Attention Business Owners: Take Action by December 31st for a Year-Long Extension on Corporate Transparency Act Reporting Deadline!

Owning a business is both fulfilling and dynamic, yet it entails navigating rules, responsibilities, and reporting obligations. For small business owners or those with a Trust linked to business interests, compliance with the Corporate Transparency Act (CTA) is imperative from January 1, 2024.

The CTA mandates small businesses to disclose owners with a 25% or more stake and individuals exerting significant control over company activities. This requirement extends to Trusts with company ownership or control.

Business or Trust owners must file a CTA report, especially if planning to establish a new company in the upcoming year, with a potential reporting deadline as soon as 30 days post-creation. Act promptly before the year concludes to explore an option for a year-long reporting extension.

This blog shares insights on securing a reporting extension for your business, providing additional time to compile necessary information for the CTA report. To fully grasp the impact on your business, it's essential to comprehend what the CTA entails.

What The Corporate Transparency Act Means For Your Business

In 2020, the Corporate Transparency Act (CTA) emerged as a cornerstone for bolstering corporate transparency and combatting financial crimes like money laundering and terrorist financing. The Act mandates businesses to disclose details about their owners and controllers, aiming to expose "shell" corporations often employed for illicit financial activities.

For compliance, specific businesses, including some corporations and LLCs, must reveal names of those owning 25% or more of the company and individuals with "substantial control" to the Financial Crimes Enforcement Network (FinCEN). This requirement extends to Trusts with company ownership or control.

To adhere, businesses must submit an annual report with crucial details on each owner or controller, encompassing business name, current address, state of formation, Entity Identification Number (EIN), owner/controller's name, birth date, address, and a government-issued photo ID copy.

Failure to file incurs penalties—an escalating $500 daily fine for tardiness, and potential imprisonment up to two years for non-compliant owners. The CTA stands as a crucial measure in fostering transparency and combating financial malfeasance within the corporate landscape.

What's Covered by the CTA Reporting?

The latest CTA regulation is applicable to any business established through the submission of a formation document to the Secretary of State or an equivalent entity, including corporations and limited liability companies (LLCs). The Act primarily targets gathering information on small businesses, as they are often implicated in money laundering and terrorist financing activities. Therefore, entrepreneurs and small business proprietors must ensure meticulous compliance with the filing requirements.

Exemptions from the rule include publicly traded companies, non-profits, and regulated entities such as financial institutions, accounting agencies, and banks. Large companies are also exempt if they boast 20 or more full-time employees in the US and achieve $5 million in sales. Additionally, inactive LLCs or corporations, not engaged in business or service, are also exempt from the reporting obligation.

When to File and Extend Your Corporate Transparency Act Report Deadline

Navigating the filing timeline for your Corporate Transparency Act (CTA) report is crucial. If your company came into existence post-January 1, 2024, you must file within 30 days of its creation. On the flip side, if your company was formed on or before December 31, 2023, the deadline extends to January 1, 2025.

For existing businesses, this means you have until January 1, 2025, to complete your report. Planning to establish a new company or alter the structure of an existing one before January 1, 2024, grants you a year-long buffer for report submission. Beyond this date, seizing this extension opportunity becomes impossible.

Why is this extension significant?

The extension is a strategic time frame for business owners to comprehend reporting requirements thoroughly, gather essential information, and collaborate with legal professionals to ensure Act compliance. While the reporting rules may seem straightforward, the consequences of non-compliance are severe. Establishing your new business entity by year-end acts as a preventive measure against potential penalties and risks associated with overlooking or misunderstanding reporting requirements. It's a proactive move that provides your business the invaluable gift of time.

Act Now for Your Family Business

For family business owners or those contemplating a new venture, the time to act is now. Create your business entity before year-end to maximize the year-long window for filing your Corporate Transparency Act (CTA) report. Avoid the year-end rush, as filings surge in late December.

Don't delay until the end of December. We anticipate a rush in new business entity filings as owners and professionals strive to submit creation documents before the new year. If you need help with your report or are uncertain about CTA applicability, our expertise is at your service.

As your Personal Family Lawyer® firm, our goal is to guide your family through every stage of life and every change in the law through an ongoing relationship with you. Our approach to serving clients doesn’t end when the paperwork is filed. We keep in touch with you and keep you abreast of any changes in the law so you can have peace of mind knowing that your family and assets are well cared for now and in the future.

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The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.