This is a new requirement established by the 2021 Corporate Transparency Act (CTA), an anti-money laundering law requiring many companies doing business in the United States to report information about the individuals who ultimately own or control them.
Here’s what you need to know, according to FinCEN.
Who has to report?
Companies that are required to comply, called “reporting companies”, may need to report information about its beneficial owners if it is:
- A corporation, a limited liability company (LLC), or was otherwise created in the United States by filing a document with a secretary of state or any similar office under the law of a state or Indian tribe.
- A foreign company and was registered to do business in any U.S. state or Indian tribe by such a filing.
Who does not have to report?
Twenty-three types of entities are exempt from reporting requirements. These include:
- Entities that are already subject to federal or state regulation, like banks and credit unions.
- Companies with more than 20 employees and $5 million in annual revenue.
Be sure to check with your CPA or attorney to determine if you’re required to file.
When do I report?
Reporting companies must file their reports by the following deadlines:
- Existing companies created before January 1, 2024 must file by January 1, 2025.
- New companies created in 2024 have 90 calendar days to file after receiving notice that their company’s creation is effective.
- New companies created in 2025 and beyond have 30 calendar days to file after receiving notice that their company’s creation is effective.
- Updates or corrections must be made within 30 days.
How do I report?
Reports can be filed electronically on FinCEN’s website and generally includes the following information for each beneficial owner:
- Name
- Date of birth
- Address
- Identifying number and issuer from either a non-expired U.S. driver’s license, a non-expired U.S. passport, or a non-expired identification document issued by a State, including an image of the document.
The company must also submit information about itself, including its name and address. Reporting companies created after January 1, 2024, must also submit information about the individuals who formed the company, or “company applicants”.
Though FinCEN’s website aims to provide the resources and information needed to make filing as quick and easy, your CPA or business attorney can help make sure you meet the filing requirements.
Ryan Colis
CFA, CFP®
Partner, Financial Advisor
About the Author
Ryan is a problem solver. He has a distinct ability to create a simple solution for very complex puzzles. So, naturally, he’s an integral part of our team. His favorite part of his role at Alterra is the analysis – whether analyzing a financial plan or reviewing an investment portfolio. However, the profession allows him to share that passion with clients by helping them navigate financial complexities as they collaborate on achieving their personal and financial goals.
After completing his undergraduate degree in Business Management, Ryan and Grant met by chance, developed a rapport and have been working together ever since. Ryan has continued his formal training in finance by earning his CFP and CFA designations.
The “Alterra” name was coined by joining the Latin roots “alter”, the origin of the word “altruism” with “terra” meaning earth or land. This name reflects the company philosophy of “clients before profits” and providing firmly grounded advice.