Own a business? Take action before December 31st to secure a year-long extension for the Corporate Transparency Act reporting deadline.
Running a business is fulfilling, but it entails rules, responsibilities, and reporting obligations that can be challenging to manage. Small business owners and Trusts with business interests must adhere to the Corporate Transparency Act (CTA) starting January 1st.
From the beginning of 2024, the CTA mandates that small companies disclose names of owners holding a 25% or higher ownership stake, along with individuals significantly influencing company activities. This requirement extends to Trusts with business ownership.
If you own a business or have a Trust linked to a business, compliance with the CTA involves filing a report. For those planning to establish a new company in the coming year, the reporting deadline may be within 30 days of its creation.
To gain additional time for filing, take action before the year concludes. This blog provides insights into obtaining a year-long extension for your business reporting, allowing more time to collect the necessary information for the CTA report. Understanding the CTA’s implications for your business is crucial before delving into the extension process.
The Corporate Transparency Act, enacted in 2020, aims to boost corporate transparency and combat money laundering, terrorist financing, and financial crimes. By mandating businesses to report owner and controller information, the Act facilitates the identification of “shell” corporations engaged in illegal money movements.
To comply, certain businesses, including some corporations and LLCs, must disclose ownership details and information about individuals exercising substantial control. This involves submitting an annual report to the Financial Crimes Enforcement Network (FinCEN) with specific details about each owner or controller.
Failure to file the annual report may result in penalties, including a $500 fine per day of delay and potential imprisonment for owners.
The CTA applies to companies created through filing formation documents with the Secretary of State or a similar office, such as corporations and LLCs. Exemptions exist for publicly traded companies, non-profits, regulated entities, and large companies meeting specific criteria.
For businesses created after January 1, 2024, the reporting deadline is 30 days from creation. However, companies formed on or before December 31, 2023, have until January 1, 2025, to file the CTA report. This grants a year-long extension, emphasizing the importance of planning new business endeavors before January 1, 2024.
The extension is crucial, offering a valuable time frame for understanding reporting requirements, gathering necessary information, and seeking legal advice to ensure compliance without the pressure of a 30-day deadline.
Seize this opportunity by creating or modifying your business entity before the year ends. Act promptly to avoid a rush of filings in late December.
If you own a family business or plan to create a new entity, act now to benefit from the year-long reporting extension for existing businesses. Reach out to Your Property Law Firm, A.P.C to get directed to a business law attorney that can help you create or modify your business entity.
