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As of January 1, 2024, millions of small businesses across the United States will feel the impact of the Corporate Transparency Act (CTA). Understanding the nuances of this legislation and its implications is crucial for small business owners to avoid potential criminal or civil penalties for non-compliance.

Enacted in 2021, the CTA is designed to combat various illicit activities such as tax fraud, money laundering, and terrorism financing that may involve U.S. businesses. By mandating the disclosure of ownership information, the law aims to shed light on the individuals behind certain U.S. businesses, reducing opportunities for abuse.

Who is Considered a Beneficial Owner of a Company?

A beneficial owner is an individual who holds a significant ownership stake in a company, either directly or indirectly, exerting substantial influence over its decisions or operations. This includes individuals who own at least 25% of the company’s shares or have similar control over its equity.

What Information Must be Provided and Reported About the Beneficial Owners?

All reporting companies, regardless of the establishment date, must provide the full legal name, date of birth, residential street address, and an identifying number (such as a driver’s license or passport with a copy of the applicable document) or a FinCEN Number of each Beneficial Owner for the Beneficial Ownership Information (BOI) report.

These companies also must update their BOI report even if a beneficial owner changes their address, legally changes their name due to marriage or divorce, or obtains a new driver’s license.

What are the Deadlines for the BOI Report?

Starting January 1, 2024, reporting companies must adhere to strict deadlines for submitting their initial BOI report.

For qualifying companies established before January 1, 2024, the filing deadline is set for January 1, 2025. Entities formed between January 1, 2024, and January 1, 2025, are granted a 90-day window from either the actual notice of formation or public announcement to file their reports.

Businesses established on or after January 1, 2025, have 30 days from the notification or public announcement of their formation to submit their initial report to FinCEN.

There are two categories of reporting companies obligated to file BOI reports:

  1. Domestic reporting companies, such as LLCs, corporations, and other entities, that are established by filing with a secretary of state or similar office within the U.S.
  2. Foreign reporting companies registered to operate in the United States through filing with a secretary of state or equivalent authority.

Submitting reports incurs no fees for businesses, and electronic forms will be conveniently accessible on FinCEN’s website.

What Should You Do Now?

Business owners impacted by the CTA will have limited time to adhere to strict upcoming deadlines. In order to ensure filing initial or updated reports on time and correctly, it is important to work with an experienced legal advisor to adhere to FinCEN’s standards. Unfortunately, Calvetti Ferguson is not allowed to give legal advice or consultation regarding these filings.

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Calvetti Ferguson works with middle-market companies, private equity firms, and high-net-worth individuals nationwide. Regardless of the complexity of the compliance, assurance, advisory, or accounting need, our team is ready to help you. Please complete the form below, and we will follow up with you shortly.