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Understanding the Corporate Transparency Act

Mar 6, 2024 | Limited Liability Company, Operating Your Company

Signed into law in January 2021, the Corporate Transparency Act seeks to combat money laundering, corporate misconduct, and other illicit financial activities. The purpose of the Act is to increase transparency through the reporting of beneficial ownership information — and collect more data regarding the ownership of specific entities operating in the U.S. market. The Act targets small businesses, including Limited Liability Companies, independent contractors, and family-run companies.    

What is the Corporate Transparency Act?

Under the Corporate Transparency Act, business entities must report beneficial ownership information. Domestic and foreign reporting companies created on or after January 1, 2024, are required to report beneficial ownership information to the United States Financial Crimes Enforcement Network or “FinCEN” website within thirty (30) calendar days of formation. These include corporations, Limited Liability Partnerships, and Limited Liability Companies. Certain types of businesses, including securities issuers, accounting firms, charities, and some large operating companies are exempt from the filing requirement.        

A beneficial owner can fall into one of two categories. A beneficial owner may either exercise substantial control over a reporting company — or they may own or control at least twenty-five percent (25%) of the ownership interests. Beneficial owners must report the following to FinCEN:

  • Name
  • Date of birth
  • Address
  • Unique identifier number from a driver’s license, passport, or other approved document
  • A photo of the document that unique identifier number appears on

A company must also report its company applicants if it is created on or after January 1, 2024. There can be up to two individuals who qualify, including the person who directly files the document that creates the reporting company and the person primarily responsible for controlling the filing of the document. 

Reporting companies in existence as of January 1, 2024, have up to one year to file their initial reports. A willful failure to comply with the requirements of the Act can result in monetary fines up to ten thousand dollars ($10,000) and up to two years in jail.    

How are Small Businesses Affected by the Act?

Small business owners should determine whether their companies are subject to the Beneficial Ownership Information reporting requirements of the Corporate Transparency Act or they qualify for an exemption. If the business owner must file a Beneficial Ownership Information report, they will need to gather the information required to file the initial report and file the information with FinCen. owners should implement new procedures to keep track of reported information and ensure it is kept up to date. 

Adapting to the new regulatory requirements can be legally and logistically challenging — it’s best to have a skillful business attorney by your side who can help you implement a solid strategy that will work for your company. Depending on the industry, small businesses may need to reassess their compliance measures, conduct more due diligence on customers, and create new structures for the administrative work in connection with the new reporting requirements. Small businesses may also need to consider how to balance between transparency and protecting the privacy of those who are associated with the company. In addition, owners might consider dissolving any inactive entities that they were saving for future use to reduce the administrative and economic burden of the new compliance requirements.     

Contact an Experienced New York Business Attorney

If you are preparing your business to meet the complex compliance challenges of the Corporate Transparency Act, a knowledgeable business attorney can assist you. Brinen & Associates provides reliable representation to clients for various regulatory and compliance matters, including those involving the Corporate Transparency Act. Call (212) 330-8151 or send us a message to learn more about how we can help you achieve your business goals.    


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I formerly worked as a satellite employee from my home state of New Jersey. I ended my employment with my former employer in 2016. In 2018, I was sued by my former employer for $1.1 million in Illinois State Court. I was referred to Brinen & Associates, LLC by a friend who is a client of the firm. Brinen & Associates, LLC came highly recommended. I contacted Joshua Brinen and then had a consultation at his office with his colleague Mark White. Together, Messrs. Brinen and White explained my options...

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