Stay Compliant with the Corporate Transparency Act
The Corporate Transparency Act (CTA) is a new Federal Law that goes into effect on January 1, 2024.
The Corporate Transparency Act (CTA) is a new Federal Law that goes into effect on January 1, 2024. This law aims to prevent money laundering and terrorist financing by requiring small businesses to report their ownership and control details to the government. This can be a challenging task for most businesses, especially those without legal counsel. That's why the Temecula Valley Chamber of Commerce recently partnered with Robert Rosenstein of the Law Offices of Rosenstein & Associates to help business owners stay compliant with the new law. In this post, we will share our key takeaways from the workshop.
First, it's important to understand that the CTA is enforced by the Financial Crimes Enforcement Network (FinCEN) and the penalty for not filing is $500 a day. Moreover, if you knew about the law and decided not to file, the penalty is two years in prison and/or $10,000. The purpose of the CTA is to curb money laundering since criminals tend to set up small businesses to launder their illicit funds. Thus, it's essential to know if your business is affected by this law.
Second, the CTA applies to limited liability companies (LLCs), corporations, limited partnerships (LPs), and other US-based entities. New companies formed in 2024 will have 90-days to file. There are 23 exemptions to this law, but if you are not exempt, you must file. The key exemptions are having 20 or more full-time employees, filing a tax return last year that reported $5 million in gross revenue, or having a physical presence in the US (a home office does not count).
Third, filing can be done electronically, but the portal has not been opened yet. Robert Rosenstein advised business owners to bookmark the FinCEN reporting website at https://fincenreport.com/ and check frequently for updates. He also recommended that businesses familiarize themselves with the ownership and control details that must be reported, such as the legal entity's name, address, and tax ID.
Finally, Robert advised business owners to seek legal counsel if they faced any uncertainties with the law. He reminded businesses to maintain accurate and up-to-date records of their filings for future reference.
The Corporate Transparency Act Law is a significant change for small businesses, and it's essential to stay compliant to avoid penalties. The Temecula Valley Chamber of Commerce and the Law Offices of Rosenstein & Associates workshop was a great resource for businesses looking to understand this new law. Let's stay compliant and protect our businesses from financial issues.