Understanding the Corporate Transparency Act: New Reporting Requirements for Businesses

The Corporate Transparency Act (CTA) has introduced significant changes to the way businesses operate in the United States. Effective January 1, 2024, certain companies are now required to file Beneficial Ownership Information (BOI) reports with the Financial Crimes Enforcement Network (FinCEN).

Who is Affected?

The CTA applies to a wide range of businesses, including:

• Domestic corporations
• Limited liability companies
• Foreign entities registered to do business in the US

However, some exemptions exist, such as for publicly traded companies, certain nonprofits, and large operating companies.

What Information is Required?

Reporting companies must provide detailed information about their beneficial owners, which are individuals who:

• Exercise substantial control over the company
• Own or control 25% or more of the ownership interest

For each beneficial owner, companies must report:

• Full name
• Date of birth
• Current residential address
• Unique identifying number
• A photocopy of identification

Reporting Deadlines and How to File

The reporting deadlines vary depending on when the company was formed. Existing companies must file by January 1,2025, while new companies have shorter deadlines. Reports must be filed electronically through FinCEN's Beneficial Ownership Secure System (BOSS).

The Importance of Compliance

Failure to comply with the CTA can result in significant penalties, including civil fines and criminal penalties. It is essential for businesses to review their company structure and determine if they’re subject to these reporting requirements. Consulting with legal counsel can help ensure full compliance.

The Corporate Transparency Act has introduced new transparency measures for businesses in the United States. Understanding the requirements and complying with them is crucial to avoid penalties and maintain a positive reputation. For more information or to speak with us about your legal issue, please contact our business attorneys in Ann Arbor at 734-665-4441.Schedule an initial consultation.