Year-End Actions for Corporate Transparency Act Compliance

Year-End Actions for Corporate Transparency Act Compliance

As companies approach the year-end deadline for compliance with the Corporate Transparency Act (CTA), an article by Lathrop GPM says that many business owners are evaluating additional housekeeping tasks essential for reducing liability and maintaining a compliant status. 

The article suggests a few of these year-end tasks, including:

• Updating governance and organizational records to accurately reflect current ownership, officers, and management roles. 
• Conducting regular management meetings and recording minutes strengthens the protections afforded by corporate structures, especially for significant decisions such as asset sales or structural changes.
• Maintaining an updated stock ledger and a compliant buy-sell agreement.
• Properly documenting ownership transfers and consistently adhering to annual filing requirements with the Secretary of State and other regulatory bodies help prevent dissolution risks. 
• Regularly revisiting the company’s strategic plan ensures alignment with long-term objectives and identifies improvement areas.

The CTA specifically mandates that entities report beneficial ownership information, including individuals with substantial control or 25% ownership, by January 1, 2024. Companies must assess their reporting obligations, file beneficial ownership information reports (BOIR) for eligible entities, and ensure timely submissions to avoid penalties.

In addition, succession and estate planning remains crucial for business continuity in the event of an owner’s incapacity or death. Effective plans can facilitate tax-efficient ownership transitions, avoid probate delays, and create liquidity to cover estate taxes. Owners should also consider “fire drills” to validate succession readiness and prepare management for unexpected changes. 

By addressing these considerations, companies can uphold Corporate Transparency Act compliance standards and confidently enter the new year.