How the Corporate Transparency Act Reporting Requirements Affect Your Business
Written by Amanda Jelks, 04/17/2024
The Corporate Transparency Act (CTA), effective as of January 1, 2024, is a new requirement for business owners and aims to enhance transparency in business ownership, combating illicit financial activities.
Essentially, the government wants to know who the people are that either own or control small businesses. These people are referred to as "beneficial owners"
Here's a brief guide to help your business navigate the key aspects of this CTA.
A: Who does this apply to?
Short answer - almost everyone. All corporations, LLCs, and any other businesses created through the filing of documents with a secretary of state.
Certain organizations are exempt from reporting, including governmental authorities, specific banks and credit unions, money services businesses, investment companies or advisors, venture capital fund advisers, state-licensed insurance producers, tax-exempt entities, regulated public utilities, and large companies (i.e., they have more than 20 full-time employees in the U.S., more than $5MM in gross receipts/sales, and have a physical office in the U.S.). A more detailed list may be found here.
What do I have to do?
Submit a Beneficial Ownership Information (BOI) report online to the Financial Crimes Enforcement Network (FinCEN), a bureau of the US Department of Treasury. There is no cost for filing the report. The report can be found online at www.fincen.gov/boi and must be submitted online. You will receive confirmation of receipt once the completed report is filed. This form requires the disclosure of all beneficial owners, which are individuals who, directly or indirectly:
A. Exercises substantial control over the company; or
B. Owns or controls at least 25 percent of the ownership interests. Substantial control has broad definition which includes any of the four general criteria:
(1) an individual who is a senior officer (president, CFO, CEO, COO, etc.)
(2) the individual has authority to appoint or remove certain officers or a majority of directors of the reporting company;
(3) the individual is an important decision-maker; or
(4) the individual has any other form of substantial control over the reporting company.
A: When do I have to submit the report?
Businesses formed before January 1, 2024, have until January 1, 2025, to file the beneficial ownership report to FinCEN.
Businesses formed on or after January 1, 2024, must file a report within 90 calendar days after receiving actual or public notice, whichever is earlier, that your company has been created (e.g., issuance of Article of Organization by the State or Articles of Incorporation).
Businesses formed on or after January 1, 2025 will have 30 calendar days. Updates or corrections to BOI must be reported within 30 days
A: How often do I have to submit the report?
This is not an annual requirement. You will submit the report only once, unless you need to update or correct information on the report.
A: What happens if I don’t submit the report or updates to it?
The willful failure to file a report or update BOI, or the willful attempt to provide false BOI, may result in civil penalties up to $500 for each day the violation continues or criminal penalties including up to two years of imprisonment and/or a fine of up to $10,000. Senior officers of an entity that fails to file a required BOI report may be held accountable for that failure.
A: Do I need a lawyer to help with this?
No, this is something you can do yourself. We are, however, happy to assist you with the process whether that means answer any additional questions you may have or preparing the report for you. If you want to discuss this process further, please contact us at (423) 602 2230
A:Where can I find more information?
The government’s compliance guide may be found at the following pdf link: