Is a Sole Proprietorship a Reporting Company under the Corporate Transparency Act?

Beginning in 2024, Pursuant to the Corporate Transparency Act (CTA), most small businesses must file information disclosing information and identities of owners of those small businesses with the Financial Crimes Enforcement Network (“FinCEN”).   It’s estimated that 32 million small businesses will be required to comply with the CTA.  Business owners operating as a sole proprietorship might wonder if the CTA applies to them.

The short answer is “no”.  Unless a sole proprietorship was created in the United States by filing a document with a secretary of state or government agency (such as the Pennsylvania Corporations Bureau). A business is a “reporting company” as that phrase is defined by the CTA only if it was created  in the United States by filing such a document. Filing a document with a government agency to obtain (1) an IRS employer identification number, (2) a fictitious business name, or (3) a professional or occupational license does not create a new business entity, and therefore does not make a sole proprietorship filing such a document a “reporting company” required to file with FinCEN.

The experienced team of business attorneys at Fiffik Law Group are here to help you understand how the Corporate Transparency Act impacts your business. We will help you comply with the Act and establish policies so that your business can remain in compliance.