As the clock ticks towards January 1, 2025, many business owners in the United States are scrambling to understand and comply with the Corporate Transparency Act (CTA). This new legislation aims to increase transparency in business ownership and combat financial crimes. However, failing to meet the requirements can lead to severe consequences. Let us explore what is at stake and how to avoid costly penalties.
Understanding CTA requirements
The Corporate Transparency Act requires most U.S. businesses to file a Beneficial Ownership Information (BOI) Report with the Financial Crimes Enforcement Network (FinCEN).
This report must include detailed information about the company and its beneficial owners, who have significant control or ownership stakes in the business. This information includes:
- Names
- Addresses
- Birthdates
- Identification numbers
- Jurisdiction of your company
For businesses established before January 1, 2024, the deadline to file the BOI report is January 1, 2025. Those formed between January 1, 2024, and January 1, 2025 must file it within 90 days of receiving notice of formation.
The high cost of non-compliance
The penalties for failing to comply with the CTA are steep and should not be taken lightly. If you miss the deadline or deliver inaccurate information, you could face:
- Up to two years in prison
- Fines of up to $10,000
- Civil penalties of up to $591 per day for ongoing non-compliance
Compliance with the CTA continues after the initial filing. You must update your BOI report within 30 days of any beneficial ownership or company information changes.
For business owners juggling numerous responsibilities, seeking legal assistance might be advisable to ensure full compliance and avoid potential pitfalls. An experienced business law attorney can help you interpret the requirements of your situation and ensure that you compile all the necessary information and submit a complete report.
The Corporate Transparency Act brings new responsibilities for business owners, but compliance is achievable with proper preparation and attention to detail. Act now to protect your business and ensure you are on the right side of this new legislation.