Reporting Company Information
The first type of information is the reporting company information. A “reporting company” is any company, whether it is domestic or foreign, that is formed by filing a document with the secretary of state (or a similar State office), or an Indian tribe. These reporting companies must report the following information to FinCEN:
- The reporting company’s name, and any trade name or DBAs (if applicable)
- The business street address
- The formation jurisdiction, and
- A “unique business number” (which can be the company’s EIN number from the IRS)
Reporting Company Exemptions
There are 23 types of entities that are exempt from reporting information to FinCEN. The most important exemption is the “large operating companies” exemption. An entity falls into this category if:
- It employs 21 or more employees in the US
- It has more than $5 million in gross receipts or sales in the US, and
- It has a physical office in the US
If a company meets all three requirements, they do not need to report any information to FinCEN. But if a company does not meet all three requirements, they are required to report their information to FinCEN.
When starting out, some companies may think they will meet the three requirements. But since they are unable to prove it at the start, they still must file.
Company Applicant Information
The second type of information is the company applicant information. A company applicant is someone who is responsible for submitting these reports to FinCEN, which includes Corporate Direct. However, FinCEN only requires this information for entities formed after January 1, 2024.
FinCEN requires the following pieces of company applicant information:
- The company applicant’s name
- The company applicant’s birthdate
- A business or residential street address, and
- A driver’s license or passport (with a document number and an image)
Beneficial Ownership Information
The third type of information is beneficial ownership information. A “beneficial owner” is someone who owns at least 25% of the company, or someone who exercises “substantial control” over the company. The “substantial control” requirement is broad. It can include managers, directors, officers, or anyone else who can make decisions for the company.
Companies must submit the following pieces of beneficial ownership information to FinCEN:
- The beneficial owner’s name
- The beneficial owner’s birthdate
- The beneficial owner’s residential street address, and
- A “unique identifying number” from a passport or driver’s license (with an image)
When to File
The timing to file these reports depends upon when the reporting company was formed.
- If the reporting company was formed before January 1st, 2024, they have one year (or until December 31st, 2024) to report their information to FinCEN.
- If the reporting company was formed after January 1st, 2024, they only have 30 days to report their information to FinCEN.
- When there is a change in ownership, a new mailing address, or someone discovers an error in a previous report, the reporting company has 30 days to file the corrected reports.
Penalties For Not Filing
The CTA has serious penalties. If you don’t report this information, you can face up to $10,000 in fines and 2 years in jail.
The Worst Part of the CTA
The CTA already places a burden on business owners across the country. And the worst part is that many registered agent services will not report this information to FinCEN for their clients. Even some attorneys have told their clients not to worry about the CTA. Because there are severe punishments for not reporting, this opens up their clients to unnecessary liability.
However, we here at Corporate Direct care about protecting our clients’ assets. And this protection includes helping our clients avoid any fines or penalties from the government.
Beginning in January 2024, we can prepare your initial and amended reports and submit them to FinCEN. Feel free to contact us for more details by clicking the link here.
- The CTA takes effect on January 1, 2024.
- You must report information about your company and its “beneficial owners.”
- You can face up to 2 years in jail or $10,000 in fines if you don’t report this information.
- Corporate Direct will help you comply with the CTA.