What You Need to Know About the Corporate Transparency Act

The Corporate Transparency Act (CTA) is a new federal law aimed at combating financial crimes such as money laundering and fraud by requiring certain businesses to disclose information about their owners. This law affects small businesses, corporations, and limited liability companies (LLCs), making it crucial for business owners to understand its requirements.

Who Needs to Report? Any corporation, LLC, or similar entity registered in the U.S. must report its "beneficial owners" unless it qualifies for an exemption. A beneficial owner is anyone who exercises substantial control over the company or owns at least 25% of its interests.

Certain entities, like large corporations with over 20 full-time employees and more than $5 million in gross revenue, or entities already subject to other federal reporting, are exempt. However, most small and family-owned businesses will need to comply.

When is the Deadline? The initial deadline to report under the CTA is January 1, 2025. Any entity created or registered before January 1, 2024, must file its report by this date. For businesses formed after this date, the report is due within 30 days of registration.

What Needs to Be Reported? Entities must disclose information about each beneficial owner, including:

• Full legal name

• Date of birth

• Residential or business address

• A unique identifying number from an acceptable ID (such as a passport or driver’s license)

The report is filed with the Financial Crimes Enforcement Network (FinCEN), and failure to comply can result in significant penalties, including fines or even criminal charges.

If you are a small business owner with concerns about how the Corporate Transparency Act affects your estate plan or business structure, our estate planning law firm is here to guide you through the process. Reach out to us for for a referral to our network of compliance advisors and to ensure you stay compliant while safeguarding your business and family’s future.