Navigating the Corporate Transparency Act: A Small Business Owner’s Guide

As of January 1, 2024, the Corporate Transparency Act mandates that more than 32 million entities, predominantly small businesses, file a Beneficial Ownership Information (BOI) report with the Financial Crimes Enforcement Network (FinCEN). Non-compliance with this federal law could lead to civil penalties of $500 per day and criminal penalties of up to $10,000 along with two years of imprisonment.

Checklist for Small Business Owners:

Step 1 – Determine Your Business Entity:

• Identify your company’s entity structure: LLC, corporation, limited partnership, limited liability partnership, business trust, sole proprietorship, or general partnership.
• LLCs or corporations must file a BOI report unless exempt. Seek legal advice for non-LLC or corporation entities.

Step 2 – Check for Exemptions:

• Determine if your business qualifies as a “large operating company” or an “inactive entity” for exemption.
• Explore other exemptions and seek legal advice if uncertain.

Step 3 – BOI Report Filing Process:

• Identify beneficial owners (individuals who control 25% or more).
• Notify beneficial owners about the reporting requirement and offer the option to provide information or apply for a FinCEN Identifier.
• Collect required information and stay updated on any changes.

Step 4 – Maintain Updated Information:

• Implement a procedure to keep reported information current.
• Consider using an entity management system for efficient management.
• Ensure a secure system for storing personal information.

Step 5 – Decide on Filing Timing and Method:

• Choose between filing early or by the deadline (January 1, 2025).
• Decide whether to file with FinCEN directly or use a third-party service provider.

Step 6 – Repeat Steps for Each Business:

• Apply the checklist to each small business under your ownership.

Step 7 – Additional Considerations:

• Evaluate the necessity of inactive entities and consider dissolution.
• Amend governing documents to address beneficial owners’ obligations on personal information.

BOI Reporting Compliance is Essential:

The Corporate Transparency Act introduces significant changes, and adherence is crucial for small businesses. Utilize this checklist to navigate through the reporting process effectively. For more detailed guidance and assistance, contact our experts at EWH Small Business Accounting.

For additional guidance and assistance regarding the Corporate Transparency Act, it is advisable to seek advice from your lawyer to ensure comprehensive understanding and compliance with the Corporate Transparency Act. For specific inquiries related to your business, please contact EWH Small Business Accounting S.C. via email at info@ewhsba.com or give us a call at 262-796-1040.