Corporate Transparency Act - Is Your Company Ready?
Overview:
The Corporate Transparency Act (the “CTA”), which went into effect January 1, 2024, requires “reporting companies” in the United States to disclose information regarding its beneficial owners, i.e., the individuals who ultimately own or control a company, to the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”).
A beneficial owner of a reporting company is an individual who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise (i) exercises substantial control over the entity; or (ii) owns or controls at least 25% of the equity interests of the entity.
Who Must File:
Every company that are not considered "exempted entities" must file. Examples of exempted entities include banks, credit unions, SEC-reporting companies, insurance companies and public accounting firms. A specific exemption exists for an entity that (i) employs more than 20 employees on a full-time basis in the United States; or (ii) filed in the previous year Federal income tax returns in the United States demonstrating more than US$5 million in gross receipts or sales.
When to File:
Existing reporting companies that were formed before January 1, 2024, must file their initial reports no later than January 1, 2025. Newly-formed reporting companies created after January 1, 2024, must file their initial reports 90 days after receiving notice of their creation or registration.
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After the initial filing, there is no annual or quarterly filing requirement; however, reporting companies have 30 days to amend their report to include updated information. Additionally, reporting companies must correct inaccurate information previously filed within 30 days of discovering the error.
Note that failure to file or providing false information can result in civil penalties up to $500 for each day that the violation continue. Violators are also subject to criminal penalties of imprisonment of up to two years and fines of up to $10,000.
How to File:
If a company is required to report its beneficial ownership information to FinCEN, the company will do so electronically through a secure filing system available via FinCEN’s website. The FinCEN BOI E-Filing System is available at https://boiefiling.fincen.gov/.
At SLS Business Solutions, we specialize in helping businesses like yours navigate the licensing maze, ensuring that all your permits and licenses are up to date while minimizing the risk of costly fines and interruptions. Our services are designed to help companies stay compliant without the administrative burden.