The corporate landscape in America is undergoing a significant transformation due to groundbreaking legislation passed by the federal government. Known as the "Corporate Transparency Act," this law came into effect on January 1, 2024, and introduces new regulations and requirements for corporate entities, including limited liability companies (LLCs) and corporations (INC.).
Understanding the Corporate Transparency Act
The crux of the Corporate Transparency Act is the mandatory requirement for new corporate entities to file a disclosure form known as the Beneficial Ownership Information Request Form (BOI). This form must be submitted to the Financial Crimes Enforcement Network (FinCEN), an agency of the U.S. Treasury, within 90 days of establishing the company. The main objective of the BOI filing is to furnish FinCEN with comprehensive information about the individuals who exercise control over the corporation. This encompasses shareholders, members, managers, and any other individuals exercising significant control.
Compliance Requirements for Existing and New Companies
Existing companies founded before January 1, 2024, are not exempt from this requirement. They are mandated to file the BOI but have until January 1, 2025, to comply. On the other hand, companies established after January 1, 2025, face a stricter timeline and must file the BOI within 30 days of their creation. In case of any changes in the information provided must be updated via a new BOI filing within 30 days of the change. Non-compliance with these stringent requirements can result in severe penalties. Fines start at $500 per day and can escalate up to $10,000. Furthermore, serious violations could potentially lead to imprisonment.
Pitfalls for Self-Created Corporations
The Corporate Transparency Act is a law that should be taken seriously. Many individuals, unfortunately, are oblivious to its existence and the severe penalties for non-compliance. While the required forms may appear simple, failure to accurately and promptly complete, file, and update the necessary information can lead to substantial financial penalties and even criminal charges. Many Florida residents have taken the initiative to establish their corporations via filings with the State of Florida Division of Corporations on Sunbiz. Although this self-service approach may seem attractive, it is not without substantial risks.
It's also important to note that scammers have already started soliciting information from individuals and entities who may be subject to reporting requirements under the Corporate Transparency Act. The fraudulent correspondence may be titled “Important Compliance Notice” and ask the recipient to click on a URL or to scan a QR code. Those e-mails or letters are fraudulent. Neither FinCEN nor any other governmental agency will send unsolicited requests. Please do not respond to these fraudulent messages, click on any links, or scan any QR codes within them.
Seeking Assistance with the Corporate Transparency Act?
If you are contemplating establishing a new corporation or if you require assistance filing the mandatory BOI form for an existing company, don't hesitate to get in touch. We are fully equipped to guide you through these new regulations and ensure your business fully complies with the Corporate Transparency Act. If you are setting up a new corporation or need help submitting the required information to FinCEN for an existing company, we are just a call away at (800) 655-0175 and ready to assist you.