Small biz owners impacted as gov't focuses on preventing financial crimes.

The Corporate Transparency Act (CTA) is set to take hold on Jan. 1, 2024, and its aim is to fight money laundering, tax fraud, and terrorism financing. This Act requires certain companies to submit a Beneficial Ownership Information report to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network. These reports must contain information about the people in control of a company, such as those with at least 25% of its “ownership interests”. All domestic and foreign companies must comply with these regulations, but certain entity types are exempt.

For companies established before Jan. 1, 2024, the initial report is due by Jan. 1, 2025. But if the company was created or registered on or after Jan. 1, 2024, the report must be filed within 30 days of the creation’s effective notice or the secretary of state’s initial public notice. The reports must include the legal name, trademarks, current U.S. address, taxpayer identification number, and jurisdiction of establishment or registration. Failure to comply with the report submission may result in civil and criminal penalties.

Individuals must also provide personal information for reporting a business that was created or registered on or after Jan. 1, 2024. They can fill out the report independently, but it is recommended to seek guidance from an advisor, attorney, or accountant to ensure adherence to FinCEN standards. Roger Harris, president of Padgett Business Services, expressed his worries about the potential oversight by small business owners due to the law’s additional administrative burden. He advised seeking legal counsel for any unclear aspects of the law to ensure compliance.

The CTA is part of the government’s effort to increase financial transparency and accountability, and businesses must prepare for the new compliance measures for the year ahead. President Biden has been credited for prompting a financial boom for Black-owned small businesses in 2021.

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