Corporate Transparency Act: It's OK to Ask for Help

Q: What is the purpose of the Corporate Transparency Act?

The Corporate Transparency Act is a new U.S. law intended to help identify and prevent money laundering and other illicit activities within the country by enforcing transparency standards for U.S. businesses.

The deadline to file beneficial ownership information reports is fast approaching, but many businesses have yet to do so. Here's why that's a problem.

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corporate transparency act deadline looms its ok to ask for help

by

Nicole Miller

Nicole Miller is LegalZoom's Chief Legal Officer and Secretary. Prior to joining LegalZoom, Ms. Miller served in many roles, most recently as General Counsel at The Honest Company, an American consumer goods company. Prior to The Honest Company, Ms. Miller practiced corporate law at the law offices of Cooley LLP and Gibson Dunn & Crutcher LLP. Ms. Miller was a Senate Fellow in the California State Senate. Ms. Miller serves on the governing board of Defy Ventures, Inc. Ms. Miller holds a B.A. in humanities from Stanford University and a J.D. from the University of Texas School of Law.

On Feb. 18, 2025, a federal district court reinstated the beneficial ownership information reporting (BOIR) requirements and deadlines mandated by the Corporate Transparency Act (CTA). However, the Department of Treasury announced on March 2, 2025, that it will no longer impose fines or penalties on American citizens and domestic reporting companies that don’t submit a report. (However, foreign reporting companies may still be subject to enforcement.)

Keep in mind this is a developing situation, and additional guidance is expected in April 2025.

Meanwhile, LegalZoom’s Compliance Filings can help you stay current with these changes and submit your business’ required filings—whether BOIRs, annual reports, or amendments. Our attorneys track filing requirements at the state and federal levels, and you’ll get timely alerts when action is needed. If you need immediate support, we also have a dedicated team of compliance specialists ready to answer your questions.

Small business owners have a lot on their plates—and now they have one more thing to do: File a beneficial ownership report.

More than 32 million businesses in the United States are small—playing an important role in our economy by creating nearly 65% of net new job creation over the past 20 years and making up almost 99% of all businesses in the country. Yet, starting a small business, running it, and staying compliant with ever-changing laws and regulations is challenging.

A business owner uses a calculator and checks his records before filling out a BOI report.

What is the Corporate Transparency Act?

One of those laws that small businesses must pay close attention to is the Corporate Transparency Act (CTA), designed to curb financial crimes and fraud. Companies are asked to submit a Beneficial Ownership Information Report (BOIR) to the Financial Crimes Enforcement Network (FinCEN), disclosing the identities of the people who own or control the business to make it more difficult for individuals to use corporate entities for illicit purposes.

Tips for filing your BOIR

To help encourage small businesses to start the BOIR filing process, here are some tips. First, determine if your business qualifies as a reporting company under the CTA. Typically, this includes corporations, limited liability companies (LLCs), and similar entities established through filings with state or Tribal authorities. Once you have confirmed your obligation to file, provide detailed information about your beneficial owners, the individuals who have significant control over the company or own 25% or more of its interests.

For many small business owners—many of whom have other jobs in addition to running their own business, seeking guidance from third-party companies specializing in regulatory compliance can be highly beneficial. LegalZoom’s research has found that most business owners actually prefer hands-on guidance to ensure they submit the most accurate reports to avoid non-compliance. Additionally, specialists offer invaluable guidance to ensure all required information is submitted on time, thereby minimizing the risk of errors or potential penalties.

FAQs about the Corporate Transparency Act

What is the purpose of the Corporate Transparency Act?

The Corporate Transparency Act is a U.S. law intended to help identify and prevent money laundering and other illicit activities within the country by enforcing transparency standards for U.S. businesses.

Who is considered a beneficial owner?

A beneficial owner is anyone who has significant control over a reporting company or who owns at least one-quarter of the company's ownership interests.

How often do you need to update beneficial ownership information?

Reporting companies need to update their beneficial ownership information within 30 days of certain changes, such as any change in the company's ownership.