You may have heard about new reporting requirements for your business, partnership, or LLC. Congress introduced the Corporate Transparency Act's Beneficial Owner Information Reporting Requirements to require specific reporting and disclosure requirements for most companies to enhance transparency by mandating the disclosure of beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). This blog post from our business lawyer provides a brief overview of the new requirements.
There are several key terms to know:
-
Reporting Companies - Corporations, limited liability companies (LLCs), or other entities created or registered by filing a document with a secretary of state or similar state office.
-
Beneficial Owners - Any individual who exercises substantial control over a reporting company or owns or controls at least 25% of the ownership interest of a reporting company.
-
Company Applicants - The individual who filed the reporting company entity registration or directed or controlled the filing (only applicable for entities created or registered after January 1, 2024).
Scope of Reporting:
Companies required to report are called reporting companies. Reporting companies may have to obtain information from their beneficial owners and company applicants and then report that information to FinCEN. This initiative is designed to curb financial crimes by ensuring a clear record of business ownership is accessible to regulatory bodies. The act delineates precise information that must be reported for both the company and its beneficial owners, including legal names, addresses, and identification details.
Who's Required to Report (And Who's Not):
While this act applies to most business entities, not all entities fall under its purview, while most small businesses are included, exemptions apply to certain entities, such as publicly traded companies, nonprofits, and large operating companies meeting specific criteria.
Timelines for Compliance:
The timeline for reporting varies by the company's formation date. Existing companies formed before January 1, 2024, must comply by January 1, 2025. New companies established during 2024 must report within 90 days after creation, whereas entities created after 2024 have a 30-day reporting window post-creation. These deadlines underscore the importance of timely compliance to avoid legal complications. The act also mandates timely updates to previously reported information, with a 30-day window for reporting changes or corrections. This dynamic reporting process underscores maintaining accurate and current business records.
Conclusion:
The Corporate Transparency Act represents a shift in business ownership transparency with far-reaching implications for small businesses in Florida. As we approach its implementation, staying informed and prepared is paramount. We are committed to guiding our clients through these changes, ensuring seamless compliance and safeguarding your business interests. For personalized legal advice and support, schedule your free consultation right away.
