Complying with the Corporate Transparency Act: A Light-hearted Guide to Serious Business

By: Waldemar Vega

So as the clock struck midnight and January 1, 2024 was officially upon us, the Corporate Transparency Act (CTA) swept in with it not just the usual New Year’s Day fanfare, but a brave new world for corporations, LLCs, and limited partnerships. Instead of “just being,” this gift within the 2020 National Defense Authorization Act made the act of existence more dramatic of an affair than a Manhattan cocktail party with confetti on New Year’s Eve yet, with FinCEN serving as the uninvited agency guest that demands to know whether the silk tux (or sequined gown) is purchased or rented. To start a business entity? Not unlike an ordinary tax filing, only spiked with a dash of Kansas City Shuffle and a sidecar of conga line. It’s not “Mother May I?” as much as “You Must,” chased with a burst of bureaucratic zest.

The "What" and "Why" of the CTA: Unmasking the Corporate Veil

Imagine if the CTA could be compared to a nosy neighbor who won't stop asking who's at your dinner party. Each time an LLC, corporation or limited partnership is formed or converted, they would be required to report to FinCEN the identities of its beneficial owners. You’d be effectively required to RSVP to the federal government: We want to know who’s really running the show in your business. It’s performance art, in a sense, with a reach wide enough for any number of skeletons in a collective closet whether you knew they were there or not.

"But I'm Just a Small Fish!" – Why It Matters

You might think that your small LLC, where you and your “friends” make organic artisanal gluten-free popsicles for the trendy pets of Long Island, isn't going to be a blip on the CTA’s radar.

You’d be wrong.

Your entity, as well as the more traditional corporations, form an incredibly diverse regulatory pond. The seatbelt might feel silly on a quick trip to the corner store, rather than a smarter long haul on the open road, but it’s there to save your life. And while it might be transparent, it can also get rather messy.

The How: Compliance Made Easier Than Assembling IKEA Furniture

Speaking of compliance, relax – this isn't as scary as all those government forms. It's no Rosetta Stone. No assembly of an IKEA hutch. And there are fewer leftover screws. At its mostComplying with the Corporate Transparency

Act: A Light-hearted Guide to Serious

Business basic, you simply have to outline your company's beneficial owners (those who own or control your company). Think of it like creating a profile for a dating app. It's not romantic, but there are lots of legal implications.

The Silver Lining: Safer Business For All

While this may seem like one more thing to worry about, it has a purpose: By shining light on these beneficial owners, the CTA hopes to deter money laundering and other financial crimes, ensuring a safer, more secure business environment for entrepreneurs who aren't trying to game the system. You could think of it as a bouncer who keeps the riff-raff out of your favorite business.

In Conclusion: A Spoonful of Compliance Helps the Business Run Smooth

The CTA might seem like one more set of boxes to check, but it’s such a squeaky simple process that’s it’s just common sense for maintaining a transparent and secure business. So, let’s do our best “surprised by a tax refund” or “found money in my old jeans” imitation and enthusiastically embrace it even more than we do sextuplets. A compliant company runs smooth, stays out of trouble and it lets you sleep at night. No FinCEN for me please!

Reporting companies created before Jan. 1, 2024 have until Jan. 1, 2025 to file their initial report. Companies created in 2024 will have 90 days from the date they were created or registered to file their report. Companies created in 2025 must file their report within 30 days of being created.

You can find more information here: https://www.fincen.gov/boi