What is the Corporate Transparency Act (CTA)?

The Corporate Transparency Act (CTA) is a landmark federal law aimed at increasing transparency in business ownership to combat illicit financial activities. It requires many U.S. companies to report information about their beneficial owners—the individuals who ultimately own or control them—to the Financial Crimes Enforcement Network (FinCEN), a bureau within the U.S. Department of the Treasury.

Who is Required to File a BOI Report?

The CTA applies to most domestic and foreign entities registered to do business in the United States, including LLCs and corporations. These are known as “reporting companies.” While there are 23 specific exemptions, they generally apply to larger, highly regulated entities like public companies, banks, and credit unions. Most small businesses will be required to comply.

Information You’ll Need to Provide

Reporting companies must submit a Beneficial Ownership Information (BOI) report containing specific details for each beneficial owner. A beneficial owner is anyone who exercises substantial control over the company or owns at least 25% of it. The required information includes:

The individual’s full legal name
Date of birth
Residential address
A unique identifying number from a valid ID (like a driver’s license or passport) and an image of the document.

Deadlines and Penalties for Non-Compliance

Compliance deadlines are strict. Companies formed before January 1, 2024, must file by January 1, 2025. Companies formed during 2024 have 90 days to file, while those formed from 2025 onwards will have 30 days. Failure to file accurately and on time can lead to severe penalties, including daily fines of up to $500 and potential criminal charges. Proactive compliance is essential to avoid these risks.