Here’s The Truth About the $500 fine related to the Corporate Transparency Act
Understanding The $500/ a DAY Corporate Transparency Act of 2024
Simplified Guide for Small Business Owners
Hey there, my business friends! Let's talk about something that sounds super serious (but don't worry, we'll keep it light and breezy): I'm sure you all saw the click bait post of your LLC will be taxed $500 a day. When I saw it I was like what is going on here. So, I had to investigate. I'm Rose, your Business Foundational Specialist, former Banker and here to help set the record straight on what's going on.
To start beneficial ownership is something us Bankers know too well. This is where anyone who opens an account with a Bank had to file a separate document detailing who had ownership in this new business. But the thing is there was no major system storing all this data. It was truly left up to the Bankes to maintain. There wasn't any real fact checking either.
Now Feds have created the Corporate Transparency Act of 2024. This act is like the new kid on the block in the business world, and it's time we get to know it a little better.! Similar to beneficial ownership, here's what you need to know. So, grab your notebook and let's get into it
What is the Corporate Transparency Act of 2024?
Imagine a law that's like a detective, but instead of solving mysteries, it wants to know all about the people who own and control businesses. That's the Corporate Transparency Act of 2024 in a nutshell. It's a new rule by our friends at FinCEN (Financial Crimes Enforcement Network) that says, "Hey, we need to know who's behind the curtain of these companies." Why? To fight against fraudulent / bad things like money laundering and financial fraud. So all you who have companies in anonymity states like Delaware, Nevada, Wyoming listen up baby.
Who Does It Affect?
If you're running a small business, especially one that's privately owned, this act is waving at you. It's mainly for companies that are not publicly traded, so if you're not hanging out with the big stock market players, you should pay attention. Here is a resource guide where you can find a list of companies that are exempt.
What Do You Need to Do?
Here’s the simple / fun part (okay, maybe not fun, but important!):
1. Who really owns your business? You need to tell FinCEN who really owns and controls your business. Think of it as introducing your business family to the neighborhood. Rule of thumb is anyone who owns 25% or more of the business or who has control over the day to day operations of the business information is reported.
2. Now using the system you will report the necessary information. This isn't just giving up a quick email address. FinCEN wants the nitty-gritty like names, addresses, birthdates, and an ID number (like from a driver's license or passport) of these owners.
3. If anything changes in your business ownership, you've got to keep FinCEN in the loop. It's like updating your relationship status on social media, but more official. Rule of thumb when your annual report is due make it a habit to make sure all information is alignment.
Why Should You Care?
Apart from being a law (and we all like to follow those, right?) The penalty for not being compliant is a hefty fine and could include jail time. By knowing who's who in businesses, it becomes harder for the bad guys to use companies for shady stuff. Plus, it adds a layer of trustworthiness to your business. It's like saying, "Hey, we're the good guys!" After 2020 and PPP money flowing the small business world became the wild wild west. People were telling everyone to get an LLC and boom now you're a millionaire. The government is still prosecuting and going after people who received PPP (paycheck protection program ) money for businesses they literally opened the same day and had no employees.. YIKES
Tips to Make It Easier
1. Keep an eye on the FinCEN website for updates and guidelines. Knowledge is power!
2. Get all your ownership details in one place. Get organized and create a folder with all your business important documents. It’s like spring cleaning but for your business documents.
3. If this all sounds like gibberish, no worries! We are here to assist you! Doing a live January 10, 7:00 p.m. follow me at @rosierose007 on instagram.
So, there you have it! The scary Corporate Transparency Act of 2024 isn’t as scary as it sounds. It's all about making the business playground safer and more transparent. By keeping up with these new rules, you're not just following the law; you're also giving a high-five to business integrity. Go you!
Remember, we’re in this together, and staying informed and compliant is just another step in our small business journey. 🌟🚀💼