The Corporate Transparency Act (signed into law on January 1, 2021) expanded anti-money laundering laws and created new reporting requirements for certain companies doing business in the US Beginning in 2024) and applies to many small businesses, but there are specific rules and exemptions that might apply depending on your business’s structure and operations.
Who Needs to Report Under the CTA?
The CTA requires most small U.S. businesses to report their beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN). A “beneficial owner” is generally an individual who:
- Owns 25% or more of the company, or
- Exercises substantial control over the business (e.g., a top executive or director).
Types of Businesses Affected
- Corporations, LLCs, and similar entities must comply.
- Newly formed businesses must report when they register with state authorities.
- Existing businesses meeting the criteria must submit BOI by a certain deadline.
Exemptions from CTA Reporting
Some entities are exempt from reporting, such as:
- Larger businesses with over 20 employees, over $5 million in gross receipts or sales, and an operating presence at a U.S. office.
- Certain regulated entities like banks, insurance companies, public companies, and certain inactive companies.
- Non-profit organizations are generally exempt, but some may still need to report depending on their structure.
What You Need to Report
For businesses that are subject to the CTA, you’ll need to provide:
- Name, address, birth date, and government-issued ID number for beneficial owners.
- Information on company applicants for newly formed businesses.
Deadlines
- New businesses formed after the regulations go into effect must report when they register.
- Existing businesses formed before the effective date have a year to comply (likely starting in 2024).
Consequences of Non-Compliance
Failure to report accurate BOI can lead to civil penalties and even criminal charges, so it’s important to understand whether your business falls under the CTA.
If you provide specific details about your business, I can help you determine whether the CTA applies and what steps you might need to take.
If a business fails to file Beneficial Ownership Information (BOI) as required by the Corporate Transparency Act (CTA), it can face significant penalties. These penalties include both civil and criminal consequences:
Civil Penalties
- Up to $500 per day: A company that willfully fails to file, provides false information or fails to update the information can be fined up to $500 for each day the violation continues.
Criminal Penalties
- Fines: Violations can result in criminal fines up to $10,000.
- Imprisonment: Willfully providing false or fraudulent information or willfully failing to file can lead to up to two years of imprisonment.
Key Situations that Trigger Penalties
- Failure to File: If a business does not submit the required BOI reports by the deadlines set by FinCEN.
- False Information: Intentionally providing false or fraudulent information about beneficial owners.
- Failure to Update: Not keeping the information current (such as when beneficial owners change).
Exceptions for Mistakes
- Safe Harbor Provision: A business that unintentionally files inaccurate information but corrects it within 90 days of discovering the error may avoid penalties.
Given the severity of the penalties, businesses need to stay compliant with the CTA and BOI reporting requirements. Would you like assistance with complying or if your business qualifies for exemptions? MatchBooks offers filing services and has partnered with a legal review and filing service.For more information https://www.fincen.gov/boi/small-business-resources or to file online https://boiefiling.fincen.gov/If you have any further questions, please feel free to contact us at info@matchbooksusa.com.We’re here to help!
