Contact Us Today 401-615-3880

Blog

Own a Business? Do This By December 31st to Get a Year-Long Extension To The Corporate Transparency Act Reporting Deadline

Posted by sslawne | December 1, 2024 | 0 Comments

 Business ownership is a fulfilling and exciting endeavor, but it also comes with rules, responsibilities, and reporting requirements that can be hard to track. If you own a small business or have a Trust that owns a business interest, you’ll need to comply with the Corporate Transparency Act (CTA) come January.

Beginning January 1, 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, as well as 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 that can give you more time to gather the required information needed to file the CTA report. But before I tell you how to gain the extension, it’s important to understand what the CTA is and how it will affect your business.

What The Corporate Transparency Act Means For 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 seeks to make it easier to identify “shell” corporations – companies that don’t actually perform an active business or trade and which 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.

In order to comply, a business must file an annual report with the following information on each owner or controller of the business:

  • Business name and current business address
  • State in which the business was formed and its Entity Identification Number (EIN)
  • Owner/controller’s name, birth date, and address
  •  Photocopy of a government-issued photo ID (such as a driver’s license or passport) of every direct or indirect owner or controller of the company

If a company doesn’t file an annual report, 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.

What Businesses Need to Report Under The CTA?

The new CTA rule applies to any company that is 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 largely 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 also 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.

When Do Businesses Need to File Their Report and How Can You Extend Your Deadline?

Here’s the thing about filing your annual report for the Corporate Transparency Act: If your company was created after January 1, 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 31, 2023, you have until January 1, 2025, to file its CTA report.

So, if you already have a business entity created, you have until January 1, 2025, to submit your report. This means if you’re thinking of creating a new company or changing the entity structure of an existing company, doing so before January 1, 2024, will give you a year-long grace period to file the report. Otherwise, once January 1 rolls around, it’ll be too late to take advantage of this extension.

Why does this extension matter?

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’re in compliance with the Act without the pressure of a 30-day deadline.

The Act’s reporting rules seem straightforward, but the penalties for non-compliance 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.

Helping You Make Strategic Moves for The Wellbeing of Your Family

If you own a family business or you’re thinking of creating a new business entity soon, 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.

And don’t wait until the end of December to get started, as we anticipate there will be 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.

About the Author

sslawne

Anthony Senerchia Jr. is an accomplished Senerchia & Senerchia P.C., his family's law firm, and COO of Dimension National Title. Anthony stands as a distinguished figure in the legal community, with an impressive array of bar admissions across Rhode Island, Massachusetts, Connecticut, and New Hampshire, including prestigious appointments to the US District Courts of Rhode Island, New Hampshire, and Massachusetts between 2019 and 2023. His legal journey began at the University of Massachusetts Law in Dartmouth, where he earned his Juris Doctor in 2019, preceded by a Master of Science from Worcester Polytechnic Institute in 2014, and a Bachelor of Science from Roger Williams University in 2010.

Anthony's dedication to the legal profession is further underscored by his active memberships in the Rhode Island, Massachusetts, Connecticut, and New Hampshire Bar Associations, reflecting his deep commitment to legal excellence across the New England region. His drive to pursue a career in law is deeply rooted in his commitment to his family, with the welfare of his children and loved ones being paramount in his professional endeavors.

At the heart of Anthony's practice is the profound satisfaction derived from assisting individuals and witnessing the tangible relief his expertise brings to their lives. This sense of fulfillment is a testament to the impactful nature of his work and his ability to navigate complex legal challenges with compassion and efficiency.

When he's not working, Anthony enjoys spending time with his wife, 2 boys, and his family. He is dedicated to giving back to his community and often participates in educational seminars and trainings.

Comments

There are no comments for this post. Be the first and Add your Comment below.

Leave a Comment

Your email address will not be published. Required fields are marked *

Our Mission

Senerchia & Senerchia PC, located in Cranston, Rhode Island, is a family-run and owned Law Firm with more than 30 years of experience. We take pride in treating our clients as part of our extended family, and as lifelong residents of our area, we truly understand our clients’ unique needs. Our services are designed to address the legal needs of individuals, families, and small businesses with a focus on personalized, client-centered assistance. We focus on Real Estate Law, Estate Planning, Probate, Trusts, and Wills, Business Law, and Kids Protection Planning. We have dedicated our careers to fighting for the rights of people in Rhode Island, Massachusetts, Connecticut, and New Hampshire.

 

Had a great experience? Review us on Google!


Senerchia & Senerchia P.C. 150 Burnside St Cranston, RI 02910 401-615-3880
Mon: 08:30am – 05:00pm
Tue: 08:30am – 05:00pm
Wed: 08:30am – 05:00pm
Thu: 08:30am – 05:00pm
Fri: 08:30am – 05:00pm

Menu