What is the Corporate Transparency Act?
Any small business owners in Florida need to learn about the recently enacted Corporate Transparency Act (CTA), which will become effective on January 1, 2024. The federal legislation is intended to increase corporate transparency and corporate accountability by establishing reporting requirements for most US businesses. The reporting requirements will involve providing information about the “beneficial owners” of the business, or the individuals who own the business or otherwise control it. Information must be reported to the Financial Crimes Enforcement Network (FinCEN), which is a bureau of the US Department of the Treasury. Our West Palm Beach business law attorneys can tell you more about the CTA and what it will mean for many businesses in South Florida.
Defining the CTA Reporting Requirement
According to FinCEN, the CTA “establishes uniform beneficial ownership information reporting requirements for certain types of corporations, limited liability companies, and other similar entities created in or registered to do business in the United States,” and it also “authorizes FinCEN to collect that information and disclose it to authorized government authorities and financial institutions, subject to effective safeguards and controls.”
Any business that is impacted will need to adhere to reporting requirements that become effective on January 1, 2024. How many businesses are likely to be impacted? Current estimates suggest that more than 32 million businesses — both small business and medium-sized businesses — will likely become reporting companies under the CTA. Reporting companies can include both domestic businesses and foreign businesses.
Businesses that are required to comply will need to report detailed information about the company, as well as information about “beneficial owners” who either: 1) exercise “substantial control” over the reporting company or 2) own 25 percent or more of the interests of the reporting company. A person can be a beneficial owner that exercises “substantial control” if any of the following are true of that individual:
- Serves as a senior officer in the company;
- Has authority over senior officers in the company (or the company board majority);
- Has a substantial influence on the important decisions made within the company; or
- Any other kind of substantial control over the running or direction of the company.
Information to Be Included in the Report
What needs to go into the report? Any business in South Florida that is required to report will need to include:
- Business entity name (and any d/b/a or trade name);
- Business entity address;
- Jurisdiction where the entity was formed; and
- Federal TIN.
The report will also need to include the following information for every beneficial owner:
- Home address;
- Identifying number (such as the beneficial owner’s driver’s license number of passport number); and
- Image of the document with the identifying number.
Contact a West Palm Beach Business Lawyer Today
If you have any questions about the CTA and how your business could be impacted, you should seek advice from a lawyer. One of the experienced West Palm Beach business attorneys at Kelley, Kaplan & Eller can provide you with more information today. Do not hesitate to get in touch with us to discuss your business’s responsibilities with regard to the Corporate Transparency Act and how the effective date of January 1, 2024 may impact your company. We are here to assist you.