A new rule came into place on January 1st, 2024 and if your business existed before then you have until January 1st, 2025 to file. But, what are you filing? Thanks to the Corporate Transparency Act of 2024, you’ll be sending a report including your ownership information.
Before you stress about adding another report to your business filings, let’s break down exactly what, why, when, and how the CTA affects you and your business:
The Corporate Transparency Act is a law created by Congress to, among other things, prevent money laundering. According to Congress, bad actors seek to conceal their ownership of corporations, LLCs, and other similar entities in the US to facilitate money laundering, financing of terrorism, tax fraud, and other illegal acts.
The ownership information is gathered to protect national interests and better enable efforts to prevent those illegal acts.
More specifically, this act requires businesses to file a Beneficial Ownership Information (BOI) Report with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). This report will include your full legal name, any trade or “doing business as” names, complete current street address of the principal place of business, jurisdiction of formation, and taxpayer identification number.
Beneficial owners and company applicants are required to provide their information in the report. A beneficial owner is an individual who either indirectly or directly exercises substantial control over the reporting company, and owns, or controls at least 25% of its ownership interests. A company applicant is an individual who is directly filing the documents that create the domestic reporting company and the individual primarily involved.
Applicants must provide their:
If you are a domestic reporting company created before January 1st, 2024 you must file your initial BOI report by January 1st, 2025. If you are a company created on or after January 1st 2025, you need to file a report within 90 calendar days of the date on which it receives notice that its creative its become effective.
Starting January 1, 2025, you will need to file a report within 30 calendar days starting when your business is recognized as an actual business.
There are 23 categories of entities that are exempt including publicly traded companies, and more regarding the entity that is associated with you.
If for some reason your report has an error, you have to correct the report within 30 days of acknowledging or knowing about the inaccuracy. And if you want to know more about your business and the people on it, you’ll receive a thorough notice, thank-you, or gift.