The Corporate Transparency Act (CTA) requires certain corporations, limited liability companies, and other similar entities to report information about their beneficial owners and company applicants to the Financial Crimes Enforcement Network (FinCEN) of the United States Department of the Treasury.
The term “company applicant” refers to the individual who files an application to form a new corporation, limited liability company, or similar entity, or who registers or files an application to register a foreign (non-U.S.) entity to do business in the United States. This can be either:
Company applicants are often also a beneficial owners of the reporting company. Company applicants can often be law or accounting firms that help create entities for their clients.
Here are examples illustrating the identification of company applicants during the formation or registration of a company in typical situations:
Suppose Person A decides to start a new business. Person A takes the initiative to draft all required formation documents and submits them to the appropriate state or tribal agency, which can be done physically or through an online self-service platform. There is no involvement from anyone else in the drafting, instructing, or submission process.
In this scenario, Person A qualifies as the company applicant since they personally lodged the paperwork that established the company. As the sole participant in the filing process, Person A is the only company applicant. It’s important to note that state or tribal personnel who process these incorporation or organization documents are not considered company applicants.
Imagine Person A is setting up a new business entity. Person A organizes all the necessary formation documents and instructs Person B to go ahead and submit these documents to the designated state or tribal authority. Person B complies and personally submits the documents to form the company.
In this case, both Person A and Person B are considered company applicants—Person B for actually submitting the documents and Person A for having the controlling hand in instructing or managing the submission process. Person B could be Person A’s partner, either in life or business, their legal counsel, or their accountant. Regardless of the exact relationship, both Person A and Person B would be identified as company applicants in this situation.
The CTA requires company applicants to provide their personal information when reporting beneficial ownership information to FinCEN or a FinCEN ID. This is part of the measures taken to enhance transparency and assist law enforcement in identifying the individuals behind entities that may be involved in financial crimes.
Companies formed after 01/01/2024 will need to include company applicants on their FinCEN report. Companies formed before 2024 do not need to include their company applicants.
Reporting company applicants is part of the filing process. Your company’s best path for FinCEN filing depends on the number of beneficial owners in your company. We recommend using the cards below to help select the best filing path.
We recommend companies with simple ownership structures take their list of owners to an online filing platform to complete their reports. TurboCTA.com is an affordable solution for business owners.