What Does the Corporate Transparency Act (“CTA“) Mean for Your Business?

As of January 1, 2024, many companies are required to report their beneficial ownership information to FinCEN. If a company was formed or registered to do business in the US by filing a document (e.g., Articles of Organization) with the Secretary of State or a similar office, then the company must report its beneficial ownership information to FinCEN, unless an exception applies. The exceptions can be found in the Small Entity Compliance Guide (the “Guide”) at fincen.gov/boi.

• New companies formed on or after January 1, 2024 must report their information within 90 calendar days of receiving notice that the company’s registration is effective.
• Starting on January 1, 2025, the timeline for filing for new companies will be shortened to 30 calendar days following notice that the creation or registration is effective.
• Companies that were formed before January 1, 2024 must report their information by January 1, 2025.

Reporting Requirements

The information that must be reported includes details about company beneficial owners and company applicants. Generally speaking, a beneficial owner of a company is an individual who, directly or indirectly, (i) owns or controls at least 25% of the ownership interests of the company or (ii) exercises substantial control over the company. Persons who have substantial control over the company include, but are not limited to:

• Senior officers
• Individuals who can appoint or remove senior officers or a majority of the board of directors
• Important decision-makers
• Individuals who have any other form of substantial control over the company.

If a company is created or registered to do business in the US on or after January 1, 2024, the company must also report information about its company applicants. A company applicant is (i) the individual who directly filed the documents that created or registered the company or (ii) the individual who was primarily responsible for directing and controlling the filing of the creation or registration document.

In addition to reporting information about its beneficial owners and company applicants, a company must also report information about itself. This information includes the company’s:

• legal name;
• “doing business as” name;
• US address;
• jurisdiction of formation or first registration if it is a foreign reporting company; and
• taxpayer identification number.

Reportable information about beneficial owners includes:

• name;
• date of birth;
• address,
• identifying number; and
• issuing jurisdiction from an acceptable identification document (e.g., driver’s license, passport, ID, etc.), and an image of the identifying document.

If there are any changes or inaccuracies to the submitted report, then the submitted report must be updated. Changes and inaccuracies include, but are not limited to, changes in beneficial ownership, typographical errors and address changes. Updated reports are due within 30 calendar days after a change occurs or when the company becomes aware or has reason to know of an inaccuracy.

Severe civil and criminal penalties can be imposed for non-compliance with the CTA. Accordingly, all companies and company owners must be diligent in complying with the CTA.

In addition to the CTA, which is imposed at the Federal level, states may impose their own similar reporting regimes. For example, New York State’s LLC Transparency Act, which has its own separate reporting mechanisms and rules, is expected to become effective as of January 1, 2026.

Please refer to the Small Entity Compliance Guide (the “Guide”) at fincen.gov/boi for more details about the CTA.

The Corporate Transparency Act (“CTA”) introduces significant reporting requirements and responsibilities for businesses. Don’t navigate these regulations alone. Contact us for guidance and to ensure your business meets all compliance obligations effectively and on time.