note: Beneficial ownership information refers to the identifying details of individuals who directly or indirectly own or control the company. This includes significant owners, officers, or those exercising substantial control over the entity.
What is Beneficial Ownership Information (BOI)?
BOI includes the identifying information of individuals who directly or indirectly own or control a company. This level of transparency allows the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) to help detect illegal activities such as money laundering or fraud.
Pro Tip: If you’re unsure about your status under the CTA, consult with a legal professional to assess whether your business is subject to this reporting requirement.
Navigating the Reporting Process
The reporting process is intended to be straightforward, with FinCEN’s electronic filing system being free and user-friendly. However, it’s crucial to ensure that the report is accurate and complete to avoid penalties for non-compliance.
Need Assistance? We’re Here to Help!
Momentus Legal is here to guide you through the CTA reporting process. Whether you have questions about corporate formation, governance, or compliance with the new CTA requirements, we can assist you every step of the way.
Reach out to our team for guidance:
- Roddy Stieger: Roddy.Stieger@momentuslegal.com
- Rayna Sparkes: Rayna.Sparkes@momentuslegal.com
Stay Informed and Compliant
Understanding and complying with the Corporate Transparency Act is essential for your business’s transparency and success. Make sure to stay ahead of the deadlines, know what information you need to report, and seek legal guidance if you need it.
If you’re looking for more details or want to stay updated on the CTA and other legal requirements, connect with Momentus Legal and follow us on LinkedIn for more insights.
Video Transcript for Reference
In 2021, Congress passed the Corporate Transparency Act, which created a new beneficial ownership reporting requirement for companies. Beneficial ownership information refers to identifying information about individuals who own or control, directly or indirectly, a company. A reporting company includes any domestic company that was formed by registering with the Secretary of State or a similar office. This also includes foreign entities that register to do business in the United States by filing a document with the Secretary of State or similar office. If your entity was formed before January 1, 2024, then you will have until January 1, 2025, to file your initial report. If your entity was formed in 2024, you have 90 days from your filing date to file your report, and entities formed in 2025 will have 30 days to file their report. This form is free to file through FinCEN’s online electronic filing system.
