Small Businesses Beware: The Corporate Transparency Act
If you own a small business or have interest in the process for creating one, you likely know that registering a business entity with the state is required. All entities that limit liability for individuals are required to register their existence with the appropriate state official as a step in the path to limited liability protection. This includes LLCs, limited partnerships, and corporations, among others, all of which Waldron & Schneider regularly creates and maintains for clients. However, this registration has never been required by the federal government.
That will be coming to an end in 2024 when the Corporate Transparency Act begins requiring most entities to file registration documents with the Financial Crimes Enforcement Network (FinCEN). Registration will include all owners and important figures of a business to provide their legal name, birth date, address, and a unique identifying number from a social security card or driver’s license. This is more expansive than ordinary state filing requirements. Some entities like banks, accounting firms, and large companies are exempted from reporting requirements. However, non-exempted entities, like small business LLCs, will be forced to report to FinCEN the personal information detailed above.
The purpose of the Corporate Transparency Act is to combat illegal activity that operates under the protection of corporate structure. Money laundering, tax fraud, corruption, and terrorist financing are among the criminal acts specifically targeted. When Congress passed the Act in 2019, those in opposition believed that personal information of reporting individuals may be abused by the FinCEN and the federal government. With the reporting requirements set to begin in January, some now believe that the more than 33 million U.S. small businesses have not been given enough time or notice to comply.
Failure to register your small business information to FinCEN will come at a cost. Violation of the reporting requirements is punishable by a fine of $500 for each day that the entity is not registered. Additionally, if this failure is found to be intentional, criminal penalties of up to two years in prison may be imposed. It is not worth the risk of receiving fines or jail time related to this new requirement for business entities.
By allowing Waldron & Schneider to help you and your business, the fear of the Corporate Transparency Act registration requirements will be easily dealt with. Waldron & Schneider has a team of corporate attorneys who understand the intricacies of business formation and can tailor a plan best suited for you and your business. Call our office today to speak with an attorney about what we can do for you.
The legal information in this blog entry is not intended to be a substitute for seeking personalized legal advice from an attorney licensed to practice in your jurisdiction. Further, nothing contained in this article is intended to create an attorney-client relationship with any reader. This article and website are made available by Waldron & Schneider for educational purposes only and to give basic information and a general understanding of the law, not to provide specific legal advice. By using this website you understand that there is no attorney client relationship between you and Waldron & Schneider. The article and website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. For more information or questions you can contact us and one of our attorneys will be in touch soon.