Navigating the Corporate Transparency Act: Essential Insights for Businesses

The Corporate Transparency Act (“CTA”) represents one of the most significant federal compliance changes for small businesses and closely held entities in recent years. Enacted to combat money laundering, terrorism financing, and other illicit financial activities, the CTA creates a nationwide database of beneficial ownership information for certain business entities. Because the law applies to millions of U.S. companies—particularly small LLCs and corporations—business owners, managers, and advisors must understand their compliance obligations.

What Is the Corporate Transparency Act?

The CTA is a federal law enacted in 2021 as part of the National Defense Authorization Act. It directs the U.S. Treasury’s Financial Crimes Enforcement Network (“FinCEN”) to collect identifying information about the “beneficial owners” of certain companies formed or registered to do business in the United States.

The CTA took effect on January 1, 2024.

Which Entities Must Comply?

Most small, privately owned U.S. entities fall within the CTA unless they qualify for an exemption.

Reporting Companies Include:

• Corporations

• Limited liability companies (LLCs)

• Limited partnerships

• Any entity created by filing a document with a secretary of state

• Foreign entities registered to do business in the U.S.

Who Is a “Beneficial Owner”?

A beneficial owner is any individual who:1. Owns or controls at least 25% of ownership interests, or2. Exercises substantial control (such as senior officers or those with significant decision-making authority).

What Information Must Be Reported?

Company Information:

• Legal name

• Trade names/DBAs

• Business address

• Jurisdiction of formation

• EIN/TIN

Beneficial Owner Information:

• Full legal name

• Date of birth

• Residential address

• Government ID number

• Image of ID

When Must Reporting Be Completed?

Entities formed before January 1, 2024: must file the initial report by January 1, 2025.

Entities formed in 2024: must file within 90 days of formation.

Entities formed on or after January 1, 2025 must file within 30 days of formation.

Updates must be filed within 30 days of any change.

How Does a Company Submit the Report?

Reports are filed electronically at: https://boiefiling.fincen.gov/

Exemptions

There are 23 exemptions, including:

• Large operating companies (20+ employees, physical office, >$5M U.S. revenue)

• Public companies

• Banks and insurers

• Registered investment entities

• Nonprofits

Who Has Access to CTA Information?

CTA data is confidential and not public. It may only be accessed by:- Law enforcement agencies- Financial institutions conducting compliance checks- Regulators involved in financial crime investigations

Penalties for Non‑Compliance

Civil penalties: Up to $500 per day  Criminal penalties: Up to $10,000 and/or 2 years imprisonment

Final Thoughts

If you have not complied with CTA requirements, we strongly urge you to take the necessary steps to comply and the necessary information as soon as possible. Kilgannon Law assists clients with CTA compliance, exemption analysis, filings, and updates. Contact us for guidance on meeting your CTA obligations.