As we step into a new era of business transparency, an important piece of legislation – the Corporate Transparency Act (CTA) – is knocking at our doors. Effective January 1, 2024, the CTA ushers in a new wave of filing obligations for many business entities. Here's what you need to know in a nutshell:
What Does CTA Mean for Your Business?
If you're setting up a corporation, a limited liability company (LLC), or other types of entities after January 1, 2024, you'll be classified as a "reporting company." This label comes with a responsibility: you must submit a beneficial ownership information (BOI) report to the Financial Crimes Enforcement Network (FinCEN), a division of the Department of the Treasury, within three months of your company's formation.
Don't worry - if your company existed before 2024, you're not off the hook, but you do have a bit more time. Your BOI report is due by January 1, 2025 (though aiming for December 31, 2024, might keep you ahead of the holiday rush).
Exemptions to the Rule
Some companies get a pass. For example, larger operating companies employing more than 20 people and boasting incomes over $5 million are exempt. There are also other specialized exemptions.
Filling Out the BOI Report
To comply, you'll need to provide specific details for each "beneficial owner" of your company in the BOI report. That includes:
Full name
Date of birth
Address
ID number and a copy of the ID itself
"Beneficial owners" are individuals who either own at least a quarter of the company or hold significant sway over the business operations.
The BOSS System – Your New Reporting Platform
Submission is digital and user-friendly, thanks to the BOSS system – the Beneficial Ownership Secure System – and comes at no extra cost.
Why Is This Important?
The data from BOI reports is a valuable asset in the fight against illegal activities like money laundering and terrorism. Rest assured, this information is strictly for government eyes and won't be available to the general public.
FAQs and Answers
As with any new regulation, questions abound. Here's a brief rundown:
Own an LLC for your rental property? File a BOI.
Have 10 LLCs? Prepare 10 BOI reports.
Can accountants and similar professionals assist with your filings? It's currently a gray area.
Should your registered agent handle the filing? No, that’s on you.
Are you self-employed? No need to file a BOI.
Is a street address required? Yes, indeed.
Should you list your Social Security number? Nope.
What about including your attorney’s details? That's a maybe.
A beneficial owner departed? Time to update your BOI report.
Got minor children involved in the business? They're not required on the BOI.
Will criminals comply and submit BOI reports? That remains to be seen.
The points above cover just the basics. If you're thirsty for more knowledge or have unique circumstances, don’t hesitate to reach out to our office. We're here to steer you through the winding rivers of compliance and ensure that your reporting is as smooth sailing as possible.