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The Corporate Transparency Act – Next Steps for Business Owners

By Emily M. Peterson, Esq. and Brandon J. Leal, Esq.

The Corporate Transparency Act (the "CTA"), the federal law requiring most small businesses to file a beneficial ownership information report ("BOI Report") with the Department of the Treasury's Financial Crimes Enforcement Network (FinCEN), goes into effect in less than two months. As with any new and novel law, small business owners should be proactive and begin preparing for compliance with the CTA NOW, so that they are better prepared once the law goes into effect.

As a refresher, beginning on January 1, 2024, the CTA will require most existing and new domestic and foreign business entities in the United States to file BOI Reports with FinCEN disclosing certain information regarding their beneficial owners and, for companies formed on or after January 1, 2024, the applicant(s) who directed the formation of the company. For a more detailed overview of the requirements for reporting companies under the CTA, check out our first article on this topic, "The Corporate Transparency Act: BIG News for Business Owners!", released on June 23, 2023. Depending on when the company was formed, companies will have either until January 1, 2025 to file their initial BOI Report (for companies already in existence prior to January 1, 2024), or thirty days from the date of formation of the company (for companies formed on or after January 1, 2024).

Now that you know what is required to be reported, on whom it should be reported, and when it should be reported, what steps can you take now in order to ensure your company complies with the CTA in the New Year? We've outlined some steps below that you can and should consider taking before the law goes into effect.

First, begin identifying your beneficial owners. For many small businesses, this will be relatively straightforward, in particular if there is only one equity owner. However, depending on the complexity of your business, and the business's ownership and leadership structures, it may take some time and analysis to determine who owns at least 25% of the equity interests of the company, or otherwise exercises substantial control over it. We encourage you to start making those determinations now, so that you give the company plenty of time to collect the required beneficial ownership information on each of these individuals. 

Next, once you've identified the beneficial owners, begin collecting the required information. Remember, you must include in the BOI Report for each of the company's beneficial owners: (1) their full legal name; (2) their date of birth; (3) their current residential address; (4) a unique identifying number from a driver's license, passport, or other state-issued identification document approved by the CTA; and (5) a scanned image of such identification document. Collecting this information may take some time, and beginning your collection efforts now rather than waiting until you are on the clock to file your BOI Report should make the reporting process go smoother when the time comes.

Importantly, consider reviewing and updating your company's government documents (typically, these documents would be the articles of incorporation and regulations/bylaws for a corporation, and the articles of organization and operating agreement for a limited liability company) as necessary in order to require equity owners, managers, members, officers, directors, and any other individual who may be considered a beneficial owner, to provide their beneficial ownership information to the company upon request. Recall that it is the reporting company's duty to file the BOI Report with FinCEN, but the reporting company cannot accurately file this report without cooperation from its beneficial owners. By requiring cooperation under the company's governing documents, the company will be equipped with the tools to ensure that their BOI Reports are accurate and complete.

Finally, consider putting in place safeguards to make sure that any updates to previously reported information are reported in a timely manner, and that any incorrect information is corrected as soon as possible. The CTA requires that an updated BOI Report be filed within 30 calendar days of any occurrence that results in a change to previously reported information. That means the company is responsible for checking in with its beneficial owners to ensure that updates are being reported to the company, so that the company can then report those updates to FinCEN. Adding provisions to the company's governing documents requiring beneficial owners to report any such change, together with regular reminders asking beneficial owners to provide updates to the company can mitigate the risk that a change in information goes unreported.

New reporting requirements can appear daunting to a small business, but proactively implementing these next steps will put small businesses in a good spot to begin reporting when the CTA goes into effect on January 1, 2024.

As always, do not hesitate to contact your WHP counsel with any questions or concerns you may have.

For more information about the CTA, see our article from June 23, 2023, "The Corporate Transparency Act: BIG News for Business Owners!"


This article provides an overview and summary of the matters described therein. It is not intended to be and should not be construed as legal advice on the particular subject.

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