Skip to main content

NAVIGATING THE CORPORATE TRANSPARENCY ACT (CTA): New Rules for Businesses

The Corporate Transparency Act (CTA), enacted in 2021, aims to increase transparency around corporate ownership. This blog post summarizes the key changes for corporations, small businesses, and LLCs, focusing on the impact in 2024.
New Reporting Requirements:
  • Beneficial Ownership Information: A core aspect of the CTA is the requirement for certain businesses to report information about their "beneficial owners." These individuals ultimately control or benefit from the company, even if they do not hold an official title.
  • Existing Companies Have One Year to File: Reporting companies created or registered to do business in the United States before January 1, 2024, must file by January 1, 2025.
  • 5-Year Business Rule: Previously, only new businesses needed to report beneficial ownership information. Presently, under the CTA, any corporation or LLC formed more than five years ago must also file a report by a specified deadline (to be determined).


Changes for Corporations & LLCs (2024):
  • Corporations: Large corporations were already subject to some ownership reporting requirements. The CTA does not introduce significant changes for them in 2024. However, they may need to comply with the 5-year business rule if formed before 2019.
  • LLCs: The CTA brings a significant change for LLCs. Previously, many LLCs were exempt from ownership reporting. Now, most LLCs, unless they qualify for a narrow exemption (like being solely owned and operated by one individual), must comply with the beneficial ownership reporting requirements.
  • New Business Reporting for 2024: Specific details regarding deadlines and reporting mechanisms for the CTA are still being finalized. However, businesses formed in 2024 and after must file beneficial ownership information at the time of formation or Within 90 Days of Creation. New Businesses are required to submit information about the individuals who formed the company (“company applicants”).
  • The CTA itself doesn't introduce any major changes to tax laws in 2024. However, separate tax legislation impacting businesses may be passed subsequently. It's important to consult with a tax professional for the latest tax regulations.

Old vs. New Rules:
  • Pre-CTA: Previously, ownership reporting for corporations was limited, and most LLCs were exempt. This created a lack of transparency about who ultimately controlled many businesses.
  • Post-CTA: The CTA aims to create a more comprehensive beneficial ownership database, potentially making it easier for law enforcement to investigate criminal activity and improve corporate accountability.

The BOI Reporting Process:
For more information and to file your report, please visit the following link. Beneficial ownership information reporting is not required annually. A report only needs to be submitted once, unless the filer needs to update or correct information. Reporting companies must generally provide four pieces of information about each beneficial owner:
  • name,
  • date of birth,
  • address, and
  • valid ID.
An image of the document must also be submitted. The identification can be a U.S. driver’s license, U.S. passport, or an identification document issued by a State (including a U.S. territory or possession), local government, or Indian tribe. If none of those documents exist, a non-expired foreign passport can be used.

Additional Resources:By staying informed about the CTA and its evolving regulations, businesses can ensure compliance and navigate the changing corporate landscape.





Disclaimer: This information is intended for general knowledge and informational purposes only, and does not constitute legal advice. It's essential to consult with an attorney for personalized guidance on your specific situation.



#planlifelaw #CTA #BOI #BusinessLaw #Compliance #CorporateTransparencyAct #BeneficialOwnershipReporting #LLC #NewBusiness 

Labels:
Location: United States

Comments

Post a Comment

Popular posts from this blog

Homeownership and Estate Planning

  Estate planning is crucial to preparing for the future, especially for homeowners. As a homeowner, you have a significant asset that requires future planning. Estate planning can help ensure that your property is distributed according to your wishes and that your loved ones are cared for after you pass away, or it can use your property to earn income as you age. A Will As An Estate Planning Tool For Homeowners One of the most common estate planning tools for homeowners is a Will. A will is a legal document that outlines how you want your property to be distributed after your death. It is important to note that a will only becomes effective after you pass away. With a will, you can name an executor to manage your estate, name guardians for your children, and specify how your debts should be paid. A will can also be used to leave specific assets to named beneficiaries, such as family members or charitable organizations. One advantage of using a will is that it is generally less exp...
Post a Comment
Read more

Shop PLL

Contact Form

Name

Email *

Message *