As we approach the end of the year, it’s essential for businesses to be aware of upcoming regulatory deadlines, especially regarding the Corporate Transparency Act (CTA). At Kaplan CFO Solutions, we understand how busy this time of year can be, and with many still recovering from the impacts of Hurricane Helene, we want to ensure you don’t overlook this critical compliance requirement.
What is the Corporate Transparency Act (CTA)?
The CTA is a regulation aimed at combating money laundering, fraud, and tax evasion by requiring certain businesses to disclose information about their beneficial owners. This information must be reported to the Financial Crimes Enforcement Network (FinCEN) to promote greater transparency and accountability.
Who Needs to File?
If your business does not meet all three of the following criteria, you may be required to comply with the Beneficial Ownership Information Registration (BOIR) filing requirements:
- $5 Million or More in Annual Revenue
Your business must generate annual revenue of $5 million or more. - A Physical Brick-and-Mortar Location
Your business must have a physical, operational location. - More than 20 Employees
Your business must employ more than 20 full-time staff.
Each organizational entity must be filed separately. For example, if you have multiple real estate entities, each one will need to be registered individually. It’s also important to note that certain exemptions may apply, including for some non-profits (though not all) and financial companies regulated by the SEC or FINRA.
What Happens if You Don’t File?
Businesses required to comply with the CTA must complete their Beneficial Ownership Information Registration (BOIR) by December 31, 2024. Failure to file by the deadline could result in penalties of up to $500 per day, so it’s crucial to act promptly to avoid these fines.
How Kaplan CFO Solutions Can Help
At Kaplan CFO Solutions, our experienced CFOs are here to guide you through the CTA filing process and ensure compliance. Whether you’re an existing client or considering our services, we can help you determine whether your business is exempt or assist you with the necessary filings.
- Current Clients: Your Kaplan CFO will assist you directly in assessing your compliance requirements and guide you through the filing process.
- For Those Without a Kaplan CFO: We are available to support you on a project basis. Our team can help assess your filing needs and guide you through each step. To discuss your situation in more detail, please contact us at (828) 338-9091.
Recent Developments – A December 2024 Update
As you may already know, a preliminary injunction was granted earlier this month, pausing the enforcement of the CTA. The injunction came after the court ruled that the CTA’s reporting requirements posed a direct challenge to state authority over corporate governance. Historically, states have managed corporate governance within their borders, tailoring laws to meet local needs. The court’s decision reinforces this tradition, opposing a one-size-fits-all federal mandate.
This ruling underscores the tension between federal and state jurisdictions. The Department of Justice (DOJ) has been actively working to overturn this injunction, leaving the future of the CTA uncertain.
For clients who have already filed, rest assured that their compliance efforts remain valid. However, for those who have not yet filed, it’s crucial to stay informed as changes could unfold rapidly.
December 24 Update:
On Monday, the filing deadline for the CTA was reinstated, with a new deadline set for January 13. This decision created a sense of urgency for many corporations preparing to meet the requirements.
December 27 Update:
Late yesterday, the situation shifted once again. The reinstated deadline has been overturned, placing the filing requirements back on pause. This latest development further illustrates the fluid nature of the CTA enforcement.
Key Takeaway
Stay Vigilant: The legal and regulatory landscape surrounding the CTA is in flux. Monitor updates closely to ensure compliance as new deadlines or changes arise.
Be Prepared: For those who have not yet filed, use this time to prepare documentation and ensure readiness for potential enforcement.
Contact Us
Need help navigating the Corporate Transparency Act? Reach out to Kaplan CFO Solutions at (828) 338-9091 to discuss your specific situation and how we can assist. Our team is dedicated to helping you stay compliant and focused on your business goals.
About Kaplan CFO Solutions
Kaplan CFO Solutions specializes in providing fractional CFO services to businesses across various industries. Our team of seasoned CFOs brings decades of experience and expertise, offering strategic financial guidance to help companies achieve long-term success. Whether you’re looking for ongoing financial leadership or project-based support, we’re here to help.