Corporate Transparency Act - Business Owners Beware

The Corporate Transparency Act goes into effect on January 1, 2024. This law imposes a new requirement for federal filing on or before December 31, 2024,

This is true for most existing corporations, limited liability companies, and limited partnerships, and many other types of business entities.

Failure to comply can result in hefty monetary penalties and up to two years in prison.

FinCEN. Do you use an LLC to own a rental property or operate a business?

If you do, you likely face the new filing requirement by the Department of the Treasury's financial intelligence unit . . . Financial Crimes Enforcement Network (FinCEN)

Fail to file and you face big penalties and possible prison time.

Business Beneficial Owners. Businesses that have to report and that are in existence on January 1, 2024, must file on or before December 31, 2024, a beneficial owner information (BOI) report with FinCEN.

Again, fail to report and you face severe penalties.

Beginning January 1, 2024, a significant change is coming that could possibly affect your businesses. Whether yours are?single-member LLCs, small multi-member LLCs, small S corporations, or small C corporations, you may be required to provide detailed reporting on your beneficial owners—the people who own or control these entities. The new FinCEN reporting applies to many of your businesses, including any that own rental properties in an LLC. Small corporations and LLCs are those with

• 20 or fewer full-time employees.
• $5 million or less in domestic gross receipts reported on a?prior tax return.
• A physical U.S. presence.

To ensure compliance, the penalties for willfully violating the Business Ownership Information (BOI) reporting requirements include

• Civil penalties of up to $500 for each day a violation is not remedied.
• A criminal fine of up to $10,000.
• Possible imprisonment of up to two years.

There’s no limit on the number of people who can be subject to these penalties. Both senior managers and corporate entities can be held liable for willful violations of the BOI filing rules, including

• Anyone who willfully files a false or fraudulent BOI report on your company’s behalf.
• Anyone who willfully provides false information to the filer of a BOI report.
• Beneficial owners who willfully fail to file a BOI report or file a false report, including corporate officers, directors, or employees, and LLC members and employees.

The new regulations are designed to enhance transparency, making it more difficult to conceal illicit activities through anonymous corporate structures. While you?operate your businesses with integrity, you will nevertheless likely have to file with FinCEN and report any changes within 30 days. The rules are effective for both new and existing entities in 2024

• New entities have to file within 90 days of formation.
• Existing entities have to file on or before January 1, 2025?(which is closer than you think).

Ignoring the new reporting requirements is not an option—staying current on these changes is key to navigating this new landscape successfully. And the best way to do that is to contact us at (562) 281-1040.

As a business owner, you need to thoroughly understand these new regulations and be able to prepare and respond proactively.

Need help with regard to this or plan your taxes for 2024 contact us at (562) 281-1040