The Corporate Transparency Act (CTA) was enacted to crack down on the misuse of anonymous shell companies for illicit activities. It requires most U.S. companies to report their beneficial owners—the individuals who control or own the business. But not all businesses have to comply. Here’s a breakdown of which businesses are required to report and which are exempt.

Who Must Report?

Under the CTA, the following types of entities are required to report their beneficial ownership information:

1. Corporations: Any business incorporated under U.S. law must report.
2. Limited Liability Companies (LLCs): Like corporations, LLCs formed in the U.S. or registered to do business in the U.S. must report.
3. Other Similar Entities: This can include limited partnerships or business trusts, essentially any entity that is created by filing with a state or tribal government​​.

Who is Exempt?

Certain types of businesses are exempt from reporting under the CTA. Generally, these are larger or more heavily regulated entities, such as:

1. Large Operating Companies:
   • Must meet all three of the following criteria:
     • Employ more than 20 full-time U.S. employees.
     • Generate over $5 million in revenue.
     • Have a physical office in the U.S.​​.
2. Publicly Traded Companies:
   • Companies that are listed on a U.S. stock exchange already report their ownership to the Securities and Exchange Commission (SEC), so they are exempt.
3. Highly Regulated Entities:
   • These include:
     • Banks and credit unions
     • Insurance companies
     • Broker-dealers
     • Registered investment companies
     • Public utilities​.
4. Inactive Companies:
   • Entities that have existed for more than a year, are not engaged in active business, have no assets, and have not sent or received more than $1,000 in the last year are exempt.

Why Reporting Matters

The goal of the CTA is to prevent bad actors from using anonymous shell companies for activities like money laundering, fraud, and tax evasion. By requiring companies to report their real owners, it helps the government track and stop illicit financial activities.

Deadlines for Reporting

• Existing companies: Must file by January 1, 2025.
• New companies (formed after January 1, 2024): Must file within 90 days of creation.
  
• New companies (formed after January 1, 2025): Must file within 30 days of creation.

Conclusion

If you run a small business or corporation, S-corp, C-corp, or an LLC, chances are you’ll need to report. More than 95% of businesses are expected to report - so that probably means you.

Filing your beneficial ownership information with FinCEN is crucial to staying in compliance with federal law and helping combat financial crime. To find out more about the reporting process, visit FinCEN.

If you're not sure if your business needs to file, it's best to assume you must and file to avoid penalties.