Corporate Transparency Act: What Every Small Business Needs to Know
By Laura Watts
Updated March 18, 2024
If you own a business, you might have received a notice from your Secretary of State’s office informing you of your requirement to file a beneficial ownership report with the United States Department of the Treasury’s Financial Crime’s Enforcement Network in compliance with The Corporate Transparency Act enacted by Congress on January 1, 2021, as part of the National Defense Authorization Act.
If reading that causes you to scratch your head, you’re not alone. Many of our Myatt & Bell business clients have reached out with questions and concerns.
First, it is important to highlight that this is a federal law. Accordingly, the annual report that your business files with the state is not sufficient to meet this new mandatory federal requirement.
While there is no fee to file a beneficial ownership report (“BOIR”), the fine for failing to comply is a civil penalty of up to $500 per day. Consequently, this is not something you should ignore. Businesses established after January 1, 2024, are required to submit the BOIR to FinCEN within 90 days of their formation. Businesses formed prior to January 1, 2024, have until January 1, 2025 to complete this filing. Businesses formed after January 1, 2025, are required to submit the BOIR to FinCEN within 30 days of their formation.
You might be wondering, what is the purpose? In a nutshell, the Financial Crime’s Enforcement Network’s (“FinCEN”) primary mission is to safeguard the financial system from illicit use. The Corporate Transparency Act’s (“CTA”) reforms are intended to crack down on money laundering and other related illegal activities like terrorist financing, corruption, and tax fraud. To illustrate, many individuals form businesses to hold things such as a title to property, but do not otherwise carry-on significant business operations. These are often referred to as “shell companies.” Most shell companies are formed for legitimate purposes, and historically, the requirements to disclose the companies’ members have been lax, allowing the owners to remain anonymous. The CTA’s reforms require better disclosure of business owners to prevent bad actors from using shell companies in furtherance of various crimes. In other words, the federal government wants to know who you are, that you’re running a legal business, and that you are paying your taxes.
If you are saying, “Gee, I just don’t have time to deal with all of that,” we have good news for you: Myatt & Bell has you covered.
We will file the BOIR on behalf of your company, or companies, starting at $400 for the first business and $75 for each additional business.[1]
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Our team is ready to assist you. To get started:
- Existing Registered Agent Clients – please click here.
- All Other Business Clients – please click here.
[1] Additional fees may apply for businesses with more complicated ownership structures.
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