Corporate Transparency Act
As a business owner you may have heard of the Corporate Transparency Act that was passed back in 2021. Well it has now been enacted as of January 1st, 2024. What does the Corporate Transparency Act entail and what does it mean for your business?
The Corporate Transparency Act (CTA) was passed to enhance transparency in business structures and ownership to combat money laundering, tax fraud, and other illicit activities. It is designed to capture more information about the ownership of specific entities operating in or accessing the U.S. market. The act was initially ignored, but now it is here and might affect your business requirements.
One new aspect that the CTA brings is the Beneficial Owner Information Report, which will now be required for many small businesses. All liable parties include corporations, LLCs, LLPs, or any companies domestic or foreign that filed with a secretary or state or any similar office. The Beneficial Owner Information Report requires companies to report any individual who directly or indirectly has substantial control over the reporting company or who owns or controls at least 25% of ownership interests of a reporting company. This is required to make sure all significant owners are identified for a company, providing full transparency.
Some exempt businesses aren’t required to report Beneficial Owner Information. Small businesses with a certain number of employees and a gross annual revenue below a specified threshold may be exempt from reporting. Others exempt from filing are securities issuers, domestic governmental authorities, and banks.
Like with any new business requirements some business owners are criticizing. Some argue that the disclosure requirements could pose privacy concerns for business owners, especially in cases where the information may be accessible to a wide range of government agencies. But at the end of the day the act has been placed in effect and there can be consequences if a company doesn't comply.
Small businesses may face challenges in complying with the new reporting requirements, especially if they lack the resources or expertise to navigate the regulatory framework. If you or your business need (or want) assistance staying compliant and filing the needed reports for the newly enacted CTA, SMK Business Solutions provides reporting assistance. Reach out on our website or call to see how we can help!
