If you’re a business owner, you’ll want to be aware of your reporting obligations under the Corporate Transparency Act, which went into effect on January 1, 2024. S.J. Gorowitz Accounting & Tax Services is available to provide this reporting as a service to our clients, or clients may use the following information to file it themselves for free.

What is the Corporate Transparency Act?

The Corporate Transparency Act’s purpose is to gather and maintain financial intelligence and information about the owners of entities and businesses operating in the United States. This information will help federal authorities detect businesses that are being used as shells for illegal activities, such as tax fraud or evasion, money laundering and financing for terrorism.

How the Corporate Transparency Act Will Collect Information

The U.S. Department of the Treasury has established the Financial Crimes Enforcement Network (FinCEN) as a repository of information and a means of identifying fraudulent activities.

Under the Corporate Transparency Act, owners of companies doing business in the United States must file Beneficial Ownership Information Reports with FinCEN. In addition, business owners must keep their reports up to date if there are changes in beneficial ownership.

Companies Required to File a Beneficial Ownership Information Report

Companies required to report under the Corporate Transparency Act include:

• Domestic companies: Any company (i.e., corporations, limited liability companies/LLCs), etc.) that were created by filing a document with a Secretary of State or similar office.
• Foreign companies: Entities, such as corporations or LLCs, that were formed under a foreign country’s laws and registered to do business in the U.S. by filing a document with a Secretary of State or similar office.

Some entities are exempt from reporting.

Who is Considered a Beneficial Owner?

A beneficial owner is someone who owns at least 25% of the business or who exercises substantial control over the company’s operations or equity.

What Kinds of Information Should Be Submitted?

Reporting companies should be prepared to provide the following details:

• Company information: Provide the legal name, trade names, principal place of business, jurisdiction of formation and Taxpayer Identification Number (TIN).
• Beneficial owner information: Provide each beneficial owner’s name, date of birth, address and identification number from a valid ID (like a U.S. passport or driver’s license) along with a copy of the ID.
• Company applicant information (for companies created or registered after January 1, 2024): Provide the name, date of birth, address and identification details.

How and When to File Beneficial Ownership Information Reports

There are two ways to file a Beneficial Ownership Information Report:

1. File a PDF report
2. File the report online.

The deadlines for filing depend on when the company was originally formed:

• Companies created or registered before January 1, 2024, must file by January 1, 2025.
• Companies that were formed in 2024 must file within 90 days after notice of creation or registration.
• Companies formed on or after January 1, 2025, must file within 30 days of notice of creation or registration.

For more answers to Frequently Asked Questions, please visit the FinCEN site.

If you own a small business and need help filing your Beneficial Ownership Information Report, you may contact S.J. Gorowitz Accounting & Tax Services for assistance at 770.740.0797 or email info2@SJGorowitz.com.