Corporate Transparency Act requires Small Business Owners’ Attention in 2024
Small businesses will need to be aware of new federal regulations to promote greater transparency, effective this year.
Congress passed the Corporate Transparency Act in 2023 to help the federal government confirm the identities of people who own, control, and run companies operating in the U.S. This new law requires businesses to report certain information about the company and the individuals who own or run the business to a regulator known as the Financial Crimes Enforcement Network (FinCEN).
Community Choice business members have access to a wide range of professional cash management support with Treasury Management Services which can help support the need to gather required information. Below are some FAQs about the Corporate Transparency Act that may be helpful to business owners.
Is there any exemption for small business owners?
The Corporate Transparency Act does not provide broad exceptions for smaller companies. The limited exemptions in the law are for large companies and highly regulated industries, especially those which have existing reporting obligations to the federal government and governmental departments such as the Securities and Exchange Commission.
When must this reporting take place?
The deadline differs for new businesses formed in 2024 compared to existing businesses. Starting January 1, newly formed companies are required to report the identity information of both owners and key managers/executives to FinCEN shortly after being created.
Most existing companies must report owners’ and key managers/executives’ identity information to FinCEN by January 1, 2025. In other words, existing companies that are not eligible for an exemption should prepare to gather the necessary ownership information this year in time for the start of 2025.
What Are the Penalties for Not Complying?
Every company is responsible for its own reporting obligations. Individuals who own or run companies can be held liable for a company’s failure to make a required report to FinCEN. Fines for not filing start at $500 per day, and there are additional civil and criminal penalties that can be incurred for reporting inaccurate or incomplete ownership information.
Businesses should contact their legal counsel for further questions on reporting and other act requirements. Community Choice is here to work with our business members to ensure any account information that is required can be made available, including Payables, Receivables, Fraud Prevention and Liquidity Management. Visit your local member center or call 877.243.2528 to learn more.