Big changes are coming for business owners in 2024, and it’s important to pay attention. A new law called the Corporate Transparency Act will go into effect on January 1st, 2024. If you own an entity, especially if it’s an LLC or a corporation, you need to pay close attention to this blog.
This law is meant to stop crimes like money laundering by forcing entities to disclose to the government who the underlying owners are.
In this blog, we’ll break down what this law means for small business owners.
What type of entities does the new law apply to:
This law applies to most business entities, although there are a few exceptions. You can find the list of exceptions below. If your business isn’t on this list, you must share important ownership information with the government. You are obligated to file the disclosure statement under the new law.
Exemption List:
– Securities reporting issuer
– Governmental authority
– Bank
– Credit union
– Depository institution holding company
– Money services business
– Broker or dealer in securities
– Securities exchange or clearing agency
– Other Exchange Act registered entity
– Investment company or investment adviser
– Venture capital fund adviser
– Insurance company
– State-licensed insurance producer
– Commodity Exchange Act registered entity
– Accounting firm
– Public utility
– Financial market utility
– Pooled investment vehicle
– Tax-exempt entity
– Entity assisting a tax-exempt entity
– Large operating company
– Subsidiary of certain exempt entities
– Inactive entity
What you need to Report:
To be in compliance with the new law, business owners must fill out a form called Beneficial Ownership Information (BOI). This form asks for details about owners with more than a 25% share in the company. You’ll need to share names, addresses, birthdays, and upload documents such as passports or driver’s licenses. People who control the company but don’t own it also need to be listed in this form. Further, if any of your initial filed information changes, you must update Financial Crimes Enforcement Network within 30 days.
Deadlines for Reporting Requirements:
If your business starts after January 1st, 2024, you have 90 days to share this information with FINCEN. certainly, if your business began before that, you have until January 1st, 2025, giving you a whole year.
Fines for failure to report:
Not following the Corporate Transparency Act can lead to big fines. Businesses that don’t share the required information may face fines of $500 per day (capped at $10,000) and even some jail time.
Who has access to database of information:
Even though the government is requiring a lot of information to be shared, they promise not to share this list with the public. Only specific government agencies can see it, and some need special permission like a court order. This is to protect your business information.
As the Corporate Transparency Act starts, small business owners should follow the rules to avoid fines and legal problems. While it might seem like a disturbance, the law aims to make businesses more transparent and fight against financial crimes. Stay informed, act quickly, and make sure your business follows the Corporate Transparency Act without any issues.
