A guide for businesses complying with 2025 Corporate Transparency Act deadlines

The Corporate Transparency Act (CTA) went into effect in the United States on January 1, 2024, mandating that all reporting companies submit details about the company’s beneficial owners and decision-makers.

The CTA aims to increase transparency and help combat financial crimes by identifying who controls and owns companies. Businesses must meet the essential deadlines and requirements to stay on track and avoid any penalties. This process includes submitting a Beneficial Ownership Information (BOI) Report to the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury.

It is crucial for businesses to comply with these reporting requirements, as failure to report or providing fraudulent reports, may result in civil penalties of up to $500 per day of violation, or criminal penalties, including up to two years in prison and/or a fine of up to $10,000 per violation.

Important CTA compliance deadlines:

• Businesses formed before January 1, 2024, must file their initial BOI report by January 1, 2025.
• Companies created or registered between January 1, 2024, and December 31, 2024, must file their BOI report within 90 days after receiving notice that the company’s creation or registration is effective.
• Businesses formed on or after January 1, 2025, must submit their BOI report within 30 days of receiving effective notice of the company’s creation or registration.
• If there are any updates to the beneficial ownership details, the BOI report must be updated within 30 days of any such change.

Which businesses are “reporting companies?”

The CTA’s reporting requirements cover both domestic and foreign entities registered to do business in the U.S. Specific business types required to file include:

• Domestic Reporting Companies: Corporations, LLCs, and similar entities created by filing formation documents with a state agency.
• Foreign Reporting Companies: Foreign entities registered to do business in the U.S. through filings with a secretary of state or similar office.

Exempt entities under the CTA:

The CTA provides 23 exemptions for certain types of businesses, recognizing that these entities generally pose a lower risk of financial misconduct due to other regulatory oversight or public transparency. A few of the more common exempt entities include:

• Publicly Traded Companies
• Governmental Authorities
• Large Operating Companies: Defined as businesses with over 20 full-time employees, more than $5 million in gross receipts or sales in the previous tax year, and a physical office in the U.S.
• Financial institutions including banks, credit unions, and securities brokers
• Other exempt entities include insurance companies, investment firms, and certain nonprofit organizations

Information required for BOI reports:

For those businesses required to file, each BOI report must include detailed information on both the company and its beneficial owners. Here’s a breakdown of the information that is needed:

• Company Information:
  • Legal name and trade names (if applicable)
  • Principal U.S. business address
  • Formation jurisdiction
  • Taxpayer Identification Number (TIN)
• Beneficial Owner Information:
  • Full legal name
  • Date of birth
  • Residential address
  • Unique identifier from a valid government-issued document (e.g., passport, driver’s license), plus an image of the ID
• Company Applicant Information: (Required for businesses formed on or after January 1, 2024)
  • Full legal name, birthdate, address, and unique identifier, along with an image of the ID
• Optional FinCEN Identifier: Businesses or individuals who have already obtained a FinCEN identifier may use it in place of their full personal details.

Updating or correcting beneficial ownership information:

It’s important for businesses to know that once a BOI report is submitted, any changes must be reported promptly. This includes both updates and corrections.

• Updates: If there is a change in beneficial owners or their information, businesses must submit an updated report within 30 days.
• Corrections: Should any inaccuracies be found, businesses must correct the BOI report within 30 days of discovering the error.

Staying compliant under the CTA:

By adhering to these deadlines and requirements, businesses can ensure compliance with the CTA while helping FinCEN achieve its transparency and anti-money laundering goals. Missing these deadlines could lead to penalties, so it is essential to keep these key deadlines and requirements top of mind.