Navigating the Corporate Transparency Act: What Business Owners Need to Know
/As a business lawyer and entrepreneur, I understand that running a business comes with its fair share of challenges. Keeping up with legal requirements and regulations can feel overwhelming, especially when new laws come into play. One such law that has recently been introduced is the Corporate Transparency Act (CTA). Keep reading to learn more about the new requirements for business owners under the CTA.
The Corporate Transparency Act, which was signed into law in January 2021, was designed to increase transparency and combat financial crimes such as money laundering, terrorism financing, and tax evasion. The law seeks to improve accountability by requiring certain business entities to disclose beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of Treasury.
But what does this mean for you as a business owner? Let's break it down:
1. Understanding Beneficial Ownership
Under the CTA, business owners must now identify and report the “beneficial owners” of their company. Beneficial owners are those who have substantial control over the business or receive substantial economic benefits from it. This could include individuals who own or control at least 25% of the company's equity or voting rights.
2. Reporting Requirements
To comply with the CTA, affected businesses must submit annual reports to FinCEN containing information on their beneficial owners. The report should include details such as full legal names, addresses, dates of birth, and unique identification numbers (e.g. a driver's license or passport number).
3. Maintaining Records
In addition to reporting, businesses must also maintain accurate and current records of their beneficial owners, including any changes that occur over time. It is very important to keep this information updated and readily accessible in case of any future audits or inquiries.
4. Expansion of the CTA
It's important to note that the CTA applies not only to newly formed businesses but also to businesses already in existence. Even if you have been operating for years, you may still need to comply with the new reporting requirements. You should consult with an experienced business attorney to ensure your business complies with the CTA.
5. Penalties for Non-Compliance
Non-compliance with the CTA can have serious consequences for business owners. Failure to report accurate and timely information may result in hefty fines and potential criminal charges. A person’s willful failure to report can result in a civil penalty fine of $500 a day for each day the violation occurs. There is also the potential of criminal penalties of up to two years imprisonment and up to a $10,000 fine. It is essential to take this law seriously and ensure you are in full compliance.
At the Law Office of Sharyna Scott, we recognize that navigating the intricacies of the legal requirements for entrepreneurs and business owners can be challenging. That's why we are here to provide you with the support and guidance you need. We are well-versed in the Corporate Transparency Act and can help you understand your obligations as a business owner. Don't hesitate to reach out to us for personalized advice tailored to your specific circumstances.
Contact us today to understand how the Corporate Transparency Act affects your business and how we can help you navigate this new legal landscape with confidence.
