Small Business Alert: You must now file with FinCEN


You may be aware from our earlier notifications and posts, but beginning January 1, 2024, you may be required to submit certain information that was not previously required about a business entity and any individuals identified by the law as a beneficial owner to the federal government. We are reaching out to help you better understand the CTA and your potential obligations.

What is the Corporate Transparency Act?

The CTA is a law that requires business entities it identifies as reporting companies to disclose certain information about the company and its owners to the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). Under the CTA, a reporting company is a corporation, limited liability company (LLC), or other similar entity created by filing a document with the secretary of state or a similar office under the laws of a state or Indian tribe or formed under the laws of a foreign country and registered to do business in the United States. 31 U.S.C. § 5336(a)(11). The following information about the reporting company must be included in the report:

  • company’s legal name, and any trade name or “doing business as” name
  • street address of the principal place of business
  • jurisdiction in which the business was formed
  • tax identification number (31 C.F.R. § 1010.380(b)(1)(i))

Additionally, the reporting company must provide the following information about its beneficial owners, which are defined as persons who hold significant equity (25 percent or more ownership interest) in the reporting company or who exercise substantial control over the reporting company:

  • full legal name 
  • date of birth
  • current address
  • unique identification number from an “acceptable identification document” (31 U.S.C. § 5336(b)(2)(A)) along with an image of the document

Reporting companies created on or after January 1, 2024, must provide the same information about the company’s applicant (i.e., the person who files the creation documents for the reporting entity).

Does the CTA impact you?

Many business regulations apply only to large businesses, but the CTA specifically targets smaller business entities. If you own a small business, you may be subject to this act unless the business falls under one of the stated exemptions, which are primarily applicable to industries that are already heavily regulated. Your business may also be exempt from the reporting requirements if it employs more than 20 full-time employees, filed a return showing more than $5 million in gross receipts or sales, and has a physical office located within the United States. 31 U.S.C § 5336 (a)(11)(B)(xxi).

We routinely create entities that might qualify as reporting companies as part of our business service and estate planning offerings. For example, if you have an entity as part of your estate plan, to hold out-of-state real estate or valuable tangible personal property, receive valuation discounts, or protect assets, you may be required to comply with the CTA.

What do you have to do to comply with the CTA?

To comply with the CTA, you should gather the required information for all reporting companies that you are a beneficial owner of, as well as the information for any additional beneficial owners. Entities created before January 1, 2024, must submit the required reports by January 1, 2025. A reporting company created on or after January 1, 2024 and before January 1, 2025, must file its initial report within 90 days of the entity’s creation. Entities created on or after January 1, 2025, will have 30 days to submit the reports with FinCEN.

Questions? Feel free to reach out to us.

Depending on your business and/or estate plan, as well as the type of entity that you own, we understand that this may involve some research and paperwork. If you have any questions or need information to file your reports, please give us a call at 216-586-4278 or submit an online inquiry.

Published with permission from WealthCounsel®

The purpose of this Alert is to provide general information, and it is not intended to provide, does not provide, and should not be relied upon as, legal advice.

Attorney Nathan Zion spends much of his practice assisting small to mid-size business owners, helping them navigate the ups and downs that accompany ownership. He regularly helps owners form companies and assists with corporate maintenance, serving as outside general counsel.

  1. Image by Ag Ku from Pixabay ↩︎