A new law on the books could change the game for small businesses – and land their owners in a world of trouble if they don’t comply, so listen up.
The Corporate Transparency Act went into effect January 1, 2024. Broadly speaking, it creates a national beneficial ownership registry -- accessible by law enforcement, government agencies, and other officials -- by requiring companies like yours to provide identifying information on their beneficial owners and company applicants to FinCEN (America’s financial intelligence unit that combats financial crimes) in an effort to prevent money laundering, tax evasion, and the use of “shell companies” to conceal illegal activities.
What’s that mean for you?
Small businesses (less than 20 full-time employees), corporations, or other domestic or foreign entities like LLPs or LLCs that file documents with the secretary of state must disclose their information via the Beneficial Ownership Information (BOI) e-file system, now live. Reporting companies created on or after January 1, 2024, will have 90 days to file their initial BOI report. Companies in existence prior to January 1, 2024, will have until January 1, 2025, to file their initial BOI report.
What’s a beneficial owner?
Anyone who has substantial control over the company or controls at least 25% of the ownership interests.
Want to opt out?
OK, but be prepared to pay some stiff fines and potentially see jail time. (That’s a joke. Don’t skip this.)
Want to learn more?
We highly suggest it. We can’t stress enough how important compliance is.
On 1/4/24, we dedicated our weekly webinar entirely to The Corporate Transparency Act. Check out the recording here and be sure to reach out to your business attorney for help.
Additional resources are coming, so stay tuned.