A new federal law, the Corporate Transparency Act (CTA), effective Jan. 1, 2024, impacts almost all limited liability companies (LLCs) and small corporations in the United States. These businesses now have new federal reporting requirements, which may be a challenge for some small and family business owners. This article provides an overview of the new reporting requirements, the potential impacts on businesses, and how working with an estate planning law firm now can provide clear guidance for your business to ensure you are in compliance with the new federal law.

Understanding the Corporate Transparency Act (CTA)

The Corporate Transparency Act (CTA) is a component of the Anti-Money Laundering Act of 2020. The CTA intends to create a new national database of individuals who own or control companies. These individuals must submit a report to the U.S. Department of Treasury’s Financial Crimes Enforcement Network, or FinCEN, called a beneficial ownership information (BOI) report. FinCEN is not part of the Internal Revenue Service (IRS), and the BOI report will not correspond to tax filing information.

What Is the Purpose of the Corporate Transparency Act?

The new legislation aims to determine who owns companies, and their assets, that were traditionally not required to report their ownership to authorities. The information will aid the U.S. government in identifying foreign and domestic bad actors who use the anonymity provided by various company structures to pursue criminal activities.

Which Types of Companies will Be Required to Report Under the CTA?

Any business entity, such as LLCs or corporations, created by filing a document with the secretary of state (e.g., Missouri Secretary of State) or any similar office must now report under the CTA. The CTA calls these entities ‘Reporting Companies’ and includes millions of domestic and foreign companies. Small business owners are likely to see the biggest impact.

FinCEN’s Small Entity Compliance Guide provides a list of 23 entities that are exempt from BOI reporting. Certain entities like banks, insurance entities, and charitable organizations are exempt from the reporting requirements. Large corporations consisting of 20 or more full-time employees, $5 million in gross sales, and an office location in the U.S. are also exempt from the reporting requirements.

What Types of Information will Need to Be Reported?

Reporting Companies are expected to report details about the company and the individual(s) holding direct or indirect control of the business entity, referred to as ‘Beneficial Owners.’ Reporting Companies must submit personal information like full names, birth dates, and addresses of Beneficial Owners. Although the information provided will not be public, FinCEN is authorized to disclose the information to various federal agencies.

How Will Information Be Reported?

Reporting Companies will submit reports electronically through the (FinCEN) website. A receipt will be issued upon the submission of the report.

When Do Companies Need to File a BOI Report?

All Reporting Companies established before Jan. 1, 2024 must file by Jan. 1, 2025. Reporting Companies formed in 2024 but before the end of the year must file within 90 days of creation. Those formed January 1, 2025 and thereafter must file within 30 days of creation. Non-compliance or misinformation can lead to steep fines, civil penalties (fines up to $500 per day up to $10,000), and criminal penalties (up to and including imprisonment).

Are Trusts Considered Reporting Companies?

If the trust was not created by filing documents with a secretary of state or similar office, it does not have BOI reporting requirements. Because state laws vary on how entities such as statutory trusts, business trusts, or other trusts are created, it’s essential to work with an experienced estate planning law firm to determine whether the trust falls within the FinCEN entity exceptions. Also, if a trust holds a reporting company, an estate lawyer can help analyze its terms to determine beneficial ownership.

Next Steps: Review Your Business Entity and Consult with an Estate or Business Planning Attorney

It’s essential to begin now to assemble a list of every company that you hold an interest in or exert control over. Even if you are not the owner, you may still be subject to the reporting requirements based on your status in the business. Then, consult with a knowledgeable estate law firm to help you navigate the new reporting requirements for businesses. Feel free to book a call with us by clicking here so we can help.


PLEASE BE AWARE that FinCEN does not send unsolicited requests and has received reports of malicious groups requesting information via fraudulent letters and emails to individuals and entities who may be subject to reporting requirements under the CTA. Individuals can subscribe to the FinCEN email list to be updated on BOI reporting here.