Effective January 1, 2024

Attention small business owners! The landscape of corporate compliance in the United States is set to change significantly with the enforcement of the Corporate Transparency Act (CTA) starting January 1, 2024. This law mandates many U.S. companies to report their beneficial owners – the individuals who own or control the company – to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury.

At AFSG, we understand the complexities this new law brings. We will not be offering our services to assist existing businesses until June 2024. New businesses registered in 2024 need to file within 30 days of their establishment – we will assist upon request.

Who Is Affected?

The CTA primarily targets small businesses that:

  • Have 20 or fewer full-time employees and less than $5 million in sales.
  • Are structured as LLCs, limited liability partnerships, corporations, business trusts, or similar entities.

This also includes foreign LLCs and corporations registered to do business in any state or tribal jurisdiction. Larger organizations with more than 20 full-time employees and over $5 million in annual gross receipts are excluded from this reporting requirement.

What Is a Beneficial Owner?

According to FinCEN, a beneficial owner is any individual who:

  • Exercises substantial control over a reporting company.
  • Owns or controls at least 25% of the ownership interests.

Reporting Deadlines

  • Existing Businesses: Companies established before January 1, 2024, must file their initial reports by January 1, 2025.
  • New Businesses: Companies established on or after January 1, 2024, have 90 days post-creation or registration to file.

Why Is This Important?

The CTA aims to prevent illicit activities such as money laundering and terrorism financing, often concealed behind small LLCs and corporations. By mandating transparency in ownership, the law seeks to make it harder for such illegal operations to hide behind corporate entities.

Our Firm’s Approach

At AFSG, we understand the complexities this new law brings. We will not be offering our services to assist existing businesses until June 2024. New businesses registered in 2024 need to file within 30 days of their establishment – we will assist upon request.

Do It Yourself?

For those who wish to tackle this on their own, Zen Business offers a service at $149 to file your Beneficial Ownership Information (BOI) report. However, it’s crucial to understand the nuances and ensure accurate compliance to avoid potential fines.

Exemptions

Certain entities like banks, accounting firms, credit unions, etc., are exempt from this filing. For a complete list of exemptions and more detailed guidance, refer to the FinCEN Beneficial Ownership Guide.

Additional Resources

Understanding and complying with the CTA is crucial for the legal and financial health of your business. As always, we’re here to guide you through these new requirements. Stay informed, stay compliant, and let us handle the complexities for you.