Corporate Transparency Act: Understanding Your Obligation
The dawn of January 1, 2024, ushers in a new era. All new and existing entities (yes – all) will need to either (i) confirm they qualify for an exemption from the CTA’s reporting requirements or (ii) timely submit a beneficial ownership information (BOI) report to the U.S. Treasury’s Financial Crimes and Enforcement Network (FinCEN).)
The long-anticipated Corporate Transparency Act (CTA) takes center stage, bringing with it a wave of positive changes for businesses. In this blog, we’ll delve into the impact of the CTA on entities, highlighting its role in fostering transparency and accountability. We’ll also discuss the penalties for non-compliance and offer a call to action to help you ensure your entity’s success in this new regulatory landscape.
The Positive Impact of the Corporate Transparency Act
The CTA is all about promoting accountability and transparency among entities. It’s an opportunity for companies to showcase their commitment to ethical business practices. The act requires all business entities formed or registered to do business in the United States to disclose additional information about their beneficial ownership, including the names and addresses of individuals with a significant stake in the company (unless you affirmatively qualify for an exemption).
You may be wondering if the BOI reports will be publicly available and how this information will be used. Fair question, but rest assured that the information will not will be publicly available. Generally, it will be disclosed only (i) to federal and state law enforcement agencies in specified circumstances and (ii) with the reporting company’s consent, to financial institutions in connection with their know-your-customer (KYC) obligations.
There are 23 listed exemptions. These include, among others:
Penalties for Non-Compliance
One key aspect that entities need to be aware of is the penalties associated with non-compliance for both new and existing entities. Fines for failing to file the necessary statements with the Financial Crimes Enforcement Network (FinCEN) can be substantial ($500 a day up to $10,000, and up to 2 years in jail).
For NEW entities, formed as of January 1, 2024, you will have 30 days to report.
For EXISTING entities, formed on or before December 31, 2023, you will have 1 year to report.
Not only can this impact your company’s financial health, but it can also lead to legal consequences for those involved in your business. Therefore, compliance is not just a matter of good practice; it’s a way to protect your LLC from unnecessary penalties and potential legal troubles.
As we move closer to the implementation of the CTA, it’s crucial for entities to prepare for these changes and ensure compliance by ensuring you have a clear understanding who directly or indirectly, (i) exercises substantial control over the entity (e.g., any senior officer) or (ii) owns or controls 25% of the entity.
Don’t worry; support and guidance will be readily available to help you navigate these new regulations effectively and efficiently. Stay tuned for more information on how to seamlessly uphold your LLC’s reputation and meet your legal obligations. In our upcoming blogs, we’ll provide you with insights, best practices, and resources to make your journey through the CTA as smooth as possible.
The CTA represents a positive shift toward a more transparent, accountable, and thriving business environment. Embrace it, and your entity will not only stay on the right side of the law but also thrive in this new era of responsible corporate practices.
If you have any questions regarding the CTA and how it might impact your business, please contact our team at email@example.com. You can also complete submit your contact information on our home page and our team will follow up with more information.