{4 minutes to read} This is Part 2 of my Corporate Transparency Act series.
In Part 1, I explained that the Corporate Transparency Act requires Reporting Companies to submit information to FinCEN about Beneficial Owners of the company and Company Applicants. In Part 2, I'm going to explain what a Reporting Company is and, in essence, whether you — who may own a company — would need to make sure your company complies if it is, in fact, a Reporting Company.
So, what is a Reporting Company under the Corporate Transparency Act? It's an entity that is a corporation, an LLC, or any company that was registered outside of the United States, and that is registered to do business in the United States. So again, it's an LLC, corporation, or other registered entity filed in any state in the U.S. or registered to do business in any State in the U.S. As you can imagine, that covers a whole lot of companies.
There are a lot of exemptions to the Corporate Transparency Act, and if your company falls within one of those exemptions, your company does not have to comply because it is not deemed to be a Reporting Company.
So, what are the exemptions? The exemptions are large or publicly-owned companies with at least 20 or more employees, at least $5 million per year in gross revenue, and a physical location in the United States, or any publicly registered company. As you can imagine, there are a lot of companies that don't have 20 employees and $5 million gross revenue that are going to be required to comply. I think the estimate has been about 90% of all companies in the United States, which, believe it or not, actually equates to about 32 million small businesses.
Below are listed links to downloads of summaries of FinCEN's Small Business Compliance Act. There is also a summary of the Corporate Transparency Act prepared by us.
In our next article, I'm going to explain when a Reporting Company must file the required information with FinCEN.
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