At Kuberno, we are committed to revolutionizing governance technology with innovative solutions that drive efficiency and transparency. As part of our ongoing efforts to keep our clients informed and compliant, we want to shed light on the Corporate Transparency Act (CTA) and its implications for your business.
What is the Corporate Transparency Act?
The Corporate Transparency Act (CTA) is a bipartisan law passed by Congress in 2020, aimed at combating money laundering and enhancing transparency in corporate ownership. Starting January 1, 2024, the Financial Crimes Enforcement Network (FinCen) will require certain entities in the United States to disclose specific identifying information about their Beneficial Owners. This information will be stored in a non-public database accessible to law enforcement and other authorized entities.
Who Needs to Comply?
The CTA applies to a wide range of entities, including:
- Limited Liability Companies (LLCs)
- Corporations
- Sole Proprietorships
- Limited Partnerships
- Limited Liability Partnerships (LLPs)
- Statutory Trusts
- Entities registered as foreign companies
These entities must disclose their Beneficial Owners’ information, which includes individuals who control at least 25% of ownership interest or exercise substantial control over the company. Senior officers such as Presidents, CFOs, and CEOs may also be considered Beneficial Owners.
Exemptions and Special Cases
There are 23 categories of exemptions under the CTA, including:
- Tax-exempt entities under Section 501© of the Internal Revenue Code
- Publicly traded companies
- Banks and credit unions
- Large operating companies with more than $5 million in annual gross receipts and over 20 full-time employees
- Venture Capital Fund advisers
- Insurance companies
If you are unsure whether your company falls under this requirement, we recommend seeking legal advice to ensure compliance.
Compliance Deadlines
For entities formed before January 1, 2024, there is a one-year grace period to comply with the reporting requirements, giving them until January 1, 2025, to file their initial reports. Entities formed on or after January 1, 2024, must report their Beneficial Ownership information within 90 days of formation. Additionally, any changes in Beneficial Ownership must be reported within 90 days.
Non-compliance can result in significant penalties, including fines up to $10,000 and potential criminal liability for senior officers.
How Kuberno Can Help
At Kuberno, we understand the complexities of compliance and governance. Our Registered Agent services provide a dedicated physical address for receiving service of process and annual filings, ensuring your business remains compliant with all legal requirements. Our platform, Kube, offers advanced analytics tools to streamline governance processes, making data-driven decisions easier and more efficient.
Our dedicated support team is here to assist you with the filing of Beneficial Ownership information. We can help you navigate these new requirements and ensure your business stays compliant.
Moving Forward with Confidence
The Corporate Transparency Act represents a significant step towards greater transparency and accountability in corporate governance. At Kuberno, we are committed to supporting our clients through these changes with innovative solutions and expert assistance. Together, we can shape the future of governance and ensure a compliant and transparent business environment.
For more information or to book a consultation, visit our Registered Agent page.
