Update: Important Development on the Corporate Transparency Act
We initially published this post to explain the Corporate Transparency Act (CTA) and the requirements for filing Beneficial Ownership Information (BOI). While the post is still informative, it’s essential to share this critical update:
As of December 3, 2024, a federal judge in Texas issued a nationwide injunction against the enforcement of the CTA. The court ruled that the law likely violates the Fourth Amendment, which protects against unreasonable searches and seizures. Additionally, the judge highlighted concerns that BOI regulations fall under state jurisdiction, not federal.
For now, this means small businesses are no longer required to file BOI reports. While this ruling might face appeals, the obligation to submit your personal information to FinCEN has been paused for the time being.
We’re keeping this post live because it explains what the BOI and CTA are in their entirety. If legal developments change, we’ll keep you informed. Stay tuned, stay vigilant, and stay updated—because knowing your rights is part of protecting your business.
Is the Government Targeting YOU? Learn About the New Law That Could Cost You $10,000—or Worse.
Small businesses are in the crosshairs. Here’s how to protect yourself.
The Corporate Transparency Act (CTA) is here, and if you’re a small business owner, you’re officially on the radar. Whether you’re aware of it or not, this new law could lead to fines of up to $10,000, penalties of $591/day, or even 2 years in jail if you don’t comply.
Sounds serious? It is. Let’s unpack what this means for you and how to stay ahead of the curve.
What Is the Corporate Transparency Act?
The Corporate Transparency Act (CTA) was passed in 2021 but went into effect in 2024. Its goal? To crack down on money laundering and illegal activities by requiring small businesses to file Beneficial Ownership Information (BOI)with the Financial Crimes Enforcement Network (FinCEN).
Who needs to file?
- Small businesses created before 2024 must report BOI by January 1, 2025.
- New businesses formed in 2024 or later must file within 30 days of formation.
This isn’t just paperwork—it’s a mandate with severe consequences.
What You’ll Need to File
FinCEN requires you to submit the following information:
- Your name
- Date of birth
- Residential address
- A valid driver’s license or passport
Who Can Access This Information?
Your data will be available to federal, state, and even foreign law enforcement agencies, financial institutions, and federal regulators. The level of access being granted raises concerns about privacy and government overreach.
Why Is This Law Unfair?
Here’s where things get frustrating:
While the government claims the CTA targets illegal activities, large corporations are exempt from these requirements. Companies with over $5 million in gross receipts, banks, and venture capital firms don’t have to report.
That means the law disproportionately impacts 32 million small businesses, adding more red tape and penalties for the very entrepreneurs driving the economy.
Why should small businesses be scrutinized while large corporations get a pass? It’s a glaring double standard.
Penalties and Deadlines You Can’t Ignore
If you fail to file, here’s what you’re looking at:
- A $10,000 fine
- Up to $591/day in penalties (adjusted for inflation)
- Up to 2 years in prison
Deadlines:
- January 1, 2025: For businesses formed before 2024
- 30 days: For businesses formed after 2024
Don’t risk it. Protect your business by staying compliant.
Criticism and the Fight for Repeal
Not everyone is on board with the Corporate Transparency Act. Politicians like Senator Tuberville and Congressman Warren Davidson have called the CTA “big government overreach at its worst” and raised alarms about the invasion of small business owners’ privacy.
While some lawmakers are working to repeal the CTA, progress has been slow. For now, compliance is non-negotiable.
What You Need to Do Next
- File Your BOI Report:
- Visit the FinCEN website and follow their step-by-step filing process.
- Ensure you have your driver’s license or passport ready.
- Know If You’re Exempt:
- Sole proprietors do not need to file.
- LLCs taxed as sole proprietors do need to file.
- Consider Professional Help:
- Use payroll software like Gusto for easier filing.
- Stay Informed:
- Follow updates about the CTA and any potential repeals.
Is This Government Overreach? Share Your Thoughts
The Corporate Transparency Act has sparked debate across the nation. Is it a necessary tool to combat crime, or is it an invasion of privacy that unfairly targets small businesses?
Drop your thoughts in the comments below. Let’s keep the conversation going.
Don’t let red tape trip you up. Skyline Pivot is here to help small business owners navigate financial challenges and protect their futures.
The first step to thriving is knowing the rules. Let us guide you.
Ready to take control of your financial journey?
Start by checking out Credit Elevated—our free tool to rebuild your financial foundation.
Further Reading:
How to Manage Money Like the 1%
External Resources:
FinCEN Corporate Transparency Act Filing Portal
The Corporate Transparency Act (CTA) introduces new reporting requirements for small businesses to enhance financial transparency and combat illicit activities. To assist business owners in understanding and complying with these regulations, the Small Business Administration (SBA) offers valuable resources:
Corporate Transparency Act Overview: This SBA-hosted webinar provides insights into the CTA’s requirements, exemptions, and compliance strategies. Access the event details here: Corporate Transparency Act – What EveryBusiness Owner Should Know
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