By now, most businesses are aware of the Corporate Transparency Act (CTA) and have disclosed the required information. However, we’re bringing this topic up again due to some common mistakes we’ve seen among clients. Here are two examples:
- One client failed to list their spouse as a beneficial owner, even though the company’s equity was community property.
- Another client didn’t include managers from the parent company, despite the parent company exercising control over the subsidiary’s ongoing management.
These mistakes demonstrate how tricky CTA compliance can be. To help avoid such issues, here are a few basic rules:
- If equity is community property, both spouses must be listed as beneficial owners.
- If your company is owned by another company, beneficial owners must be determined by reviewing the ownership structure of the parent companies.
- If individuals who aren’t senior executives or directors exercise control over the entity, any agreements with them must be analyzed to determine if they qualify as beneficial owners.
To ensure proper compliance, we recommend using authorized filers, such as CTASafe.com, who can help spot potential issues if something is wrong. For more complex situations, involving a lawyer is essential to avoid errors that could lead to costly penalties. Compliance is not just about ticking boxes; it requires expertise and attention to detail.