What is the Corporate Transparency Act? Passed, in 2021, the Corporate Transparency Act creates new reporting requirements for companies regarding their “Beneficial Owners”, the individuals who directly or indirectly own or control the company. For most companies, this will be simple. For other companies, such as those that have many owners or officers, have a web of parents, subsidiaries, affiliates and investors, or are owned/managed by trusts, custodians or guardians, this will take significantly more time. The goal of the Corporate Transparency Act is to reach the individuals who manage and control a business.
This information is not publicly available and is securely stored on the Financial Crimes Enforcement Network.
Why should you register? For one, it’s the law. Second, there are fines as high as $10,000, civil penalties up to $500 per day, and penalties up to two years in prison for knowingly providing false information or failing to comply.
Which companies need to register? Most companies: there are an estimated 32 million companies that will need to register pursuant to the Corporate Transparency Act. There are several types of companies that are exempt from reporting, a partial list of exempt companies include:
- Government authorities
- Financial Institutions
- Investment companies
- Insurance companies
- Utilities
- Accounting firms
- Tax-exempt companies
The full list of 23 companies exempt from listing can be found here.
When do companies need to register? For most readers of this article (i.e., companies formed before January 1, 2024), you will need to register before January 1, 2025. Companies formed during 2024 will need to register within 90 days. Companies formed after January 1, 2025 will have 30 days to register.