What the Corporate Transparency Act Means for Your Small Business
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If you're running a small business, new rules from FinCEN kicked in on January 1, 2024, and it's time to get your act together. Under the Corporate Transparency Act (CTA), many companies will need to disclose their Beneficial Ownership Information (BOI). Sounds straightforward, right? But don’t underestimate this shift—it could impact everything from your internal data management to your relationships with stakeholders.
What Is the CTA, and Why Does It Matter?
In a nutshell, the CTA targets anonymous ownership structures often used to facilitate money laundering and other financial crimes. Small businesses falling under FinCEN’s definition of a “reporting company” must report the people who really pull the strings—those who own or control at least 25% of the business.
Who Needs to Comply?
Not every business has to file BOI reports. Exemptions apply, especially if your business is already subject to significant regulatory oversight (think banks and large operating companies). But if you're a typical small business with a straightforward ownership structure, you’ll likely be on the hook.
What Do You Need to Do?
Start by identifying your beneficial owners. These are the people who have a significant say in your company's operations or who own a substantial stake. Once you've got this information, you’ll need to file it through FinCEN’s secure system before January 1, 2025. Some details about how to do this are below.
Next Steps for Small Businesses
Identify: Determine if your company is classified as a “reporting company.”
Gather: Collect details about beneficial owners, including legal names, addresses, and identification.
Prepare: Familiarize yourself with the electronic filing system that opened on January 1, 2024.
Docket: To avoid penalties, mark the deadlines to ensure you file before January 1, 2025.
Penalties for Non-Compliance
If you miss the deadlines or submit false information, you could face up to $500 in daily fines, not to mention possible criminal charges. The takeaway? Get your information in order now.