Understanding the Corporate Transparency Act: How to Secure a Year-Long Reporting Extension for Your Business

Understanding The Corporate Transparency Act

What The Corporate Transparency Act Means For Your Business

The Corporate Transparency Act, enacted in 2020, serves as a crucial step toward corporate transparency and the prevention of financial crimes like money laundering and terrorist financing. At Aisha Williams Law, we know the importance of this act and its implications for your business.

Reporting Requirements Under CTA

The Corporate Transparency Act (CTA ) mandates that certain businesses, including corporations and LLCs, disclose ownership and control information to the Financial Crimes Enforcement Network (FinCEN). This includes details about individuals who own 25% or more of the company and those with substantial control, even when held through Trusts.

To comply, your business must submit an annual report with the following key information:

  • Business name and current address
  • State of formation and Entity Identification Number (EIN)
  • Owner/controller’s personal information (name, birthdate, address)
  • Government-issued photo ID copies for all direct or indirect owners or controllers

Failure to file can lead to penalties, with fines of $500 per day for late reports and the potential for imprisonment for owners.

Who Needs to Report?

The new  Corporate Transparency Act (CTA) rule applies to businesses created by filing formation documents with the Secretary of State or similar offices. It primarily targets small businesses, making it crucial for entrepreneurs and small business owners to understand and fulfill reporting requirements.

Exemptions exist for publicly traded companies, non-profits, regulated firms, and large companies with 20 or more full-time employees in the US and $5 million in sales. Inactive LLCs or corporations are also exempt.

When Do Businesses Need to File Their Report and How Can You Extend Your Deadline?

Timing is critical when it comes to Corporate Transparency Act reporting. If your business was created after January 1, 2024, you have just 30 days from its formation to file the report. However, if your company’s formation date falls on or before December 31, 2023, you gain a valuable extension until January 1, 2025.

Creating or restructuring your business entity before January 1, 2024, provides a year-long grace period for report submission. This extension is vital for understanding reporting requirements, gathering necessary information, and seeking legal advice to ensure compliance.

Why does this extension matter? It gives you the advantage of time, reducing the pressure of a 30-day deadline.

Helping You Make Strategic Moves for The Wellbeing of Your Family

As your trusted estate planning law firm, we’re here to guide your family through life’s stages and legal changes. Our commitment to your wellbeing extends beyond paperwork. We keep you informed about legal changes, ensuring your family and assets are well-cared for.

If you own a family business or plan to create a new business entity soon, take action now. Secure the year-long reporting extension for existing businesses. Don’t wait until December’s end when a rush of filings is expected.

Schedule a complimentary call with our office to learn more and ensure your business remains properly protected. We’re here to support you every step of the way.

With Aisha Williams Law, you have a dedicated partner in understanding and navigating the best way to protect you assets. Don’t let reporting requirements overwhelm you—act today to protect your business and family’s future.

 

This article is a service of the Law Office of Aisha M. Williams, APC, serving San Diego, Carlsbad, Escondido, and all of California. We don’t just draft documents. We ensure you make informed decisions about life and death for yourself and the people you love. That’s why we’ll start you with a  Family Wealth Planning Session, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love.

We created this material solely for educational and informational purposes. It does not serve as ERISA, tax, legal, or investment advice. Should you need legal advice tailored to your specific needs, you must seek such services independently.