What Businesses Need to Know About the Corporate Transparency Act

Beginning on January 1, 2024, businesses across the US must comply with new reporting rules under the Corporate Transparency Act (CTA). This act, passed as part of the Anti-Money Laundering Act of 2020, requires certain corporations and similar entities to report their ownership and control information to the Financial Crimes Enforcement Network (FinCEN).

If your business is structured as a corporation, LLC, or limited partnership, chances are you will need to file a report. Here’s what you need to know:

What information needs to be reported? 

Under the CTA, businesses are required to report their “beneficial ownership information” (BOI). This includes:

• Identity of all beneficial owners who directly or indirectly own 25% or more of the company 
• Identity of one individual who has significant responsibility to control or manage the entity
• The applicant—the person who files the document that forms the entity

In addition, businesses must report any changes to this information within 30 days of the change.

Which businesses need to comply?

While banks, securities brokers, insurance companies and a few other entity types are exempt, most corporations and similar US-based entities must comply, including those with foreign owners. The only exception would be if your entity already reports similar information under existing federal or state reporting laws.

How to file your BOI report 

**It is very important to know that you must file your BOI report before 1/1/25 if your entity was created prior to 1/1/24.** 

Starting on January 1, 2024, qualifying businesses can file their reports online at boiefiling.fincen.gov/fileboir.

Important deadlines include:

• Entities created before 1/1/24 must file by 1/1/25
• Entities created after 1/1/24 but before 1/1/25 have 90 days to file 
• Entities created on or after 1/1/25 have 30 days to file

Penalties are steep

Failure to comply can lead to penalties of $500 per day (up to $10,000) or even imprisonment up to 2 years.

Given the relatively short timeline and steep penalties, businesses should begin preparing now by gathering ownership information.