What Business Owners Need to Know About New Corporate Transparency Act Requirements
Who Must Report
Reporting companies include corporations, limited liability companies, and other entities created by filing a document with a secretary of state or similar office. Certain entities are exempt, including publicly traded companies, banks, credit unions, insurance companies, and large operating companies with more than 20 full-time employees and $5 million in gross receipts.
Defining Beneficial Owners
Beneficial owners are individuals who own or control at least 25% of a reporting company or exercise substantial control over it. Substantial control includes serving as a senior officer, having authority to appoint or remove officers, or making important decisions about the company's operations, finances, or structure. Carefully identifying all beneficial owners is a critical compliance step.
Information Required
Required information includes each beneficial owner's full legal name, date of birth, current residential address, and a unique identifying number from a passport, driver's license, or other approved identification document. Companies formed after January 1, 2024, must also report information about their company applicants who filed the formation documents.
Deadlines and Penalties
Entities existing before 2024 have one year to file their initial reports, while entities created after the effective date must file within 90 days of formation. Failure to comply can result in civil penalties of up to $500 per day and criminal penalties including fines up to $10,000 and imprisonment. Proactive compliance is essential to avoid these severe consequences.
