Attention Business Owners: Are You Compliant with the Corporate Transparency Act (CTA)?

The Corporate Transparency Act (CTA) is nearly in effect, and if you are a business owner: ensuring compliance is essential to avoid potential fines – or even jail time. Taking the right steps now could save you thousands of dollars in penalties.

To help you navigate the essentials of the CTA and understand its implications for your business, Farther’s team of experienced wealth management professionals has created this straightforward guide.

What Is the Corporate Transparency Act (CTA)?

Enacted in 2021, the CTA is designed to increase business ownership transparency by identifying individuals with direct or indirect ownership of companies. This move aims to combat fraud, money laundering, and other illegal activities.

As of January 2024, the Treasury’s Financial Crimes Enforcement Network (FinCEN) began accepting Beneficial Ownership Information (BOI) reports.

Deadlines to Remember

• Existing Businesses (created before January 1, 2024): File by January 1, 2025
• New Businesses (created in 2024): File within 90 days of formation
• Businesses Formed After January 1, 2025: File within 30 days of creation

A Legal Twist

While the U.S. District Court for the Eastern District of Texas has issued a preliminary injunction, many cautious business owners are choosing to file, regardless. The final ruling will likely come after January 13, 2025, so filing early can help you stay on the safe side.

Who Is a Beneficial Owner?

A Beneficial Owner is anyone who meets at least one of these criteria:

1. Owns or controls at least 25% interest in the business
2. Exercises substantial control over the business, in situations including:some text
   • Acting as a senior officer
   • Making key business decisions
   • Having authority over appointments or removals

Who Needs to File?

The following entities are subject to reporting under the CTA:

• Corporations
• LLCs
• Similar entities formed in the U.S.
• Foreign companies registered to do business in the U.S.

Who Is Exempt?

Certain entities – such as banks, credit unions, and tax-exempt organizations – are exempt from filing BOI reports. These entities are already subject to stringent federal or state regulations.

For a complete list of exemptions, see FinCEN’s Small Entity Compliance Guide.

What Information Is Required?

You will need to submit the following information:

For the Company

• Legal name
• Trade names (if applicable)
• Address
• Jurisdiction of formation
• Taxpayer ID

For Beneficial Owners

• Full name
• Date of birth
• Residential address
• Identification number (e.g., passport, driver’s license)

How to File Your BOI

FinCEN has made it simple to file your BOI electronically. Use the BOI E-Filing System.

Why Compliance Is Critical

Failure to file or filing late can have serious consequences:

• Civil penalties: $500 per day
• Criminal penalties: Up to $10,000 and/or 2 years in prison

Act Now to Protect Your Business

Remaining compliant with the CTA is not only important to avoid penalties, it is vital to safeguarding your business and reputation. Visit FinCEN’s website for comprehensive guidance, and engage your Farther advisor for additional recommendations.

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