3 Facts About Corporate Transparency Act Every Business Must Know!

As its name suggests, the Corporate Transparency Act (CTA) is a regulation that is aimed at increasing corporate transparency in the U.S.  Also holding the aim to prevent money laundering and other financial crimes, the CTA requires companies to report all information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). This requirement applies to millions of companies, regardless of size or turnover. That is why it is worth taking a look at exactly what the Act is and what it contains.

1. Not All Businesses Are Required to Report

One of the most important aspects of the Corporate Transparency Actis that it doesn’t apply to every single business operating in the United States. In fact, 23 different types of entities, including certain types of financial institutions and some large operating businesses (those that have more than 20 full-time employees, a physical location in the U.S., and over $5 million in revenue) are exempt from the CTA’s reporting requirements. Furthermore, nonprofit organizations, certain trusts, and government entities are also exempt from the Beneficial Ownership Information (BOI) reporting requirement.

2. Strict Reporting Deadlines Are in Place

Entities formed after January 1, 2024, get only 90 days after their incorporation to file their initial BOI report. This means that if you are starting a new company, you need to act quickly to ensure that you provide the required information within the deadline.

Existing companies that were established before January 1, 2024, have till January 1, 2025, to report their BOI.

3. Non-Compliance Can Lead to Significant Penalties

Businesses that do not report their BOI or provide inaccurate or incomplete information can face hefty penalties. The fines for non-compliance with the Corporate Transparency Act can be as high as $500 per day of non-compliance or criminal charges.

Additionally, businesses may suffer damage to their credibility and image. They may also lose their standing with their clients.

For More Details: Reach Out to BOIFinCEN Reporting for more details and information.

Conclusion

The Corporate Transparency Act is an important piece of legislation that every entity operating and/or located in the U.S. should be aware of. Those who ignore it may end up having to pay hefty fines and can even face prison terms.