The Corporate Transparency Act (CTA) is a new federal law that came into effect in 2024. It requires many small businesses, including LLCs and corporations with fewer than 20 employees, to report ownership information to the federal government. Here’s a breakdown of what this means for you and your business.

You might think the CTA is just for big corporations, but it’s actually aimed at small businesses. The law is designed to help prevent money laundering and other financial crimes by requiring companies to disclose who owns them. This way, it’s harder for bad actors to hide behind anonymous shell companies.

If you own an LLC, corporation, limited liability partnership, business trust, or similar entity with fewer than 20 full-time employees and less than $5 million in sales, you’ll likely need to report your beneficial ownership information (BOI). This also applies to foreign LLCs and corporations registered to do business in the U.S. However, businesses with more than 20 full-time employees and over $5 million in annual gross receipts are excluded from these reporting requirements.

Approximately 30 million existing businesses and about 2 million new businesses each year will be required to report this information.

A beneficial owner is anyone who, directly or indirectly, has substantial control over the company or owns or controls at least 25% of the company’s ownership interests. This definition ensures that the true decision-makers and stakeholders of a company are identified.

If your business falls under the CTA requirements, you’ll need to report the following information about your company:

• Full legal business name

• Any trade names (DBAs)

• Principal business address

• State, tribal, or foreign jurisdiction of formation

• Taxpayer Identification Number (TIN) (such as an EIN, ITIN, or SSN)

For each beneficial owner, you’ll need to provide:

• Full legal name

• Any “doing business as” (DBA) name

• Birthdate

• Unique identifying number from an acceptable identification document (such as a driver’s license or passport) and an image of that document

A FinCEN identifier is a unique number issued by the Financial Crimes Enforcement Network (FinCEN) to an individual or a reporting company upon request. This number can be used in place of the individual’s personal information on a BOI report, simplifying the reporting process.

For businesses created after January 1, 2024, you’ll also need to report information about the company applicant. This is the person who files the formation documents or directs the filing. For example, if a Company Rock employee helps you file, they would be the company applicant.

• Existing Businesses: Companies created before January 1, 2024, have until January 1, 2025, to file their initial BOI reports.

• New Businesses: Companies created on or after January 1, 2024, must file their initial reports within 90 days of formation or registration.

• Updates: If there’s a change in beneficial ownership information, you must update your report within 30 days of the change.

All reported information will be stored in a secure, non-public database known as the Beneficial Ownership Secure System (BOSS), managed by FinCEN. Only authorized federal agencies, law enforcement, and certain financial institutions will have access, and only for specific purposes such as national security or intelligence.

With Company Rock, you can now file the report through your Dashboard, after you receive your EIN (Employer Identification Number), for what we'll charge a service fee. You can always consult externally with CPA, or try to do it on your own, but in that case, we're not responsible for any consequences of the filing, in case there are some errors in how you proceed. That's why we offer a hassle-free BOI (Beneficial Ownership Information) filing service.
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For further details, you can check out the FinCEN BOI homepage, the BOI Compliance Guide, or the FinCEN FAQ.

By understanding the CTA and its requirements, you can ensure your business remains compliant and avoids any penalties associated with non-compliance.