Corporate Transparency Act of 2024 - What You Need to Know!!!

Understanding the Corporate Transparency Act (CTA) 2024: Essential Information for Realtors and Business Owners in Cleveland

Today, we’re delving into a critical topic that all real estate agents, especially those working with S Corps and LLCs, need to be aware of: the Corporate Transparency Act (CTA) 2024. This legislation impacts a significant number of our clients, particularly investors with properties or businesses structured as S Corps or LLCs. If you’re in real estate, you can’t afford to ignore this.

Mike Ferrante, Team Leader of the 21 Mike Team at Century 21 HomeStar, spoke with David Freeburg, CEO of Infinity Title, and Andrew Tomko, Chief Legal Counsel at Infinity Title, here to shed light on the CTA and what it means for you and your clients. Their combined expertise in real estate law and title services makes them the perfect guides through this complex topic.

Introduction to the Corporate Transparency Act (CTA) 2024

Mike Ferrante: Thank you, David and Andrew, for joining us. Let’s dive right into the Corporate Transparency Act (CTA) 2024. Can you give us a brief overview of what the CTA is and why it’s important for real estate agents and their clients?

David Freeburg: Absolutely, Mike. The CTA was enacted by Congress in 2021 to combat illegal activities like money laundering and tax evasion that can be hidden through anonymous business entities. Starting in 2024, if you own an S Corp or an LLC, you’ll need to report information about the beneficial owners of these entities to the Financial Crimes Enforcement Network (FINCEN).

Andrew Tomko: That’s correct. The idea is to create transparency about who ultimately owns and controls these entities. For real estate agents, especially those dealing with investor clients who often use LLCs to manage their properties, it’s crucial to understand these requirements.

Key Requirements of the CTA

Mike Ferrante: What exactly do business owners need to do to comply with the CTA?

Andrew Tomko: If your business was formed before January 1, 2024, you have until the end of 2025 to submit the required information. If it was formed after January 1, 2024, you have 90 days to comply. Going forward, new entities will have 30 days to report.

David Freeburg: This involves disclosing the names, addresses, and other identifying information of the beneficial owners. It’s a straightforward process, but it’s important to do it right to avoid penalties.

Why Compliance is Crucial

Mike Ferrante: What happens if a business owner decides not to comply?

David Freeburg: Non-compliance isn’t an option. Eventually, when you file your tax return, the IRS will notice if your entity isn’t registered. This can lead to penalties and other legal issues. Essentially, it’s about aligning with federal law to ensure transparency and accountability.

Tax Implications and Benefits

Mike Ferrante: Let’s talk about the tax implications. How can structuring your business as an S Corp or LLC be beneficial?

David Freeburg: Structuring your business correctly can have significant tax benefits. For instance, an S Corp allows you to pay yourself a reasonable salary and take additional profits as distributions, which aren’t subject to self-employment tax. This can save you a substantial amount of money.

Andrew Tomko: Additionally, understanding whether an LLC should be taxed as a partnership or an S Corp can affect how much you pay in taxes. This is why it’s crucial to consult with a CPA to determine the best structure for your specific situation.

Practical Steps for Realtors

Mike Ferrante: What practical steps should Realtors and their clients take to comply with the CTA?

Andrew Tomko: First, familiarize yourself with the requirements. You can find more information on the FINCEN website. Second, gather the necessary information about your beneficial owners. Third, consider consulting with a CPA or legal expert to ensure you’re fully compliant.

David Freeburg: Also, make sure your LLC or S Corp is properly registered and maintained. This includes having a valid operating agreement and updating your statutory agent information as needed.

Final Thoughts

David Freeburg: The main takeaway is to be proactive. Don’t wait until the last minute to comply with the CTA. It’s better to handle this now and avoid any potential issues later.

Andrew Tomko: Agreed. And remember, this isn’t just about compliance. It’s about protecting your business and ensuring you’re operating within the law. If you have questions, don’t hesitate to reach out to professionals who can guide you through the process.

Conclusion

In conclusion, the Corporate Transparency Act (CTA) 2024 is a significant piece of legislation that impacts many in the real estate industry, particularly those working with S Corps and LLCs. By understanding and complying with the CTA, you can ensure your business operates smoothly and avoids potential legal and financial pitfalls.

For more updates and expert advice, make sure to follow us on all social media platforms. If you have specific questions or need further assistance, don’t hesitate to contact us. The 21 Mike Team at Century 21 HomeStar is here to support you every step of the way.

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