The Corporate Transparency Act (CTA), a significant new federal regulation, introduces mandatory reporting requirements for many businesses operating in the United States. Designed to combat illicit financial activity, such as money laundering and shell company abuse, the CTA requires businesses to disclose specific ownership information to the Financial Crimes Enforcement Network (FinCEN). Compliance is not optional, and with the looming deadline of January 1, 2025, business owners must understand what is required to avoid steep financial penalties and legal consequences.

At Goyette, Ruano & Thompson, we are committed to ensuring our clients remain informed and compliant. In this article, we break down everything you need to know about the Corporate Transparency Act, including who it applies to, what information must be reported, how to file, and the risks of non-compliance.

The CTA was passed as part of the National Defense Authorization Act in 2021 to increase transparency in business ownership and combat financial crimes. It targets issues such as money laundering, the misuse of shell companies, and fraudulent activities. This new regulation represents a significant shift, especially for small and mid-sized businesses, by requiring the disclosure of beneficial ownership information (BOI).

The law applies broadly to businesses, though there are some exceptions. Companies with 20 or more full-time employees, over $5 million in gross revenue, and a physical presence in the United States are exempt. However, smaller businesses, including many LLCs and single-member entities, will need to comply. Businesses with ownership held by individuals who control 25% or more of the company are required to submit reports, including foreign owners who must provide valid identification, such as a passport.

The reporting requirements under the CTA are clear but must be followed precisely. Beneficial owners must disclose their full legal name, residential address, and a government-issued identification document, such as a passport or driver’s license. Business details, including the legal entity name and Employer Identification Number (EIN), must also be included. This information is submitted to FinCEN via a secure, web-based portal and will not be publicly available but accessible to law enforcement agencies when necessary.

The process of filing begins by visiting the FinCEN portal, gathering the required information, completing the BOI form, and submitting the report electronically. After submission, businesses will receive a confirmation number, which should be retained for records. It is important to note that there is no fee for filing, and any requests for payment should be treated with suspicion, as they are likely fraudulent.

Failure to comply with the Corporate Transparency Act carries significant penalties. Businesses that miss the reporting deadline or provide false information may face civil fines of up to $591 per day until compliance is achieved. Willful non-compliance could even lead to criminal penalties, including imprisonment. The financial and operational risks of failing to meet these requirements make compliance a priority for any business owner.

While it may seem like another regulatory burden, the CTA’s goal is to promote accountability and transparency, ultimately strengthening the financial and economic systems. For business owners, compliance not only avoids fines and penalties but ensures operational transparency and legal protection.

At Goyette, Ruano & Thompson, we are here to guide you through the process. Whether you are unsure of how the CTA applies to your business, need help gathering the required documentation, or want assistance with filing your BOI report, our team of experienced attorneys can help you navigate this new requirement efficiently and accurately.

The January 1, 2025 deadline is approaching, and non-compliance will not be overlooked. Contact our team today to schedule a consultation and ensure your business meets all the requirements of the Corporate Transparency Act.