Business ownership is a fulfilling and exciting endeavor. Still, it also comes with rules, responsibilities, and reporting requirements that can be hard to track. Suppose you own a small business or have a Trust that owns a business interest. In that case, you must comply with the Corporate Transparency Act (CTA) come January unless you get an extension.
Beginning January 1st, 2024, the Corporate Transparency Act (CTA) will require small companies to disclose the names of any owners with a 25% or more ownership interest in the company and any individuals who exercise significant control over the company's activities. This new rule also applies to Trusts that own or control a company.
If you or your family own a business or have a Trust that owns a business, you'll be required to file a report under the CTA. And, if you plan to create a new company next year, your reporting deadline could be as soon as 30 days after the date of its creation.
There is a way to get more time to file the required report, but you need to act before the end of the year.
In this blog, I'll share how to get a year-long reporting extension for your business to give you more time to gather the required information to file the CTA report. But before I tell you how to gain the extension, it's essential to understand what the CTA is and how it will affect your business.
The Corporate Transparency Act (CTA) was enacted in 2020 to enhance corporate transparency and prevent money laundering, terrorist financing, and other financial crimes. By requiring businesses to report information about their owners and controllers, the Act makes it easier to identify "shell" corporations – companies that don't perform an active business or trade and are often used to move money around illegally.
To comply with the Act, certain businesses, including some corporations and LLCs, will need to disclose the names of anyone who owns 25% or more of the company and any members of the company who have "substantial control" over the company's activities to the Financial Crimes Enforcement Network (FinCEN). This includes anyone who owns or controls a company through their Trust.
To comply, a business must file an annual report with the following information on each owner or controller of the business:
Suppose a company doesn't file an annual report. In that case, it may be penalized with a $500 fine for every day the report is late, and its owners could even face imprisonment for up to two years.
The new CTA rule applies to any company created by filing a formation document with the Secretary of State or a similar office, such as corporations and limited liability companies (LLCs).
Since money laundering and terrorist financing are usually conducted using small businesses, the Act essentially aims to collect information on these companies, so entrepreneurs and small business owners should take extra care to meet the filing requirements.
Publicly traded companies, non-profits, and regulated companies like financial firms, accounting agencies, and banks are exempt from the rule. Large companies are exempt if they have 20 or more full-time employees in the US and generate $5 million in sales. An LLC or corporation that isn't actively performing a business or service is also exempt due to its inactivity.
Here's the thing about filing your annual report for the Corporate Transparency Act: If your company was created after January 1st, 2024, you'll need to file your report within 30 days of the company's creation. But, if your company's formation occurred on or before December 31st, 2023, you have until January 1st, 2025, to file its CTA report.
So, if you already have a business entity created, you have until January 1st, 2025, to submit your report. If you're thinking of creating a new company or changing the entity structure of an existing company, doing so before January 1st, 2024, will give you a year-long grace period to file the report. Otherwise, once January 1st rolls around, it'll be too late to take advantage of this Corporate Transparency Act extension.
The extension provides a valuable window of time for business owners to understand the reporting requirements thoroughly, gather the necessary information, and engage with legal professionals to ensure they comply with the Act without the pressure of a 30-day deadline.
The Act's reporting rules seem straightforward, but non-compliance penalties can be substantial. Creating your new business entity by year-end provides a cushion against potential penalties and risks associated with overlooking or misunderstanding reporting requirements. It's a proactive step that gives your business the advantage of time.
Suppose you own a family business or are considering creating a new business entity soon. In that case, I encourage you to do it NOW before the end of the year so you can take advantage of the year-long window to file your Corporate Transparency Act report for existing businesses.
Don't wait until the end of December to get started, as we anticipate a rush of new business entity filings at the end of December as business owners and their professionals rush to file their creation documents before the new year. If you need assistance filing your report or aren't sure whether the CTA rule applies to your company, we can help.
As your Personal Family Lawyer® firm, our goal is to guide your family through every stage of life and every change in the law through an ongoing relationship with you. Our approach to serving clients doesn't end when the paperwork is filed. We keep in touch with you and keep you abreast of any changes in the law so you can have peace of mind knowing that your family and assets are well cared for now and in the future.
Schedule a complimentary call with my office using the button below to learn more.
