Navigating the Corporate Transparency Act: What You Need to Know
At Van Egmond & Heitlinger, APC, we understand the importance of staying up to date on regulatory changes that affect businesses. Specifically, one major change is the Corporate Transparency Act (CTA), which imposes new reporting requirements on certain entities. Therefore, in this article, we explain key aspects of the CTA so that you can understand how it may impact your business.
Understanding the Corporate Transparency Act
The Corporate Transparency Act, enacted as part of the National Defense Authorization Act, aims to prevent money laundering, terrorism financing, and other illegal financial activity. Consequently, it requires certain businesses—primarily small and medium-sized entities—to report their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN).
Reporting Deadlines and Requirements
Entities subject to the CTA, called “Reporting Companies,” must meet specific deadlines. For instance:
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New Reporting Companies formed between January 1, 2024, and December 31, 2024, must file a FinCEN report within 90 days of formation.
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Existing Reporting Companies formed before January 1, 2024, must file by January 1, 2025.
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Additionally, any updates or changes to reported information must be submitted within 30 days.
Therefore, meeting these deadlines is critical to avoid penalties.
Entities Subject to Reporting Requirements
Reporting Companies include:
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Corporations
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Limited liability companies (LLCs)
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Other entities formed by filing with a Secretary of State or equivalent official
Moreover, non-U.S. companies registering to do business in the U.S. must also comply. While certain regulated entities are exempt, many businesses must follow these reporting rules.
Defining Beneficial Owners
A beneficial owner is anyone who directly or indirectly:
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Owns at least 25% of the company’s ownership interests
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Exercises substantial control over the company
In addition, this includes individuals with senior officer roles or significant influence over important decisions, regardless of equity ownership.
Reporting Process and Penalties
Reports to FinCEN must include:
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General company information
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Details about beneficial owners (legal names, addresses, dates of birth, and unique identifier numbers)
Otherwise, failure to comply can lead to civil penalties, criminal fines, and even imprisonment. Thus, businesses should take reporting seriously.
How We Can Help
At Van Egmond & Heitlinger, APC, we help businesses navigate the complexities of regulatory compliance. For example, Colleen Van Egmond Delahanty and our team guide clients through the CTA to ensure accurate and timely reporting.
Furthermore, staying compliant with the CTA is essential to avoid penalties and maintain transparency. With our expertise, we help protect your business interests and keep you informed of regulatory changes.
Finally, for assistance or to discuss your compliance needs, contact us at (209) 876-8886.