Introduction to the Corporate Transparency Act (CTA)

In January 2024, the Corporate Transparency Act (CTA) was implemented, introducing a new federal filing requirement for many corporations and limited liability companies (LLCs). This act aims to combat financial crimes by eliminating the anonymity of shell companies used for illegal activities. However, it also affects legitimate business owners.

Who Needs to Comply?

The CTA applies to entities formed by filing with a state's secretary of state, such as corporations and LLCs, but not to sole proprietors. Exceptions include large businesses with over 20 employees and $5 million in revenue, certain regulated entities like banks, and nonprofits.

Defining Beneficial Owners

The law focuses on identifying "beneficial owners" of businesses, who are individuals with significant control or ownership. The process is straightforward for companies with clear ownership structures but can be complex for those with layered ownerships.

Filing Requirements for New Businesses

If you start a business in 2024 or later, you must file a report with the Financial Crimes Enforcement Network (FinCEN) within 90 days, detailing each beneficial owner's name, birthdate, address, and an identifying number from an approved document.

Existing Businesses and Reporting

Businesses formed before 2024 must also file a beneficial owner report by January 1, 2025, if they don't qualify for exemptions. This requirement doesn't extend to company applicants for existing entities, only beneficial owners.

How to File Your Report

Submissions go to the Beneficial Ownership Secure System (BOSS), a new federal database, without any filing fees. The information is confidential, accessible only to authorized government bodies.

Integrating BOSS Reporting into Business Formation

BOSS reporting is now a mandatory step in the business formation process, separate from state and local filings.

Conclusion and Additional Resources

Understanding and complying with the CTA is crucial for new and existing business owners. For detailed guidance, consider attending workshops or consulting step-by-step filing resources.

Other Resources

• Feb 2024 Workshop: What Business Owners Need to Know About The Corporate Transparency Act
• FinCEN BOI E-Filing System
• Step-by-step walk through of filing a BOI

DISCLAIMER: The financial figures presented in this blog are for illustrative purposes only and should not be construed as financial advice. Actual results may vary depending on individual circumstances and market conditions. Readers are encouraged to consult with a qualified financial advisor or accountant before making any financial decisions based on the information provided in this blog.