The Corporate Transparency Act - What You Need to Know

Bruce and Jason Hosler discuss the Corporate Transparency Act (CTA) implications for small business owners. The CTA, a new regulation set by the Treasury Department's lesser-known division, The Financial Crimes Enforcement Network (FinCEN), mandates that most small businesses disclose comprehensive information about their beneficial owners. This mandate includes personal and contact details, requiring a new application process starting January 1st, 2024.

Bruce elaborates on the Beneficial Ownership Information (BOI) regulations, which define a beneficial owner as anyone who either directly or indirectly exercises substantial control over a company or owns at least 25% of its shares. For sole member LLCs, like Jon's, our co-host, only the member's information is needed, not their spouse's. However, there are concerns about the security and accessibility of this information, as it will be available to various government agencies for national security and law enforcement purposes.

The conversation also touches on the genesis of the CTA, rooted in the government's efforts to combat money laundering. However, the broad scope of the act means that even small businesses are required to comply, with significant penalties for non-compliance, including a $500 daily fine and potential jail time. Businesses can start reporting on January 1, 2024, but those established in 2024 will have only 90 days post-formation to file their initial report. Businesses that began prior to January 1st, 2024, will have until January 1, 2025, to file.

Bruce advises businesses to start preparing now by identifying beneficial owners, designating a compliance officer, updating legal records, familiarizing themselves with the reporting form, seeking professional help, and staying informed about legal changes. Jason adds that businesses should consider forming new entities before 2024, closing inactive ones, avoiding filing in states promoting anonymity, and incorporating CTA considerations into business transactions.

Jason says that owners should close any businesses that are no longer in operation, and if you're thinking of opening a business in 2024, doing so before the end of 2023 will give you until the end of 2024 to file your BOI reports.

Finally, a reminder: This episode was recorded on November 29, 2023. The information discussed is subject to change, and listeners should stay updated, especially with potential tax updates at the end of the year. We will update this information as it comes in, especially in the first quarter of 2024.

Resources mentioned in today's episode:

Financial Crimes Enforcement Network (FINCEN) Website: https://fincen.gov/

Beneficial Ownership Information (BOI) Page: https://fincen.gov/boi

For more information about anything related to your finances, contact Bruce Hosler and the team at Hosler Wealth Management: Visit them online at https://www.hoslerwm.com/

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