New Requirements for LLCs! Have you heard about the Corporate Transparency Act?

Do you have an LLC or a small business? Have you ever filed documents with the Secretary of State to create that business entity? Then please read on! You may have heard that the Corporate Transparency Act (“CTA”) that became effective January 1, 2024 will impact you as a business owner. And it will! The federal law was enacted to help combat money laundering, trafficking, and terrorism financing. The CTA requires that all entities (with certain limited exceptions) that have filed their formation documents with the Secretary of State’s office must file a Beneficial Ownership Information (“BOI”) report with the Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) by January 1, 2025. Failure to file and comply with the CTA can result in steep civil penalties of $500/day and up to $10,000 in criminal penalties and two years of jail time 😨!

This means that even if you have a simple LLC for a rental property, or an LLC that you’ve never funded, you are required to file the BOI report with FinCEN. In recent news, the National Small Business Administration sued and won a decision in federal district court in Alabama that the CTA is unconstitutional given its breadth and depth into the personal information of small businesses and their owners. The federal court agreed that the steep penalties for small businesses and the requirement to disclose personal information was unfair. While this decision is important, it has been appealed and the final ruling on this may take 1-2 years. In the meantime, following the requirements of the CTA will still be expected of small businesses.

You can learn more about the CTA here and the link to the e-filing system file your BOI report with FinCEN can be found here.  If you’d like to have a paid consultation to discuss how to comply with the new law, please reach out to us – we’d love to help!