Corporate Transparency Act: What Businesses Need to Know for 2024 and Beyond
November 19th, 2024
Starting January 1, 2024, the Corporate Transparency Act (CTA) introduces a new federal reporting requirement impacting many business entities. If you operate a Limited Liability Company (LLC), an LLC taxed as an S-Corp, a Corporation, or other entities registered with the Secretary of State, this law now mandates you to disclose specific personal information about your business’s owners or controlling members.
What Is the Corporate Transparency Act?
The CTA aims to enhance transparency by requiring businesses to file a Beneficial Ownership Information (BOI) Report with the Financial Crimes Enforcement Network (FinCEN). This report is designed to provide detailed information about those who own or control a business entity, supporting efforts to combat financial crimes and fraud.
Who Needs to File and When?
The deadlines for filing depend on when your business was formed:
- Entities registered before January 1, 2024: BOI reports must be filed by January 1, 2025.
- Entities registered between January 1, 2024, and January 1, 2025: BOI reports are due within 90 days of formation.
- Entities registered after January 1, 2025: BOI reports are due within 30 days of formation.
Ongoing Reporting Requirements
This is not a one-and-done filing. Businesses must submit updated BOI reports within 30 days of any changes to ownership or control. Changes could include a transfer of ownership, a change in control, or modifications to previously reported details.
Penalties for Non-Compliance
Failing to comply with the CTA reporting requirements can result in serious consequences:
- Fines: Up to $500 per day for late or missed filings.
- Civil and Criminal Penalties: Additional enforcement measures by FinCEN, which could be severe.
Important Consideration for California Businesses
In California, tax preparers are prohibited from filing BOI reports on behalf of clients because doing so may constitute practicing law. Business owners must file their reports directly using FinCEN’s official portal: www.boiefiling.fincen.gov.
What Should You Do Now?
- Understand Your Obligation: Determine if your business is required to file a BOI report.
- Prepare Your Information: Gather details about your beneficial owners or controlling members, including their personal identifying information.
- File on Time: Ensure your report is submitted within the specified timeline to avoid penalties.
At TaxPlus, we’re committed to helping you stay informed about changes in compliance and taxation laws. While we cannot file BOI reports on your behalf, we’re here to answer your questions and guide you on understanding this new requirement.
Stay proactive, stay compliant, and avoid unnecessary penalties—start preparing your BOI report today!
