Starting a small business or investing in rental properties can be exciting and come with great returns! However, in 2024, new regulations introduced by the Corporate Transparency Act (CTA) will come with additional responsibilities for business owners. It's crucial to understand these changes to avoid penalties and ensure compliance. In this guide, we'll break down the key points and steps to help you navigate the CTA effectively.
1. Understanding the CTA Basics
The CTA, created in 2021, mandates that certain business entities file reports with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). This requirement applies to most small business structures, including LLCs, corporations, and limited partnerships, with some exemptions.
2. Who Needs to File?
Reporting Companies: Most small businesses are considered reporting companies and must comply with CTA regulations. Exemptions exist for large operating companies and specific entities like publicly traded corporations and nonprofits.
Beneficial Owners: Identify individuals who own or control at least 25 percent of the business or exercise substantial control over it.
3. Steps to Compliance
Step 1: Determine Reporting Company Status
Check if your business entity qualifies as a reporting company under the CTA. Most small businesses, including LLCs and corporations, fall under this category.
Step 2: Identify Beneficial Owners
Determine individuals who meet the criteria of beneficial owners. This includes those with 25 percent or more ownership interest or substantial control over the company.
Step 3: Gather Required Information
Collect detailed information from beneficial owners, such as full legal names, dates of birth, residential addresses, and unique identifying numbers from official documents like passports or driver’s licenses.
Step 4: Identify Company Applicants
Provide information about the individuals who filed the formation document for your business entity. This is essential when forming your company.
Step 5: File BOI Report
File the Beneficial Owner Information (BOI) report within 90 days of forming your business entity. Use the FinCEN Beneficial Ownership Secure System (BOSS) database for online filings.
Step 6: Update BOI Reports
Ensure your BOI report is kept up-to-date. If there are changes in the provided information, update the report within 30 days of the change.
Key Takeaways
The CTA reporting requirements start for businesses forming in 2024.
Non-compliance can result in severe penalties, so it's crucial to adhere to the regulations.
File the BOI report accurately and on time, including information about beneficial owners and company applicants.
Stay informed about any changes in the CTA regulations to ensure ongoing compliance.
By following these steps and understanding your obligations under the CTA, you can navigate the new regulations seamlessly and focus on the growth and success of your small business. Stay compliant, stay informed, and ensure your business thrives in the changing regulatory landscape. For more detailed information on Corporate Transparency Act compliance, consult our expert guide.
Disclaimer: Laws and regulations are subject to change, and readers are advised to consult EPL advisors for personalized advice and compliance with specific state requirements. This information is not specific advice and is meant for general education.
You can reach our CEO and founder Peter Ellefson anytime at Peter@eplfs.com