Posted in Asset Protection,Business & Corporate Law,Wills, Trusts & Estate Planning

The Corporate Transparency Act (CTA), effective from January 1, 2024, brings significant changes to the regulatory landscape of small businesses. The law aims to combat financial crimes like money laundering and tax fraud. Here’s a brief synopsis of what small business owners need to know:

Who Needs to File:
Under the CTA, businesses, including LLCs and corporations, must file Beneficial Ownership Information (BOI) Reports unless they qualify for specific exemptions. Exemptions include publicly traded companies and certain regulated industries.

Identifying Beneficial Owners:
A beneficial owner is anyone who owns or controls at least 25% of the company or exercises substantial control. This includes senior officers and decision-makers.

Details Required in the BOI Report:
Each beneficial owner’s report must include their full legal name, birthdate, home address, an identifying number from a government-issued document (e.g. driver license or passport), and an image of the government-issued document.

Filing Deadlines and Updates:
Deadlines for filing BOI Reports vary based on the company’s creation date. The deadline is January 1, 2025 for entities created prior to 2024. For entities created in 2024, the deadline is 90 days after creation. For entities created in 2025, the deadline is 30 days after creation. There are no annual reporting requirements. However, updates must be made within 30 days of any changes.

Penalties for Non-Compliance:
Failure to file or reporting false information can lead to civil or criminal penalties, including fines and imprisonment.

Compliance with the CTA is crucial for small businesses. You can seek guidance from professionals or refer to FinCEN’s BOI website located here: BOI Reports.