Corporate Transparency Act CTA-2024:
All You Need to Know
I would like to inform everyone about a recent federal law that not only impacts small businesses, predominantly partnership Limited Liability Companies (LLCs), but also contains specific exceptions regarding inheritance and wealth planning trusts.
The Act Itself: CTA-2024
The Corporate Transparency Act (the “CTA”), effective January 1, 2024, mandates “reporting companies” in the United States to disclose information regarding their beneficial owners (ie. individuals who own control of a company) to the Financial Crimes Enforcement Network (FinCEN), which is part of the U.S. Department of the Treasury. Business disclosures to FinCEN, involving the provision of information about your company, take place on the
FinCEN website. Each individual is assigned a unique identifying number by FinCEN in this process. While Limited Liability Companies are not exempt, certain exceptions to filing exist, including:
Sole Proprietorships
Some General Partnerships
Foreign Entities not registered to do business in the U.S.
Unincorporated Associations and Wealth
Planning Trusts
Minor Children
Individuals acting as custodians, or those
individuals who economically benefit from
the entity derived solely from the person’s
employment status
Individual whose only interest in the
corporation is through the right of
inheritance.
For businesses in New Jersey, as with businesses elsewhere in the U.S. the implications of the CTA are significant. Businesses will need to comply with these new federal reporting requirements, which may involve disclosing information about their beneficial owners for the first time. This could affect many businesses which may not have been previously subject to such transparency requirements. While reporting responsibilities exist for certain companies, there are exemptions for various types of businesses such as banks, bank holding companies, money transmitting businesses, and companies registered with the Secretary of Treasury under section 5330, insurance companies and other companies under the umbrella of the Securities and Exchange Act of 1934 and U.S. Code. Rather than take offense to the exemptions described above as a small business, we need to embrace our legal obligations.
The law requires that existing businesses are to complete the Beneficial Ownership Interest (BOI) filing by December 24, 2024.
Businesses formed after January 1, 2024, have 30 days to complete the BOI, with a 90-day grace period due to unfamiliarity of the registration requirements. The number of businesses required to file is staggering. In New Jersey alone, between January 1, 2024 through January 31, 2024, our office search revealed 12,231 business entities recorded as Limited Liability Companies for that given period of time. Nationally, more than 32 million businesses are required to file this BOI as mandated by the Corporate Transparency Act.
How Can DeSimone Law Offices Assist?
In February 2024, DeSimone Law Offices, LLC prepared a template and protocol to assist businesses in completing the Business BOI, ensuring compliance with the CTA. Our procedure enables the filing entity or small business, specifically a Limited Liability Company, to gather and have ready the BOI information your company needs to enter into the corporate required registration portal, in order for you to obtain your unique FinCEN Identity Number. Furthermore, how can individuals support each other in meeting these new obligations? Spread the word to your friends and family about these updates. Encourage them to seek advice from their accountants, lawyers, or our office for further assistance to ensure that all requirements are met.
Compliance
Non-compliance could result in a federal penalty of up to $591 per day, continuing violations, and criminal penalties up to $10,000 with a two-year prison sentence.
Conclusion
In Closing, the time to file is fast approaching, and failure to comply may have severe consequences. Our commitment at DeSimone Law Offices, LLC extends to supporting our communities and individuals as to their heritage and wealth management and addressing the impact of these requirements on small businesses.