New Act Passed Affects Spokane Small Business Owners | Stewardship Concepts Financial Advisors

As a financial advising practice whose niche is Spokane small business owners, we have many clients affected by this law. Because we can work with many business owners, we can notify them of current financial news and information that applies to their business and personal financial plans. Recently there was a new Act passed- the Corporate Transparency Act. This Act requires small businesses to file a report.

Our article aims to concisely give you all the information you need.

Quick overview

Applies to corporations and LLCs. (Trusts, general partnerships, sole proprietorships, and companies with more than 20 or more full time employees are excluded. But if your sole prop is an LLC, you must file a report.

The deadline is the end of the year.

It takes about 10 minutes.

You'll need to have a picture of your driver's license.

You will be required to do it annually.

Follow this link to apply: BOI E-FILING (fincen.gov)

Purpose behind law

Set a clear federal standard for incorporation practices.

Protect U.S. national security and commerce.

Enhance national security, intelligence, and law enforcement efforts to combat money laundering, terrorism financing, and other illicit activities.

Bring the U.S. into compliance with international anti-money laundering and countering terrorism financing standards.

It's been addressed that this is not to create a public registry of business entities in the U.S.

More information

For entities formed on or after January 1st, 2024, each entity must disclose information about the entity itself and its beneficial owners to the Financial Crimes Enforcement Network (FinCEN) of the Department of Treasury within 90 days of formation.

For entities in existence before January 1st, 2024, each entity must disclose information about the entity itself and its beneficial owners before January 1st, 2025.

An individual who willfully provides false or fraudulent information or willfully fails to report complete and updated beneficial ownership information can face a civil penalty of $500/day if the violation continues or is not remedied and a criminal fine of up to $10,000 and/or two years imprisonment. There is a 90-day safe harbor if an individual voluntarily submits a report containing correct information.

Each entity must include its legal name and all associated trade names. They must also disclose the EIN and physical street address of the business.

Each beneficial owner(any owner that directly or indirectly owns or controls at least 25% of the business interests) must include their full legal name, date of birth, current address, and identification (driver's license or passport) with a picture.

Penalties

An individual who willfully provides false or fraudulent information or willfully fails to report complete or updated Beneficial Ownership information faces a civil penalty of $500/day. If the violation continues or is not remedied, the criminal fine of up to $10,000 and, or two-year imprisonment.

But, there is a 90-day safe harbor if an individual voluntarily submits a report containing the correct information.

Who does this apply to?

Any business that qualifies within the U.S. and requires a corporation, LLC, or other similar entity that was:

Created by filing a document with the secretary of state or similar office.

Formed under the law of a foreign country and registered to do business in the US by filling a document with the secretary of state

LPs, LLPs, and business trusts qualify as "similar entities."

Trusts and general partnerships appear to be excluded.

Sole proprietorships are excluded (unless they are an LLC )

Exclusions

The Act excludes 23 types of entities from filling.

A “Large Operating Company” is defined as companies with 20 or more full-time employees working 30 hours a week. Or with more than $5 million in gross receipts or sales on a federal income tax return.

501(c) tax-exempt charitable organizations and foundations

527(e)(1) political organization

497(a)(1) and (2) charitable and split-interest trusts

You can look up the list of exemptions here to see if your business falls under one:

What do I need to do?

Go to the following link to file the report and "prepare and submit BOIR" online. It only takes about 10 minutes to complete.

BOI E-FILING (fincen.gov)

Fill out the information for every beneficial owner. A beneficial owner is anyone who controls at least 25% of the ownership interest of the company.

Every beneficial owner must fill out: Full name and date of birth, residential address, business’s current address, identification number, driver’s license or passport number, digital picture of identifying document used,

If there is a change of Beneficial ownership information, the reporting company must report the change to FinCEN within 30 days of the event. Examples include a change of address, change of Name, new driver's license or passport containing new information.

Here is a list of FAQs:

This is inconvenient and adds another thing to a Spokane small business owner’s table. We recommend setting a calendar reminder to do this annually so you don’t have to worry about it. When you have the link and know what to do, this process should take less time than reading this article. If you have any questions about your small business, ask our Spokane financial advisor.

Book a meeting today.