I will be sending correspondence to my corporate and LLC clients about the CTA in the coming weeks. I am available to discuss the requirements with any of my current clients or any owners of LLCs or Corporations in Florida as well. In the meantime, wherever you are located, consult with your lawyer or legal professional.
The Corporate Transparency Act (CTA) represents a significant shift in how businesses must report ownership and control information to the federal government. Enacted to combat illicit activities like money laundering and terrorism financing, the CTA imposes new reporting requirements on most corporations, LLCs, and similar entities formed in the United States or registered to do business here. With the final deadline of January 1, 2025, fast approaching, it’s critical for business owners and their advisors to understand their obligations.
Who Must Comply?
The CTA requires “reporting companies” to disclose information about their beneficial owners and company applicants to the Financial Crimes Enforcement Network (FinCEN). A beneficial owner is anyone who owns or controls at least 25% of the company or exercises substantial control over it. Reporting companies include most LLCs and corporations, with exceptions for certain larger or heavily regulated entities.
What Information Must Be Reported?
The required disclosures include:
- The full name, date of birth, residential address, and a unique identifying number (like a passport or driver’s license number) for each beneficial owner.
- Similar information for individuals involved in the creation or registration of the entity.
FinCEN will use this data to create a private, secure database accessible only to authorized government agencies.
Key Dates
- Businesses created before January 1, 2024, must submit their initial report by January 1, 2025.
- Businesses created on or after January 1, 2024, have 30 days from formation to file their report.
Consequences of Noncompliance
Failure to comply can result in significant penalties, including fines of up to $500 per day and criminal penalties of up to $10,000 or two years in prison.
What Should You Do Now?
- Identify Beneficial Owners: Review ownership and control structures to identify who qualifies as a beneficial owner.
- Prepare Required Documentation: Gather and verify the necessary personal and entity information.
- Consult a Legal Advisor: Ensure compliance with CTA requirements and address any complexities.
With the clock ticking, it’s crucial to act now to avoid costly penalties and ensure your business is ready for this new regulatory landscape.
