At Ishihara and Parker Law Firm in Longview, Texas, we aim to keep business owners informed about legal compliance requirements. One of the most significant regulatory updates affecting businesses in 2024 is the Corporate Transparency Act (CTA), which introduces new reporting obligations for entities registered with the Secretary of State.

Who Needs to Report?

The Corporate Transparency Act applies to most entities that have filed with the Secretary of State, including:

• Limited Liability Companies (LLCs)
• Corporations
• Limited Partnerships

However, sole proprietors who have not formally registered an entity with the state are not subject to these new requirements.

What Needs to Be Reported?

Entities must report beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN). A beneficial owner is anyone who:

• Owns 25% or more of the company directly or indirectly
• Exercises substantial control over the entity, such as a senior officer or someone with the authority to make major business decisions

Each beneficial owner must provide:

• Full legal name
• Date of birth
• Residential address (not a P.O. Box)
• A unique identifying number (such as a driver’s license or passport number)

Additionally, businesses must submit:

• The entity’s legal name
• Any trade names or DBAs
• The entity’s current principal place of business
• Its jurisdiction of formation
• Taxpayer Identification Number (TIN)

Deadlines for Filing

• Existing entities (registered before January 1, 2024) have until January 1, 2025, to submit their initial report.
• New entities (registered on or after January 1, 2024) must file within 30 days of formation.

Penalties for Non-Compliance

Failure to comply with the CTA can result in:

• Fines of up to $500 per day for non-compliance (capped at $10,000)
• Criminal penalties, including up to two years of imprisonment

How to File

Starting January 1, 2024, businesses must file their reports electronically through FinCEN’s online portal. There is no filing fee, and entities are required to update their information within 30 days of any changes.

FinCEN Identifiers: Streamlining the Process

To simplify reporting, individuals with multiple entities can request a FinCEN Identifier, a unique number assigned to a beneficial owner. This allows them to use the identifier instead of submitting personal details for each entity separately. However, any changes to the owner’s information must be updated across all reports within 30 days.

Privacy Considerations

BOI reports submitted to FinCEN are not public records and are not accessible to the general public. The information is only shared with authorized government agencies for national security and law enforcement purposes.

What Should Business Owners Do Now?

• Determine if your entity is a reporting company under the CTA.
• Identify all beneficial owners who meet the reporting criteria.
• Gather the required information and prepare for submission via FinCEN’s portal.
• Consider applying for a FinCEN Identifier if you own multiple entities.

Final Thoughts: Stay Compliant and Avoid Penalties

The Corporate Transparency Act is designed to enhance transparency and combat financial crimes. However, compliance is mandatory, and the penalties for non-compliance are significant. Business owners should act now to ensure they meet these new requirements before the deadline.

At Ishihara & Parker Law Firm, we assist businesses in navigating these new obligations. If you have questions about your reporting requirements, contact us today for professional guidance and compliance support.

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