Starting January 1, 2024, the Corporate Transparency Act (CTA) requires nearly all U.S. companies to file a beneficial ownership report with the Financial Crimes Enforcement Network (FinCEN). This new federal law is a significant shift in corporate compliance and is designed to combat money laundering, terrorism financing, and other illicit activities. But for many business owners, the process of understanding and meeting these requirements can be overwhelming.
This guide aims to clarify what the Corporate Transparency Act entails, how it affects your business, and the steps you need to take to stay compliant.
What is the Corporate Transparency Act?
The Corporate Transparency Act is part of a broader effort by the U.S. government to increase transparency in corporate ownership. Under this law, most U.S. companies must report their beneficial owners—individuals who have substantial control or ownership of the company—to FinCEN, a bureau of the U.S. Treasury.
This means providing detailed information, including:
- The name of your company
- The company’s address
- Employer Identification Number (EIN)
- Names, birthdates, addresses, and identification numbers (e.g., passport or driver's license) of beneficial owners
The deadline for companies formed before 2024 is December 31, 2024. For companies formed in 2024 or later, the FinCEN report must be filed within 90 days of formation.
What Are the Penalties for Non-Compliance?
Failure to file the required FinCEN report can result in severe penalties. Companies can be fined $500 per day for each day the report is late, and individuals responsible for filing false reports could face criminal charges, including up to two years in prison.
This isn’t just a minor bureaucratic task—non-compliance can have serious financial and legal consequences for your business.
Does Your Business Need to File?
The CTA covers almost all U.S. companies, but there are a few exemptions. Companies that do not need to file include:
- Publicly traded companies
- Insurance companies
- Accounting firms
- Companies with more than 20 employees and over $5 million in annual revenue
Despite these exemptions, FinCEN estimates that over 32 million companies will need to file a report before the end of 2024. If your business doesn’t fit the exemption criteria, you’ll need to take action.
How KEYTLaw Can Help
At KEYTLaw, we understand that navigating federal compliance requirements can be daunting. That’s why we’ve developed a streamlined system to simplify the FinCEN filing process for Arizona businesses.
When you hire us to handle your FinCEN report, we take care of the details:
- Easy Access: We send an email to your company’s contact person with a secure URL and password to access our FinCEN filing system.
- Guided Process: Our system asks simple, step-by-step questions about your company and its beneficial owners, making it easy to provide the necessary information.
- Multi-Owner Assistance: If your company has multiple owners, our system allows you to email each owner directly, so they can enter their own information. This ensures accuracy and reduces your liability if another owner misrepresents their details.
- Complete Filing: Once all information is entered, we file the report with FinCEN on your behalf and send you a copy for your records.
This comprehensive approach ensures that your FinCEN report is filed accurately and on time, allowing you to focus on running your business without the worry of compliance issues.
Compliance Tips for Arizona Business Owners
Staying compliant with the Corporate Transparency Act can seem overwhelming, but following a few best practices can make the process smoother. Here are some key tips to help ensure that your business meets its reporting obligations:
- Start Early
Don’t wait until the last minute to begin gathering the necessary information for your FinCEN report. The earlier you start, the more time you’ll have to resolve any issues that may arise. Begin by identifying your company’s beneficial owners and ensuring that their information is up-to-date. - Double-Check Your Data
Accuracy is critical when filing your FinCEN report. Double-check all the information you enter, especially personal details like birthdates and identification numbers. Filing inaccurate information, even unintentionally, can lead to penalties or criminal charges. - Use a Trusted Filing System
Consider using a secure and reliable system to manage the FinCEN filing process. At KEYTLaw, we offer a user-friendly platform that guides you through the process step by step, ensuring that all necessary information is collected and submitted correctly. This can help reduce errors and the risk of non-compliance. - Coordinate with Co-Owners
If your company has multiple owners, coordinate with them early in the process. Each owner will need to provide their personal information for the report, and any inaccuracies could lead to penalties. Our system allows co-owners to enter their own details, reducing the chances of mistakes. - Stay Informed About Exemptions
While most companies are required to file, certain businesses may be exempt. Review the exemption criteria carefully to see if your company qualifies. However, even if you think you might be exempt, it’s important to verify this through official channels to avoid any future issues. - Keep Detailed Records
Maintain thorough records of all communications, documents, and filings related to your FinCEN report. These records can be crucial if any questions arise later or if you need to demonstrate compliance in the future. - Seek Professional Assistance
Compliance with the Corporate Transparency Act can be complex, especially for businesses with multiple owners or those that operate in multiple states. Seeking professional legal assistance can help ensure that your report is filed correctly and on time, protecting your business from fines and legal troubles.
Protect Yourself from False Filings
One critical aspect of the CTA is the need to certify that the information you provide is accurate. Filing false information can result in serious criminal penalties, so it’s important to take this process seriously.
For businesses with multiple owners, the risk of entering incorrect information is higher. For example, if one of your partners, like “Homer Simpson,” sends you incorrect data to file, you could be held responsible for the false filing. However, with KEYTLaw’s system, you can have each owner enter their information directly, reducing your liability if they misrepresent the facts.
Why the Corporate Transparency Act Matters for Your Business
While the Corporate Transparency Act might seem like just another regulatory hurdle, it serves an important purpose in the fight against financial crimes. The transparency it brings can help prevent money laundering, fraud, and corruption, making the business environment safer and more trustworthy for everyone.
For honest business owners, compliance with the CTA isn’t just a legal obligation—it’s a way to demonstrate integrity and contribute to a healthier business ecosystem.
Stay Ahead of the Deadline
The December 31, 2024, deadline for filing your FinCEN report may seem far off, but time can slip away quickly. Don’t wait until the last minute to figure out if your business needs to file. The sooner you act, the more time you’ll have to ensure everything is done correctly.
Ready to File? We’re Here to Help
If your business is subject to the Corporate Transparency Act, don’t take chances with your compliance. Let KEYTLaw handle the filing process for you. Our experienced team will ensure that your report is filed accurately and on time, protecting your business from fines and penalties.
Visit us at www.keytlaw.com to book a free consultation. We’re here to make the process as easy as possible, so you can focus on growing your business with confidence.
