You've may have been hearing about this new business report you need to file with some unnerving consequences, and now (01/01/2024) it is officially in effect!
More information has been released and reports are starting to be accepted, so we've put together some of the FAQ's:
What is it?
The Corporate Transparency Act (or CTA for short) is a new federal law that started on January 1, 2024. It's a reporting requirement, that shares who are the beneficial owners, and who started the company.
What is it for?
The law was made to make businesses more transparent and to fight against terrorism, illegal money activities, tax cheating, and other financial crimes. It aims to close the gap in knowing who owns or benefits from certain businesses in the United States.
Who is it for?
There are two types of companies that are required to report:
Domestic Reporting - corporations, LLCs, and any other entity type that was created by filing a documentwith the secretary of state or similar office in the US. Basically, if you registered your business as an LLC in a State you are required to report.
Foreign Reporting - entites formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.
Who does not need to file?
There are a heap of exceptions including banks, credit unions, insurance companies, public utility.
If your business type is a sole proprietor, general partnership, joint venture or trust, you also don't need to file.
What are the deadlines?
Existing companies: Reporting companies created or registered to do business in the United States before January 1, 2024 must file by January 1, 2025.
Newly created or registered companies: Reporting companies created or registered to do business in the United States in 2024 have 90 calendar days to file after receiving actual or public notice that their company’s creation or registration is effective.
What information is needed to submit?
name
address
date of birth
Valid ID: this ca be a US passport, US driver's license, or identification issued by State or local government. Must be non-expired and an image of the ID needs to be provided.
What happens if I don't file?
Failing to comply could result in penalties of $500, or even a $10,000 penalty with 2 years prison time.
Is there a fee?
No fee!
What is the frequency of filing?
The report is not an annual requirement. It's only required to be submitted once and then you would just update the information when changes to ownership take place.
Where do I file?
U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) are now accepting reports. You can file HERE.
How do I know if I need to file?
As always, it's always best to consult with a professional to best advise you based on your specific entity type. If you would like to work with our legal partner, Guide My Business, to get submitted please complete this FORM
Information source: https://www.fincen.gov/boi
DISCLAIMER
The Finance Agency are accounting professionals however, any information contained or given is for educational purposes only and does not a substitute for financial advice from a professional who is aware of the facts and circumstances of your situation. Please consult with a CPA, tax preparer, or accountant that is working with your specific business situation and State regulations.