02/22/2024
* What is the Corporate Transparency Act?
In 2021, Congress enacted the Corporate Transparency Act. This new law aims to help law enforcement prevent, identify, and combat financial crimes. Under the CTA, most businesses are required to file a report with the Financial Crimes Enforcement Network (FinCEN).
Beginning on January 1, 2024, most companies in the United States will have to report information about their beneficial owners, i.e., the individuals who ultimately own or control the company. This information must be reported to FinCEN, a bureau of the U.S. Department of the Treasury.
* Do I Need to File A BOI Report?
Starting January 1, 2024, almost every small business is required to file a Beneficial Ownership Information (BOI) Report. This new reporting rule is a result of the Corporate Transparency Act, enacted by Congress in 2021.
* Who is Required to File?
Companies required to report Beneficial Owner Information (BOI) to FinCEN are called reporting companies. There are two types of reporting companies:
• Domestic reporting companies are corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.
• Foreign reporting companies are entities (including corporations and limited liability companies) formed under the law of a foreign country that has registered to do business in the United States by the filing of a document with a secretary of state or any similar office.
* Who is a Beneficial Owner of My Business?
If your business is a reporting company, your next step is to identify its beneficial owners. A beneficial owner is any individual who, directly or indirectly:
• Exercises substantial control over a reporting company;
• OR
• Owns or controls at least 25 percent of the ownership interests of a reporting company.
An individual might be a beneficial owner through substantial control, ownership interests, or both.
* What Happens if a Business Fails to Comply With the CTA?
Failure to comply with this new law can result in civil and criminal penalties. Penalties can include fines of up to $500 per day that the violation continues, criminal penalties of up to two years of imprisonment, and a fine of up to $10,000. There are a few businesses that are exempt from filing a BOI report.
CALL US, WE CAN HELP YOU!
