MANDATORY Reporting Requirements for LLCs and Other Entities!
Starting January 1, 2024, the recently enacted Corporate Transparency Act (“CTA”) requires LLCs, small corporations and similar entities to report beneficial ownership information to the Treasury’s Financial Crime Enforcement Network (FinCEN). The penalty for failure to file is up to 2 years in prison and $10,000. The deciding factor appears to be if the entity was created by filing a document with the secretary of state or similar office. If so and no exception applies, the FinCEN filing is mandatory.
Determining who is a beneficial owner can be difficult. A beneficial owner is any individual who directly or indirectly exercises substantial control over the company or who owns or controls 25% or more of the company. Substantial control is broadly defined to include senior officers, those who have the ability to appoint or remove senior officers or a majority of the board of directors, those who have substantial influence over important decisions, and (the catch all) those who have any other form of substantial control over the company.
A reporting company must provide:
its legal name and any trade name or DBA,
the jurisdiction in which it was formed or first registered, and
its Employer Identification Number (EIN)
For each of the company’s beneficial owners, the company will need to provide the individual’s:
an identifying number from a driver’s license, passport, or other approved document for each individual, and an image of the document that the number is from.
Companies created or registered before January 1, 2024 must file by January 1, 2025.
Companies created or registered after December 31, 2023 must file within 90 days of formation.
This is not just a one-time reporting requirement. A company will have 30 days to report any changes to reported information, i.e., any changes in beneficial ownership.
For updates, the 30 days start from when the relevant change occurs.
For corrections, the 30 days start after becoming aware of, or having reason to know of, an inaccuracy in a prior report. There are no safe harbors for filing an incorrect report.
More information can be found here:
If you’d like to file the form on your own, you can do so at the link below:
If you’d like us to handle the filing, please contact our office at 864 520 2012