WHAT is the Corporate Transparency Act?

The CTA is a new law that is meant to help the government guard against money laundering, terrorism financing, and other types of illegal financing. The CTA authorizes the Financial Crimes Enforcement Network (FinCen) to collect information and disclose it to governmental authorities and financial institutions. The CTA requires the reporting “beneficial ownership” of the company.  Beneficial ownership refers to the individuals who ultimately own or control a company. In simpler terms, it means identifying the real people behind a company, rather than just the legal entity itself.

WHO needs to worry about this?

Any company who is considered a “reporting entity.”

“Reporting Entities” are

  • LLCs, corporations and any other companies that were created by a filing to a US government agency.
  • Foreign companies are also reporting entities if they have made a filing in the US, like a filing to do business in one or more states.


  • There are a few exceptions– these are companies that don’t need to make this filing:

“Large operating companies”: These are companies that 1) operate from a physical commercial street address in the US, and 2) employ more than 20 full-time employee (the full time count can’t dip below 20 at anytime), and 3) generated more than $5million in annual US gross receipts in the prior year.

Wholly-owned subsidiaries of exempt companies.

Various other exceptions, including entities that are otherwise regulated by the government and already disclose beneficial ownership to the government (including publicly traded companies, insurance businesses, banking businesses and government organizations).

WHEN do you need to file?


  • For companies formed before January 1, 2024: on or before January 1, 2025.
  • For companies formed after January 1, 2024 and during 2024: within 90 days after formation.
  • For companies formed after January 1, 2025: within 30 days after formation.


  • Updates must be filed within 30 days after a change (including a change of beneficial owner, a change in the address or identification card of a beneficial owner, a change in the address or name of the reporting company).


YES! Failure to comply can lead to criminal penalties of imprisonment for up to two years, and/or a fine of up to $10,000 and a civil penalty of $500 per day.

WHAT are your obligations?

You will need to make an initial filing and additional  Beneficial Ownership Information Reporting filings at https://boiefiling.fincen.gov. The core of this Reporting is listing out “beneficial owners”.


  • “Beneficial Owners” include anyone (a person, not a company) who directly or indirectly owns 25% or more of a company, and anyone who “substantially controls” the company. When calculating ownership, you include all ownership, including stock, profits interest, options, etc.

If you have multiple layers of companies, to calculate who owns 25% or more, you are only looking at individual people, not companies.  So, if Company X is owned by Company Y, you would look at Company Y’s individual owners to see who owns 25%+ of Company X.

There are a few circumstances where a substitute person will be disclosed instead of the beneficial owner- for example, children, nominee, certain employees (non-senior officers with control),inheritor and creditors.


  • “Substantial Control” includes people who: 1) are a “senior officer” (for example, president, CEO, CFO, Manager, board member, etc), or 2) have the authority to appoint or remove officers or directors, or 3) are an important decision maker or 4) have any other form of substantial control, influence, or who directly or indirectly lead, or determine business decisions and choices.

Example:  If Adam, Bonnie and Crestridge LLC each own 33.3% of ABC LLC, who are the beneficial owners of ABC LLC?

Adam and Bonnie each directly own 33.3%, so they are beneficial owners of ABC LLC.

Sam owns 100% of Crestridge LLC, which means he has an indirect 33.3% ownership in ABC LLC.  Sam is a beneficial owner of ABC LLC.

Lily has been hired to act as CEO of ABC LLC.  Lily has “substantial control” of ABC LLC, so she is also a beneficial owner of ABC LLC

  • Do you need to list out your “Company Applicants”? Only if you were formed after 1/1/24.

Company Applicants are individuals who have directly filed your formation documents or who direct/control the filing.  If you were formed after 1/1/24, you will need to list at least one Company Applicant, and not more than two.  If Drumm Law has formed your company after 1/1/24, we are one of your Company Applicants and we will send you our FinCen number.


  • Company’s full legal name
  • Any trade name or “doing business as” name
  • Address of the Company’s principal place of business
  • State that Company was formed in
  • IRS Taxpayer identification number, including Employer Identification Number
  • For each Beneficial Owner and Company Applicant:
  • Full legal name
  • Date of birth
  • Current address

Identifying number and jurisdiction and image of one of the following current documents:

  • US passport
  • State driver’s license
  • Government issued identification document

Who can HELP?

Please feel free to reach out to us if you have any questions. We think the most difficult part is making the list of “beneficial owners”.  We can help you gather all of the information that you will need to make the filing.

This is a short summary of your obligations, but for full instructions, see https://www.fincen.gov/boi/small-entity-compliance-guide.