{3 minutes to read} Are you wondering if your business is required to comply with the Corporate Transparency Act (CTA) that went into effect on January 1, 2024?
This is one part of a series of videos I'm recording to explain the various components of the Corporate Transparency Act. In this video, I'm going to explain which companies are required to report to FinCEN, the government agency accepting the required information. I'll explain what that information is and how to report it in other videos.
So, what is a Reporting Company? Well, the broad definition of Reporting Company under the Act is any corporation, LLC, or other entity that was created by filing or with a document with a state agency, and any foreign company created outside of the United States, registered in a state within the United States to do business in the United States. Well, that pretty much covers every single entity in the country, right?
There are, however, 23 exemptions. If your company falls within one of the exemptions, then your company is relieved from the reporting requirement. What's important is not so much understanding the definition of a Reporting Company, but to understand what the exemptions are. Generally, the exemptions apply to large companies, so most small businesses in the United States will not fall within an exemption. Here is a brief explanation of what those exemptions are:
•The first is any large company in the United States with more than 20 full-time employees and $5 million or more in gross receipts.
•The second exemption is a combination of entities that are funded, venture capital companies, private equity companies, and any Securities and Exchange Commission (SEC) registered advisors. All of those types of entities are under one exemption.
•Certain subsidiaries of exempt companies. If an exempt company owns a subsidiary, generally, the subsidiaries will also be exempt.
As you can see, there is a broad swath of companies that will not be able to claim an exemption, which means that most small businesses in the United States are going to have to report under the Corporate Transparency Act.
Please see my other videos for definitions of a Company Applicant and a Beneficial Owner and the deadlines for filing. Also, in the comments below, you will find a link to a summary of the CTA we have prepared. You can call or email us through our contact information below.
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