On January 1, 2024, the Corporate Transparency Act went into effect. This affects all kinds of businesses, especially smaller ones. Discover more information about the Corporate Transparency Act and how to follow compliance in Massachusetts.
What is the Corporate Transparency Act?
The Corporate Transparency Act, enacted in 2021, requires many businesses to report information about individuals who own or control them. It was created to combat illicit activity which includes money laundering, financing for terrorism, and other illegal activities. Filing is simple, secure, and free of charge.
Who is required to Report?
Beneficial owners are responsible for reporting information about their businesses which include any person who directly or indirectly has a significant ownership stake in a company. This means you have a major influence on reporting the business’s decisions or operations, own 25% of the company’s shares, or have control over the company’s equity.
How and What to Report
Businesses created after January 1, 2024, are required to provide information about the businesses, the beneficial owners, and company applicants which include owners’ and applicants’ names, addresses, birthdays, and identification numbers (license or passport number). Businesses created before January 1, 2024, must not disclose information about company applicants.
Companies need to provide legal names, trademarks, their address (main business or foreign-based companies’ U.S. operational location), and a taxpayer identification number. It’s important to update your reporting when your company changes.
You can fill out your businesses’ information electronically through the secure filing system on the Financial Crimes Enforcement Network’s (FinCEN) website.
When Do You Have to Report?
FinCEN will begin accepting reports starting January 1, 2024. Businesses established before January 1, 2024, will have until 2025 to file the information while ones that began after January 1, 2024, will have 90 calendar days after receiving notice of the company’s creation or registration to file. Companies established after January 1, 2025, will have 30 calendar days from receiving notice of the company’s creation.
What Happens If You Fail to Report?
If your business fails to report or attempts to report false information, you can be punished with a civil penalty of up to $500 for each day the violation continues. Extreme criminal penalties include a fine of $10,000 or imprisonment for up to 2 years
Where to Get Help & Find Resources
You should not try to file your reports on your own, as you can make mistakes. Try to consult an advisor like an attorney or accountant to ensure the filing is correct and completed on time.
Small businesses can find resources catered for them on the FinCEN website. You’ll find a small entity compliance guide, frequently asked questions, quick reference guides, a short introductory video, and ways to chat with a virtual assistant.
Learn more about the Corporate Transparency Act at our webinar, “Understanding the Corporate Transparency Act (CTA) and FinCEN Reporting,” presented by Velina Peralta Bolduc and Jenny M. Eldred on Thursday, April 11, 2024, from 9 am to 10 am.
