The 411 On The Corporate Transparency Act: What It Is And Who It's For
New year, new you, new… business laws???
Yep, your goal list isn’t the only thing that’s getting a refresh in 2024! The business laws we’re forced to abide by are too.
You can consider it the government’s gift to us and that gift in question? 🎁
The Corporate Transparency Act (CTA) – not to be confused with the abbreviation for “call-to-action” that us business owners are so familiar with. 😅
Most of the time when we’re hit with a new business law or regulation, it can feel like a cryptic crossword puzzle that leaves you super confused and just crossing your fingers that it doesn’t apply to you so you can skip right over it.
But in 2024, we’re collectively stepping into “that girl” mentality in this business world, which means that we follow the rules!!! And we make sure that we understand what rules we’re following exactly.
But no, that doesn't mean you have to spend hours scouring Google to figure out what the Corporate Transparency Act means and who it’s for.
Because what kind of legal business bestie would I be if I made you do that?
Instead I’ve wrapped up all the jargon for you and made it easy to read and understand so you can make sure you’re in compliance!
What Is The Corporate Transparency Act?
The Corporate Transparency Act might sound like another snooze-fest brought to you by our dear friends at the bureaucracy bazaar, but I’m here to say it's actually more like a VIP pass to the 'No Fraud Club' – and membership is mandatory.
What It Is ➡️ The short of it is this: Starting January 1, 2024, the Financial Crimes Enforcement Network (FinCEN) is throwing a reporting party, and guess what? If you have an LLC or Corporation, you're on the guest list.
They're asking all of us to share a bit about who really owns or benefits from your business.
(Oh, and btw, FinCEN is a bureau of the United States Department of the Treasury that collects and analyzes information about financial transactions in order to combat domestic and international money laundering, terrorist financing, and other financial crimes… so what they say, basically goes.)
Why Now ➡️ Well, it turns out the government isn't super thrilled about those naughty no-gooders using shell companies for shady money things.
And they want to make sure you're not one of them.
So in order to start fighting against money laundering, this new regulation requires that you report your business beneficial owner information to FinCEN like stated above!
Now you may be wondering… who exactly does this apply to? Do I have to report?
Who It’s For ➡️ Not ALL companies will be required to report, which is why the first step is to simply understand where you fall.
Typically this will include corporations, LLCs, and other similar entities doing business in the U.S., however, Sole Proprietors are generally not required to report.
To find out if you’re among the required reporting companies, CLICK HERE!
Generally speaking, anyone with at least 25% ownership interest or who exercises substantial control over the company is considered a beneficial owner.
"Substantial control" can include senior-level operational control, like a CEO or other executives who makes significant decisions for the company, even if they don't own a significant portion of the company.
When To Report ➡️ Now, this news is not meant to sound the alarms for you! As a business owner myself, I know how it can feel to have one more thing added to your plate.
The good news is that you have some time!
❗️If your business existed before January 1, 2024, you have the ENTIRE year to report at any point. If you form a business after January 1, 2024, you have 30 days to report.❗️
How To Report ➡️ Most importantly, how the heck do you comply with this regulation?
Well, I’ve made a simple checklist for you to follow to ensure that you’re in compliance with the CTA and can add it to your business owner to-do list to complete at any time within the year!
CLICK HERE to grab the step by step guide.
Where To Report ➡️ Once you have all of your ducks in a row and you’re ready to report, you can navigate to the official FinCEN site to follow their filing process!
What Happens If You Don’t Report ➡️ Oh, and if you fail to do so? Welllll, there are consequences of course.
If you fail to report, you could be faced with criminal and monetary damages, including civil penalties up to $500 for each day of noncompliance after a missed deadline, as well as criminal fines and possible imprisonment for willful non-compliance.
So basically just grab the guide and check it off your list!
Additional Resources For The Corporate Transparency Act
The guide I created and linked above covers almost everything you need to know about this new business rule, but in case you’re in need of more resources for the CTA, here’s a few suggestions:
- Beneficial Ownership Information provided by FinCEN
- Small Business Compliance Guide provided by FinCEN
- FAQ’s provided by FinCEN
- The official FinCEN Newsletter for updates
- FinCEN Contact for personal support
Here’s to conquering the business world – one regulation at a time! 💁🏻♀️