The Corporate Transparency Act (CTA) mandates businesses to disclose beneficial ownership information to enhance transparency in corporate ownership and combat money laundering, terrorist financing, and other illicit activities.

Effective January 1, 2024, all corporations, LLCs, and similar entities must file a report unless exempted.

Certain corporations, limited liability companies (LLCs), and similar entities are required to report information about their Beneficial Owners to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury.

A beneficial owner is not always the person listed on the company documents. It’s an individual who meets any of the following criteria:

• Owns 25% or more of the company’s shares
• Exercises substantial control over the company, even without direct ownership
• Receives substantial economic benefits from the company

Some entities are excluded from the reporting requirement, such as:

• Sole proprietor businesses (unless SMLLC)
• Rental property sole owners (unless SMLLC)
• Farmers (unless SMLLC)
• General partnerships that are not LLC’s
• Grantor trusts
• Charitable trusts
• Irrevocable trusts
  

Large Company Reporting Exemption

• More than 20 full time employees in the United States, and
• Physical office in the United States, and
• Prior year US tax return reflecting at least $5,000,000 in revenues.
  

Over 30 million small businesses are expected to be impacted by the Corporate Transparency Act. If you own or manage a business registered in the United States, you may be required to file a Beneficial Ownership Information Report (BOI) with the Financial Crimes Enforcement Network (FinCEN).

Failure to comply with the reporting requirements of the CTA can result in significant penalties, including civil monetary penalties and potential criminal penalties for willful violations.

‍Individuals who violate the regulations may face a civil penalty of up to $500 per day until the violation is corrected. They could also be subject to a criminal fine of up to $10,000 and/or imprisonment for up to two years.

Failure to comply with the reporting requirements of the CTA can result in significant penalties, including civil monetary penalties and potential criminal penalties for willful violations.

‍Individuals who violate the regulations may face a civil penalty of up to $500 per day until the violation is corrected. They could also be subject to a criminal fine of up to $10,000 and/or imprisonment for up to two years.