New Fed Reporting Law for Corps. and LLCs Starts Jan. 1

Beginning January 1, 2024, new rules require some businesses to share ownership details with the U.S. government. This rule, called the Corporate Transparency Act (CTA), applies to companies filing reports with FinCEN, the Financial Crimes Enforcement Network. However, since the reporting form is not out yet, there’s no need to panic. FinCEN has simply shared guidance, with the latest update on December 12, 2023. Here’s a basic breakdown of the new reporting law:

Who Needs to Report? Reporting companies, which include corporations, LLCs, or entities created by filing with a Secretary of State, must report about their beneficial owners. Foreign companies registered to do business in the U.S. also fall under this rule. If your business was created before Jan. 1, 2024, you have a whole year to file. Reporting companies created after Jan. 1, 2024 will have 90 days.

Who Doesn’t? Sole proprietorships, unless they were filed with a Secretary of State. Filing for an IRS number, fictitious business name, or license does not make you a reporting company.

Who’s Exempt? Certain entities, like publicly traded companies, nonprofits, and some large companies, are exempt. FinCEN’s Small Entity Compliance Guide can help you check if your business qualifies for an exemption from the reporting law. There are 23 types of exempt entities.

These rules aim to promote transparency, and while it might sound complex, many businesses are exempt. Check FinCEN’s guide and Beneficial Ownership Information page for clarity, and ensure your business complies if needed.

FinCEN has also posted this important fraud alert:

Alert: FinCEN has been notified of recent fraudulent attempts to solicit information from individuals and entities who may be subject to reporting requirements under the Corporate Transparency Act. The fraudulent correspondence may be titled “Important Compliance Notice” and asks the recipient to click on a URL or to scan a QR code. Those e-mails or letters are fraudulent. FinCEN does not send unsolicited requests. Please do not respond to these fraudulent messages, or click on any links or scan any QR codes within them.