Starting in 2024, millions of companies across the US will be required to file new paperwork with the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).  

 

That requirement is imposed by the Corporate Transparency Act – an element of the Anti-Money Laundering Act of 2020. But what exactly is this new law all about? And what can your business do to prepare for it? Read on to find out: 

 

What is the Corporate Transparency Act? 

 

The Corporate Transparency Act (CTA) aims to prevent money laundering, terrorist financing, tax fraud, and other illegal activities by requiring businesses to provide the Treasury Department with additional information about their ownership and organizational structures. 

 

What Companies Are Required to File a Report? 

 

The CTA says every LLC, corporation, or other entity that was created by filing paperwork with a Secretary of State or similar office must file a report unless it qualifies for an exemption. 

 

Most exemptions are primarily reserved for companies that operate in industries that are already heavily regulated, like: 

 

  • Banks 
  • Credit unions 
  • Insurance companies 
  • Accounting firms, and 
  • Securities brokers 

 

The CTA also exempts “large operating companies,” which it defines as an entity that: 

 

  1. Has more than 20 employees in the United States 
  2. Has an operating presence at an office in the United States, and 
  3. Generated more than $5 million in gross sales in the previous year 

 

If you are not sure whether or not your business is exempt, speak to an attorney as soon as you can. They will be able to advise you of your obligations. 

 

What Information Do Companies Have to Provide? 

 

Under the Corporate Transparency Act, companies will need to provide FinCEN with information like: 

 

  • The legal name 
  • Their trade name or DBA 
  • Their primary address 
  • Their tax ID number 
  • Their formation jurisdiction 
  • Their owners’ legal name(s) 
  • Their owners’ address, and 
  • Their owners’ driver’s license number(s) 

 

Businesses will also need to obtain and submit a unique FinCEN ID number with their filing. 

 

How Can Your Company Prepare for the CTA? 

 

Now that you know a little more about the CTA, you are probably wondering what your company should be doing to prepare for it. Here’s what we recommend: 

 

  1. Determine whether you are required to file a report with FinCEN 
  2. Decide when to file your report (the deadline for most companies is January 1st, 2025) 
  3. Gather the information you’ll need to send to FinCEN 
  4. Implement a system that will make subsequent filings more streamlined 

 

If you want help preparing your FinCEN report, please don’t hesitate to contact The Frazer Firm. You can schedule a consultation by calling (561) 295-1551 or filling out our online contact form. 

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