At Skyline Creative, we understand that as a small business owner, staying on top of compliance requirements can be daunting. However, being informed about these requirements is essential to avoid potential penalties and ensure your business operates smoothly. One such requirement that demands your attention is the Corporate Transparency Act (CTA), which mandates certain businesses to file a Beneficial Ownership Information (BOI) report by year-end.
What is the Corporate Transparency Act?
The Corporate Transparency Act (CTA) is a pivotal federal law aimed at curbing illegal activities like money laundering by shedding light on the true ownership of businesses. Before January 1, 2025, all qualifying businesses must report their Beneficial Ownership Information (BOI) to the Financial Crimes Enforcement Network (FinCEN). This means you’ll need to disclose the individuals who own or control at least 25% of your company. Failing to comply with the CTA could lead to serious penalties, making it essential for business owners to stay informed and meet these new requirements.
Heavy penalties for failure to comply. Penalties are severe for failure to comply. The CTA divides penalties into three categories: unknowing violation, willful failures and violations in pursuit or as part of another federally illegal act. Penalties include a $500 daily civil penalty, fines of up to $10,000 and a possible two-year prison sentence for those that do not provide or update beneficial ownership information with FinCEN. Knowingly failing to comply may trigger a $500 per day civil penalty, $250,000 in fines and a five-year federal prison sentence.
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At Skyline Creative, we emphasize the importance of understanding and acting on these compliance measures to keep your business on the right track.
Does Your Business Qualify for a CTA Exemption?
To determine whether your business is exempt from filing under the CTA, you need to meet ALL THREE of the following criteria:
- Employee Count: Your business must have more than 20 employees.
- Annual Revenue: Your business must generate gross annual revenue exceeding $5 million.
- Physical U.S. Location: Your business must have a physical location within the United States.
If your business meets all three of these stipulations, you are exempt from filing under the CTA. However, if your business does not meet any one of these criteria, and you are not operating as a tax-exempt entity, you are required to file a BOI report.
What Is a BOI Report?
The BOI report is a critical filing that lists each entity in which you own 25% or more. This is a mandatory requirement for businesses that do not qualify for the exemptions mentioned above. Failure to file could result in severe penalties, so it’s crucial to ensure compliance.
Important Note: Who Handles the Filing?
It’s important to note that CPAs are not filing these reports on behalf of clients, as the CTA is not IRS-related. As a business owner, it’s your responsibility to file the BOI report. Fortunately, the filing process is straightforward and can be completed online.
To file, simply click HERE and follow the prompts accordingly.
