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Any U.S. business not qualifying for an exemption to CTA filing is considered a “reporting company” under FinCEN’s final rule. You can see if your company is exempt by using our Company Checker tool. Exemptions are very hard to qualify for and are mostly reserved for companies in highly regulated industries.
An exemption does exist for large operating companies, which are companies that employ 21 or more full-time employees AND have over $5M in annual sales as listed on their tax return. A company must meet both requirements to be exempt under this rule.
An additional exemption exists for inactive companies. However, this only applies to companies in existence before 2020 with no assets, business, or sales. Companies that were formed after 2020 still need to file a report, even if they are no longer in business.
Companies in existence before 2024 will have one year, starting 01/01/2024, to file their initial report. Companies formed after 01/01/2024 will have 30 days to file an initial report.
It is important to know that reporting is not a one-time requirement. CTA reports are due within 30 days of any update to the information on a FinCEN report. This includes even a manager changing their home address. FinCEN estimates one in two companies will have a triggering change requiring an updated report in any given year.
Corporate Transparency Act Beneficial Ownership Information reports include mandatory information about the reporting company, every beneficial owner, and every company applicant.
Beneficial owners include any individual with substantial control, 25% ownership interests, or both. Beneficial owners are always individuals (and never companies) who either significantly control the company or hold at least a 25% ownership interest.
Note: Multiple individuals can qualify as beneficial owners, and every reporting company should have at least one beneficial owner due to someone being in control of any given company. A reporting company must report all beneficial owners to FinCEN in its BOI report. Omitting an owner can lead to $10,000 fines or up to 2 years in jail.
Your company’s best reporting option depends on the number of owners of your entity. Simple entities with less than ten beneficial owners can typically file by themselves online. More complicated entities with over ten beneficial owners should consider finding a specialized law or accounting firm to navigate this regulation.
You can find more help by selecting a card below.
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.