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The Corporate Transparency Act (CTA) is a law that creates new reporting requirements that most businesses will need to adhere to beginning January 1st, 2024. The penalties for noncompliance are significant so it’s important to familiarize yourself with the highlights of the CTA.

What Is the Corporate Transparency Act?
The Corporate Transparency Act requires qualifying companies (known as “reporting companies”) to file certain information with the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN).

Who is a “Reporting Company”?
Reporting companies are defined as “certain types of corporations, limited liability companies and other similar entities created in or registered to do business in the United States.” There are 23 exceptions to the CTA, with a key exception for businesses that are “large operating companies”, which are defined as businesses that:

-Employ 20 or more people on a full-time basis
-Have more than $5 million in gross receipts or sales, and
-Have an operating presence at a physical office within the United States.

Therefore, it appears that most small businesses will be required to file a report. Further, even if entities are fairly inactive, they still may need to report.

When Will My Company Need to File Its Report?
-Existing Entities. For reporting companies in existence as of January 1, 2024, the initial reporting deadline is no later than January 1, 2025.

-New Entities. Companies created or registered after January 1, 2024 must file their initial reports within 90 days of their creation or registration.

-Updated Information. For both existing and new entities updates will need to be filed within 30 days of information changing about the company or any beneficial owner.

What Information Will I Need to Report?
Your business will need to disclose the owners, controlling parties, and company applicants to FinCEN, among other information.

What Are the Penalties for Non-Compliance With the CTA?
Filing a report with false information and/or not filing at all both come with the same penalty, $500 per day (up to $10,000) and two years in prison for each violation.

How Can Cobbe Law Help My Business with Complying with the CTA?
Cobbe law is here to help you make sure that you have the proper documentation relating to ownership of your company. Additionally, Cobbe Law has partnered with CTA Filings to ensure that your business has the support it needs with reporting requirements, if applicable. At CTA Filings, each filing will be reviewed by a licensed attorney. If you need more information about CTA Filings or would like to schedule a consultation to discuss your corporate housekeeping needs, please contact Melody Cobbe.