Act Now: Corporate Transparency Act | Legacy Law Firm

If you are a business owner, it's essential you understand and comply with the new requirements under the Corporate Transparency Act (CTA) to avoid harsh penalties. The CTA introduces the Beneficial Ownership Information Reporting System, which began in 2024. Under this system, many businesses—such as LLCs, corporations, and partnerships—are now required to report specific details to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).

Failure to comply with these new rules can result in significant penalties. Civil fines can reach $591 per day, with maximum penalties of up to $10,000, and there’s even the risk of imprisonment for up to two years.

Who Needs to Report?

The CTA focuses on "reporting companies," generally businesses with 20 or fewer employees that were created by filing formation documents with the Secretary of State or a similar government body. These businesses must submit detailed information to FinCEN, including:

• The company’s legal name and address
• Beneficial ownership details (those with substantial control or owning at least 25% of the company)
• In some cases, the individual who registered the business

This requirement applies broadly to corporations, limited liability companies (LLCs), limited partnerships (LPs), limited liability partnerships (LLPs), and limited liability limited partnerships (LLLPs)—unless the company qualifies for an exemption.

Exemptions to the CTA

• Certain businesses are exempt from the CTA's reporting requirements. These exemptions include:
• Publicly traded companies
• Businesses with more than 20 full-time U.S. employees
• Businesses with over $5 million in gross receipts or sales, based on the previous year’s federal income tax return
• Entities already subject to similar reporting under other government regulations
• Subsidiaries of exempt companies

Key Deadlines

Business owners should be aware of the following critical deadlines under the CTA:

• Existing businesses (formed before January 1, 2024) must file their initial report with FinCEN by January 1, 2025.
• Businesses created or registered between January 1, 2024, and January 1, 2025 must file their report within 90 days of formation.
• After January 1, 2025, newly formed businesses must file their report within 30 days of formation.

Why Compliance Is Crucial

Given the serious penalties associated with non-compliance—daily fines, large financial penalties, and even potential imprisonment—business owners must act now to understand their obligations. 

If your business meets the reporting criteria, you’ll need to comply with the CTA’s deadlines and rules to safeguard against any risks.