The Corporate Transparency Act: What Business Owners Need to Know

The Corporate Transparency Act (CTA) is a crucial legislative update that could have a significant impact on your business.

Understanding the Corporate Transparency Act

The Corporate Transparency Act (CTA) is a recent federal law designed to prevent the misuse of corporate structures for illicit activities, including money laundering, fraud, and terrorism financing. Its main objective is to enhance transparency by requiring certain U.S. businesses to disclose details about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of Treasury.

Who is Affected by the Corporate Transparency Act?

The Corporate Transparency Act primarily targets smaller, privately held entities, such as corporations, LLCs, and similar entities created by filing documents with a state or a Native American tribe’s office. Certain exemptions exist for companies already operating under substantial regulatory oversight or meeting specific criteria.

Information Required for Compliance

Entities affected by the Corporate Transparency Act are mandated to disclose specific information about their beneficial owners. This includes names, birthdates, addresses, and an identification number, such as a driver’s license or passport number. A beneficial owner, as defined by the Corporate Transparency Act, is anyone who directly or indirectly exercises substantial control over the entity or owns 25% or more of its ownership interests.

Compliance Deadlines

To ensure compliance, businesses must adhere to the following deadlines:

• Entities created or registered before January 1, 2024, have until January 1, 2025, to file their initial Beneficial Ownership Information (BOI) report.
• Entities created or registered in 2024 must file within 90 calendar days after receiving notice that their creation or registration is effective.
• Entities created or registered on or after January 1, 2025, must file within 30 calendar days after receiving notice that their creation or registration is effective.

Why the Corporate Transparency Act Matters

The Corporate Transparency Act signifies a significant shift in corporate transparency requirements, aiming to enhance accountability and combat the misuse of business entities. Non-compliance with the filing requirements can lead to severe criminal and civil penalties.

Learn More

For further information on this federal requirement, visit the FinCEN website at https://www.fincen.gov/boi.

Staying informed about the Corporate Transparency Act is crucial for businesses, especially those falling within its scope. By adhering to the filing requirements and deadlines, businesses can contribute to the broader goal of fostering transparency and accountability in the corporate landscape.

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As trusted probate and estate planning lawyers, we serve clients throughout the vibrant communities of Fort Lauderdale, Miami, Palm Beach, and Boca Raton, Florida. SJF Law Group is also proudly serving clients throughout the State of Florida by offering virtual and in-person appointments.

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