One of my favorite things I get to do here at Rieger Law Group is to assist individuals in making their dreams a reality. The area where this is most present is assisting in forming new businesses and aiding existing businesses with their corporate structure and operations. Regardless of whether you are an entrepreneur working on your first business venture or an established corporation, you will experience a major shift in federal oversight and regulation in 2024 due to the recently enacted Corporate Transparency Act.
The Corporate Transparency Act imposes substantial new reporting obligations on business entities to reduce the opportunity for corporate criminal activities, such as money laundering, fraud, and the financing of illegal ventures. The new reporting obligations mandated by the Act went into effect on January 1, 2024, and require many companies doing business in the United States to report information about the individuals who ultimately control or have beneficial ownership of the entities. Therefore, effective this year, companies must report information to the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the U.S. Department of the Treasury. Below is an overview of the requirements of the Corporate Transparency Act.
When Must a Company Register:
Companies created before January 1, 2024, have until January 1, 2025, to register and report their beneficial ownership.
Companies created after January 1, 2024, will have ninety (90) days to file their registration.
Companies created after January 1, 2025, will have thirty (30) days to file their registration.
Which Companies Must Register:
Corporations, limited liability companies, and other companies otherwise created in the United States by filing an instrument with the secretary of state or any similar office; and
Foreign companies registered to do business in any U.S. state.
Unless your corporation qualifies for an exception, you will need to report your beneficial ownership information. The most common exceptions include publicly traded companies, nonprofits, and other large operating companies. Most small corporations and LLCs will have to report their information.
Companies must report their (i) Beneficial Ownership and (ii) Company Applicants.
A Beneficial Owner is:
Any individual who exercises substantial control over the company; or
Any individual who owns/controls at least 25% of the ownership interests in the company.
The Company Applicant:
Must be an individual, not a company or legal entity; and
Should be the individual who directly filed the registration, as well as any individual who directs or controls the filing.
The Corporate Transparency Act establishes civil and criminal penalties for entities that fail to comply with the reporting requirements. This is just a brief overview of this new legislation that substantially impacts corporate governance and formation. For a complete overview and assistance in meeting your registration requirements, please give us a call!
Written by: Gunner Joyce | Director of Transactional | Attorney at Law
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