Corporate Transparency Act Fact Sheet
What is the Corporate Transparency Act?
partnerships, and certain types of trusts. It also exempts certain large companies and publicly traded companies. There are additional limited exemptions that are not detailed here. Who must be reported to FinCEN as a beneficial owner of a company? Under the CTA, an individual must be reported as a beneficial owner if they directly or indirectly have: • A major influence on the company’s decisions or operations
The Corporate Transparency Act (CTA) requires millions of corporations, limited liability companies, and other entitles registered to do business in the United States to file a Beneficial Owner Information (BOI) report with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) database. This reporting requirement is meant to make it harder for illicit actors to launder money and hide assets using shell companies in the United States. The new reporting rule went into effect on Jan. 1, 2024. Knowing the intricacies of the CTA and its potential impact is essential for small businesses. Otherwise, they may incur criminal or civil penalties for failing to timely file or update this report. Is your business required to file a BOI report with FinCEN? Businesses required to file a BOI report with FinCEN include a vast swath of corporations, LLCs, and other business entities formed or operating in the U.S. The CTA exempts sole proprietorships, general
• Ownership of at least 25% of the company
• A similar level of control over the company’s equity.
What information is required to be reported?
Businesses registered or established after Jan. 1, 2024 must provide information regarding the business, its beneficial owners, and its company applicants — including owners’ and applicants’ (if applicable) names, addresses, birthdays, and identification numbers (such as a license or passport number). Businesses established before that date can omit information regarding company applicants. All reporting companies must provide their legal name and trade names, as well as their current U.S. address. They also need to provide a taxpayer identification number and specify the jurisdiction where they were formed or registered. In addition to the required initial filing, the CTA requires companies to update the original filing when things change. For instance, if a beneficial owner changes their address, legally changes their name due to marriage or
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