Have You Heard About the New Corporate Transparency Act?

As a business owner, are you tired of all the rules and regulations we have to follow? There are already so many to be aware of, but a critical new one – the Corporate Transparency Act – came into effect on January 1, 2024. Please don’t overlook it. The Corporate Transparency Act (CTA) was enacted to create transparency in who owns a business, and therefore curtail illegal activity. With the CTA, there are mandatory reporting requirements to the Financial Enforcement Network (FinCEN), a bureau of the US Department of Treasury.

Corporate Transparency Act – What You Need To Know

The rollout of any new endeavor does not come without bumps in the road, and the Corporate Transparency Act is no exception, but FinCEN has a robust FAQ page on its website that is regularly updated. You can also contact them through their website. FinCEN appears responsive to questions and feedback that may come up as businesses try to comply. I believe these are the key points of the Corporate Transparency Act, focused on the Beneficial Owner Information, that business owners should be aware of:

Does Every Business Need to File?

The reporting has some exemptions, but most companies will need to comply.

What is the Deadline to File?

If an entity was created before January 1, 2024, a Beneficial Owner Information (BOI) should be filed no later than December 31, 2024. For new entities established after January 1, 2024, reporting must be completed within 90 days of creation.

Who is Considered a Beneficial Owner?

Anyone who owns 25% or more must be identified and reported, as well as anyone else (including an employee) who exercises substantial control. Do not overlook identifying individuals who may not own 25% of the company, but will be deemed exercising substantial control.

How/Where is a BOI Filed?

Forms can be completed online at fincen.gov/boi. For smaller businesses, with under ten beneficial owners, the form should take less than 15 minutes to complete if you have all the required information in hand. Some legal professionals are completing forms on their client’s behalf for a fee.

What Information Do I Have to Report on BOI?

Information required for the company includes the exact name as it was formed, the state where it was formed, the EIN, and any DBAs. The applicant (completing the form or original individual who organized the entity with the formation state) and beneficial owners must provide dates of birth, residential address, and a government-issued photo ID.

How are Changes Reported?

Any changes in information (including address) for the applicant or beneficial owners must be reported within 30 days. This one will be sticky, as even the best-intentioned organization may overlook updating an owner’s personal address should they move. However, the regulation states there will be fines if changes are not updated within 30 days of occurring.

What happens if a BOI is not Completed by December 31, 2024?

Civil penalties of up to $500 a day for each day the violation continues will be imposed, in addition to the potential criminal penalties of up to two years imprisonment and a fine of up to $10,000.

Contact Flourish Today

There is much more to running a business than meets the eye, especially as more rules and regulations like the Corporate Transparency Act get enforced. So, if you want to build your company on a solid foundation and create a basis for growth, having an outside perspective from a Business Consultant can be a valuable resource. If you’d like to learn more about how I can help you and your business, schedule a complimentary consultation. Email Info@FlourishBiz.Consulting, call 480-980-6066, or use the contact form to reach me.

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Flourish Business Consulting is small business consultancy firm based in Phoenix, Arizona, with local clients here in the Valley of the Sun and all across the state. Flourish provides small business consultancy services to support every aspect of your organization.
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Flourish Business Consulting is small business consultancy firm based in Phoenix, Arizona, with local clients here in the Valley of the Sun and all across the state. Flourish provides small business consultancy services to support every aspect of your organization.
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© Copyright by Flourish Business Consulting. All rights reserved.