The Corporate Transparency Act (CTA) and What You Need to Know

What is The Corporate Transparency Act

The Corporate Transparency Act (CTA) went into effect on January 1, 2024. The CTA requires reporting companies to provide a Beneficial Ownership Information (BOI) report to the Department of the Treasury Financial Crimes Enforcement Network (FinCEN) regarding information on beneficial ownership. All beneficial owners for reporting companies must be submitted on the BOI. A beneficial owner is someone who has significant control over the entity or has over 25% ownership in the business.

Who Does CTA Affect?

The CTA applies to LLCs, corporations, or any entity that was formed by filing a document with the secretary of state. Entities who are authorized to do business in the United States must also comply with the CTA. There are 23 entities that are exempt from the CTA reporting requirement.

Compliance With The CTA

BOI reports for reporting companies must be submitted before January 1, 2025, if your business was registered before January 1, 2024. Reporting companies created after January 1, 2024, and before January 1, 2025, will have 90 days to submit their BOI to FinCEN after receiving notice that their business has officially been created or registered. Reporting companies created on or after January 1, 2025, will have 30 days to submit their BOI to FinCEN after receiving notice that their business has officially been created or registered. After filing your initial report, there are no quarterly or annual follow-ups. However, you will need to update the BOI report within 30 days if there is a change to the report.

Penalties for Noncompliance

Noncompliance with the CTA can be costly. A reporting company that is out of compliance may incur civil penalties of up to $500 per day that the violation continues or criminal penalties, including imprisonment for up to two years and /or a fine of up to $10,000. Senior officers of an entity may be held accountable for compliance failures.

Stay Up to Date

Staying in compliance is crucial to ensuring business success. One perk of partnering with a PEO like Landrum HR Solutions is ensuring that you stay up to date on employment law regulations and topics. We will guide you through employment law issues to help ensure you are in compliance. Reach out to us for more information on how we can help you with your HR needs.