Navigating the Corporate Transparency Act (CTA)

Don’t let January 1, 2025 sneak up on you.

As of January 1, 2024, The Federal Government's Financial Crimes Enforcement Network (known as FinCen) has initiated the acceptance of beneficial ownership information reports, ushering in a new era of regulatory compliance for small business owners across the United States. Here's a comprehensive guide on how to file your corporate transparency report, ensuring adherence to the mandates set forth by the Corporate Transparency Act:

1. Determine Your Filing Obligation

   Begin by ascertaining whether your business falls under the purview of the CTA and is required to file a beneficial ownership information report. The CTA mandates that LLCs and corporations submit these reports unless they qualify for specific exemptions. Exempt entities include large operating companies exceeding 20 full-time employees in the U.S. with over $5 million in gross sales or receipts from U.S.-based sources, inactive entities established before January 1, 2020, but not engaged in active business, and certain non-profits, among others.

2. Identify Beneficial Owners

   If your business meets the criteria for reporting, identify individuals who qualify as beneficial owners—those with a 25% or more ownership stake or substantial control over the company. Engage legal counsel if needed to ensure accurate identification of beneficial owners, as defined by the CTA. Once identified, inform these individuals about the CTA's requirements and their role in the reporting process. Beneficial owners can either apply for a FinCEN Identifier and directly provide information to FinCEN or furnish the necessary details to the company for inclusion in the beneficial ownership information report.

3. Establish Reporting Procedures

   Develop procedures to manage and safeguard the personal information of beneficial owners, ensuring compliance with privacy regulations and maintaining data integrity. Implement protocols to update information promptly in case of changes in beneficial ownership or personal details. Organize a systematic approach to streamline the reporting process, minimizing errors and ensuring timely submissions.

4. File Your Report Online

   All companies subject to reporting requirements must file their beneficial ownership information reports online through FinCEN's designated platform. You have two options for filing:

   Utilize FinCEN's online platform: Access FinCEN's online interface to complete and file the BOIR directly within the platform. Follow the prompts to input the necessary details and upload identification documents for each beneficial owner.

Compliance Deadlines

Entities established before January 1, 2024, must submit their initial corporate transparency reports by January 1, 2025. For businesses established between January 1, 2024, and January 1, 2025, the filing deadline is within 90 days from the notification or public announcement of their formation, whichever occurs earlier.

By adhering to these steps and deadlines, small business owners can navigate the complexities of the Corporate Transparency Act, ensuring regulatory compliance while safeguarding the integrity of their operations.