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  • Writer's pictureNicole Bernier, Esq.

Navigating the Corporate Transparency Act: What Every Business Owner Needs to Know

Attention business owners! You may have seen this Instagram post from a few weeks back. Well, now that the new year has started, the Corporate Transparency Act (CTA), is officially in effect! If you don't know what this is, no worries – that's exactly what we're here to discuss. In this post, we'll break down what the CTA entails and how it affects your business, in a way that's easy to digest.

Understanding the Corporate Transparency Act: First off, let's talk about what the CTA is. This new law mandates all entities* (such as LLCs and corporations) to file a “Beneficial Ownership Information Report” (BOI Report) with the U.S. government, unless they're exempt from this rule. The purpose? It's a move to curb illegal activities like money laundering by increasing transparency in business operations.

What You Need to Do:

  • For Existing Entities (Formed Before Jan 1, 2024):

    • Take a deep breath – there’s no immediate action required on your part.

    • Your task is to file a BOI Report with the Financial Crimes Enforcement Network (FinCen) by December 31, 2024.

    • If you prefer to get it out of the way, you have the option to file it anytime during 2024.

  • For New Entities (Formed On or After Jan 1, 2024):

    • You’ll need to file the BOI Report within 30 days of your business formation.

*If you're running your business as a Sole Proprietorship, there is no legal business entity so this rule doesn't apply to you!

What to Include in the BOI Report: The BOI Report will require you to include personal details like names, addresses, and current ID photos of every beneficial owner or controlling person of your business entity. In addition, for entities formed on or after January 1, 2024, this same information is required for any person responsible for the formation of the entity. This information helps the government keep a check on the legitimacy of business operations.

Conclusion: While the thought of new legal requirements might seem overwhelming, don’t worry, you’re not alone in this! If you have questions or need guidance on navigating these changes, feel free to reach out for help.

Remember that staying informed and compliant is key to the success and longevity of your business!

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