The Corporate Transparency Act is a new law that requires certain businesses to disclose their beneficial ownership information to the U.S. government. This act aims to prevent money laundering, tax evasion and other illicit activities by increasing transparency in business ownership.
As a business owner, it is important to understand whether your company is subject to the CTA’s reporting requirements.
What types of businesses qualify?
The CTA applies to a wide range of businesses, including corporations, limited liability companies and other similar entities formed or registered to do business in the United States. This includes both domestic and foreign companies that meet certain criteria.
What are the exemptions to the CTA?
There are several exemptions to the CTA’s reporting requirements. These include:
- Publicly traded companies
- Companies with more than 20 full-time employees in the U.S., $5 million in gross receipts or sales and a physical presence in the country
- Certain nonprofit organizations
- Certain heavily regulated entities, such as banks, credit unions and insurance companies
Businesses meeting these designations should not have to report.
What are the reporting requirements?
If your business is not exempt from the CTA, you will need to report beneficial ownership information to the Financial Crimes Enforcement Network. Beneficial owners are individuals who directly or indirectly own or control 25% or more of the company’s ownership interests or who exercise substantial control over the company.
The information you will need to report includes the beneficial owner’s full legal name, date of birth, current address and a unique identifying number from an acceptable document, such as a driver’s license or passport.
If your business is subject to the CTA’s reporting requirements, it is important to gather the necessary information and submit it to FinCEN to ensure compliance with the law. By understanding your obligations under the CTA, you can help protect your business and contribute to a more transparent and secure financial system.