Corporate Transparency act is a new law that will take affect January 1, 2024. What does this mean for companies and what should they be aware of? Starting in January 2024 some companies will have to report certain information about their ownership, this means the following:

According to the government’s Financial Crimes Enforcement Network site, CTA “establishes uniform beneficial ownership information reporting requirements for certain types of corporations, limited liability companies, and other similar entities created in or registered to do business in the United States.” A beneficial owner, according to the SEC’s investor site, is one who “holds shares indirectly, through a bank or broker-dealer. When it come to U.S. investors most of them own their securities this way. This rule applies to a corporation, limited liability company or any other entity created by the filing of a document with a secretary of state or any similar office under the law of a state or Indian tribe. The CTA’s main goal, according to FinCEN, is to “provide essential information to law enforcement, national security agencies, and others to help prevent criminals, terrorists, proliferators, and corrupt oligarchs from hiding illicit money or other property in the United States.”  Companies need to know moving forward that they will need to report four pieces of information to include name, birthdate, address, and a unique identifying number and issuing jurisdiction from an acceptable identification document.

According to FinCEN, companies now must issue beneficial ownership information. As it says, “Under the rule, a beneficial owner includes any individual who, directly or indirectly, either exercises substantial control over a reporting company, or owns or controls at least 25 percent of the ownership interests of a reporting company. According to FinCEN there will not be any fee when reporting your beneficial ownership information report.

You may be wondering if there are any exemptions and the answer is yes, 23 exemptions to be exact. You will be able to find these exemptions via Beneficial Ownership Information Reporting | FinCEN.gov. Another would be smaller business that is considered a proprietorship, usually are exempt from BOI requirements because they would not register to begin with.

If you have further questions, please contact your qualified financial professional here at BiggsKofford to see if either you are covered or exempt, and what requirements you will need to know.