Introduction:
As a business owner, staying informed about regulatory changes is crucial to avoid penalties and maintain compliance. One such significant change is the Corporate Transparency Act, which goes into effect on January 1, 2024. This comprehensive guide will walk you through everything you need to know about this new law and how to ensure your business stays on the right side of compliance.
Understanding the Corporate Transparency Act:
The Corporate Transparency Act is a federal law designed to combat money laundering and illicit activities by requiring businesses, particularly LLCs and corporations, to file a Beneficial Ownership Information (BOI) report. This report discloses individuals who own 25% or more of the company. This may bringing transparency to corporate ownership structures that were previously opaque.
Who Needs to Comply:
If your business is a U.S.-based company or a foreign company operating in the U.S., you are likely subject to the Corporate Transparency Act. However, there are exceptions, for example, inactive companies formed before 2020 and very large companies with significant revenue or employee counts. New businesses formed on or after January 1, 2024, must file the BOI disclosure within 90 days of formation.
Required Information for BOI Report:
The BOI report necessitates detailed information about individuals with significant ownership or control over the company, including their name, residential address, date of birth, and a copy of a government-issued ID like a driver's license or passport. Any changes to this information must be promptly reported within 90 days.
Filing Process and Fees:
Businesses are required to file the BOI report electronically with the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury Department. Notably, there are no filing fees associated with this process. Failure to comply can lead to civil penalties of $500 per day and potential criminal penalties.
Preparing for Compliance:
To ensure compliance with the Corporate Transparency Act, business owners should start gathering the necessary ownership information and IDs well in advance of the deadline. This is especially important for companies with intricate ownership structures involving trusts or IRAs, as determining the beneficial owner for reporting purposes is essential.
Utilizing Professional Services:
Many businesses are opting to enlist the help of lawyers and professional corporate compliance services to navigate the complexities of the Corporate Transparency Act. These services can assist in gathering and filing the required information accurately, minimizing the risk of non-compliance and associated penalties.
Stay Informed and Prepared:
Stay tuned for further updates and insights on the Corporate Transparency Act by subscribing to this blog. Being prepared and proactive is key for businesses to maintain compliance not only in 2024 but also in the evolving regulatory landscape beyond. Don't get caught unprepared – stay informed and compliant.
As always, talk to your attorney about your BOI report.