Suppose you or your Trust own or manage a business. In that case, you must report company ownership information under the new Corporate Transparency Act. And if you or your Trust create a new company in 2024, that report could be due in as little as 30 days. In this blog, I'll share how to get a year-long reporting extension for your new business, but you'll need to act before the end of the year. Read more…
Business ownership is a fulfilling and exciting endeavor. Still, it also comes with rules, responsibilities, and reporting requirements that can be hard to track. Suppose you own a small business or have a Trust that owns a business interest. In that case, you must comply with the Corporate Transparency Act (CTA) come January.
Beginning January 1st, 2024, the Corporate Transparency Act (CTA) will require small companies to disclose the names of any owners who hold a 25% or more ownership interest in the company and any individuals who exercise significant control over the company's activities. This new rule also applies to Trusts that own or control a company.
If you or your family own a business or have a Trust that owns a business, you'll be required to file a report under the CTA. And, if you plan to create a new company next year, your reporting deadline could be as soon as 30 days after the date of its creation.
There is a way to get more time to file the required report, but you need to act before the end of the year.
In this blog, I'll share how to get a year-long reporting extension for your business to give you more time to gather the required information to file the CTA report. But before I tell you how to gain the extension, it's essential to understand what the CTA is and how it will affect your business.
The Corporate Transparency Act (CTA) was enacted in 2020 to enhance corporate transparency and prevent money laundering, terrorist financing, and other financial crimes. By requiring businesses to report information about their owners and controllers, the Act makes it easier to identify "shell" corporations – companies that don't perform an active business or trade and are often used to move money around illegally.
To comply with the Act, certain businesses, including some corporations and LLCs, will need to disclose the names of anyone who owns 25% or more of the company and any members of the company who have "substantial control" over the company's activities to the Financial Crimes Enforcement Network (FinCEN). This includes anyone who owns or controls a company through their Trust.
To comply, a business must file an annual report with the following information on each owner or controller of the business:
Suppose a company doesn't file an annual report. In that case, it may be penalized with a $500 fine for every day the report is late, and its owners could even face imprisonment for up to two years.
The new CTA rule applies to any company created by filing a formation document with the Secretary of State or a similar office, such as corporations and limited liability companies (LLCs).
Since money laundering and terrorist financing are usually conducted using small businesses, the Act primarily aims to collect information on these companies. Therefore, entrepreneurs and small business owners should take extra care to meet the filing requirements.
Publicly traded companies, non-profits, and regulated companies like financial firms, accounting agencies, and banks are exempt from the rule. Large companies are exempt if they have 20 or more full-time employees in the US and generate $5 million in sales. An LLC or corporation that isn't actively performing a business or service is also exempt due to its inactivity.
Here's the thing about filing your annual report for the Corporate Transparency Act: If your company was created after January 1st, 2024, you'll need to file your report within 30 days of the company's creation. But, if your company's formation occurred on or before December 31st, 2023, you have until January 1st, 2025, to file its CTA report.
So, if you already have a business entity created, you have until January 1st, 2025, to submit your report. If you're thinking of creating a new company or changing the entity structure of an existing company, doing so before January 1st, 2024, will give you a year-long grace period to file the report. Otherwise, once January 1st rolls around, it'll be too late to take advantage of this extension.
The extension provides a valuable window of time for business owners to understand the reporting requirements thoroughly, gather the necessary information, and engage with legal professionals to ensure they comply with the Act without the pressure of a 30-day deadline.
The Act's reporting rules seem straightforward, but non-compliance penalties can be substantial. Creating your new business entity by year-end provides a cushion against potential penalties and risks associated with overlooking or misunderstanding reporting requirements. It's a proactive step that gives your business the advantage of time.
Suppose you own a family business or are considering creating a new business entity soon. In that case, I encourage you to do it NOW before the end of the year so you can take advantage of the year-long window to file your Corporate Transparency Act report for existing businesses.
Don't wait until the end of December to get started, as we anticipate a rush of new business entity filings at the end of December as business owners and their professionals rush to file their creation documents before the new year. If you need assistance filing your report or aren't sure whether the CTA rule applies to your company, we can help.
As your Personal Family Lawyer® firm, our goal is to guide your family through every stage of life and every change in the law through an ongoing relationship with you. Our approach to serving clients doesn't end when the paperwork is filed. We keep in touch with you and keep you abreast of any changes in the law so you can have peace of mind knowing that your family and assets are well cared for now and in the future.
Schedule a complimentary call with my office using the button above to learn more.
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14425 Falcon Head Blvd
Bldg E-100
Austin, TX 78738
