Our next two e-newsletters will inform you about the Corporate Transparency Act (CTA) and its significance for your business and filing requirements you will need to take.
Background and Overview
The Corporate Transparency Act (CTA) is a pivotal piece of legislation aimed at increasing transparency in business operations. Enacted as part of the Anti-Money Laundering Act of 2020, the CTA mandates that certain business entities report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). This legislation aims to combat illicit activities such as money laundering, terrorist financing, and other financial crimes by creating a comprehensive database of business ownership.
Key Deadlines
The CTA requires compliance by the following deadlines:
1. Existing Entities: Businesses formed or registered before January 1, 2024, must file their initial beneficial ownership information by January 1, 2025.
2. New Entities: Businesses formed or registered on or after January 1, 2024, must file their beneficial ownership information within 30 days of their formation or registration.
Who Must File?
The CTA applies to a wide range of entities, including corporations, limited liability companies (LLCs), and similar entities created by filing a document with a secretary of state or similar office. However, there are several exemptions, including:
- Large Operating Companies: Entities with over 20 full-time employees, more than $5 million in gross receipts or sales, and a physical presence in the U.S.
- Certain Regulated Entities: Banks, credit unions, securities issuers, insurance companies, and other entities already subject to federal or state regulation and reporting requirements.
Beneficial owners are defined as individuals who, directly or indirectly, exercise substantial control over an entity or own or control at least 25% of the ownership interests of the entity.
Why is this Important to Your Business?
Compliance with the CTA is crucial for maintaining the integrity and transparency of your business operations. Failure to comply can result in significant penalties, including fines and potential criminal charges. By understanding the requirements and taking timely action, you can ensure that your business remains in good standing and avoids any legal complications.
Next week, we will provide detailed instructions on how to complete the filing process, including a step-by-step guide and the necessary resources to comply with the CTA requirements. Stay tuned for more information!
Questions?
While TrueBlaze does not handle this filing for you, we are here to help you navigate questions and provide assistance. Feel free to contact us here. We encourage you to work with your attorney to meet the requirements.