If you’re a business owner, you should know by now that there’s a new law that requires you to disclose your ownership details to the government. While this might feel like just another bureaucratic hassle, ignore it at our own peril. With big penalties and fines, this particular hassle deserves your attention!
The Corporate Transparency Act (CTA) was passed way back in 2021 as part of an effort to combat money laundering, tax evasion, and other financial crimes. It requires that all incorporated businesses report their Beneficial Ownership Information (BOI) to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). That means most LLCs, S-Corps and C-Corps have to comply. For most, the deadline is right around the corner, by January 1, 2025. But if your business was new this year, you were required to file the report within 30 days of your start.
What’s driving all of this? Historically, shell companies have been used to hide illicit activities. In response, the U.S. is catching up to global standards, requiring transparency about who actually owns and controls businesses. While this does feel intrusive, the goal feels justified.
Fortunately, filing your BOI report is easy enough. FinCEN has an online portal (boiefiling.fincen.gov) and the process only takes about 15 minutes. Before you start, you’ll need some essential information: names, addresses and birthdates of all beneficial owners of your business, your EIN, and copies of IDs for everyone.
Not every business is required to file the report. If your company has over 20 employees, generates more than $5 million in annual revenue, the government already knows all about you. Similarly, nonprofits and truly dormant entities with no assets or activity can skip it. But, don’t just assume you are exempted. Check with your advisors.
Unless you are a true do-it-yourselfer, you’ve probably received a lot of mailings about this new filing requirement from your CPA and attorney. For many legal and capacity reasons, many CPAs are not handling these filings for their clients. Many are just referring their clients to attorneys. With the end-of-year deadline fast approaching, be aware that your CPA and attorney could be quite slammed. For most readers, you can certainly do the filing yourself, but if you’re in doubt, you should contact your advisors for some help.
If you are rolling your eyes after reading all of this, let’s talk more about the penalties. The government isn’t messing around. Stubborn resistance could cost you $500 per day, up to $10,000, and could even lead to criminal charges. Clearly, it’s not worth the gamble for only 15 minutes of minor, emotional pain! Don’t let this slip through the cracks.
