2024 Brings New Reporting Requirements for Business Owners.
The Corporate Transparency Act went into effect January 1, 2024, mandating new regulations for millions of business owners. This historic law imposes unprecedented reporting requirements for nearly all small businesses in an effort to combat financial crimes. Business owners impacted by the Act will be required to file a report with the federal Financial Crimes Enforcement Network (“FinCEN”), a bureau of the United States Department of the Treasury.
The Act provides some exemptions to the filing requirement; however, the exemptions are mostly for large companies and tax-exempt entities. The vast majority of small businesses will be required to file a report. Do not assume your company will be exempt!
Businesses formed prior to January 1, 2024, must file an initial report by January 1, 2025. Businesses formed during 2024 must file an initial report within ninety days of creation or registration. Those businesses formed after January 1, 2025, must file the report within thirty days of creation or registration.
The information which must be reported includes the full name of the company and any trade names or “DBA’s” used, the business address, and the business EIN number. Additionally, information about each “beneficial owner” (as defined in the Act) must also be reported, such as their full legal name, date of birth, residential address, and a government identification number. Companies have a continuing obligation to report changes. If any reported information changes, companies must file an updated report within thirty days of the change.
Failure to comply with the Act can result in heavy civil penalties and criminal prosecution, including imprisonment. Reports must be filed electronically through FinCEN’s filing system. The Corporate Transparency Act is detailed and complex. This client alert provides only a brief overview of the basic requirements of the Act. Contact Hudson Legal Services for more information. It is also important that you speak with your tax advisor about this new reporting requirement.
Any articles published on this website contain basic information on legal matters for general knowledge only and are not meant to provide advice regarding a specific legal problem you may have. It is important that you not rely on this general information without first communicating with an attorney regarding your specific legal situation. Further, Attorney Karlie Hudson of Hudson Legal Servies is licensed to practice law only in North Carolina and in no other jurisdiction. It is important that you consult with an attorney licensed to practice law in your jurisdiction.
