Are Federal Disclosures Necessary When Starting An Llc?
One of the many benefits of establishing a limited liability company (LLC) is having a degree of separation between the owner(s) of the business and the business itself. Those who intend to start businesses can limit their liability and even the social connection between their brand as a professional and the new business.
That lack of clear connections is one of the reasons that Congress passed the Corporate Transparency Act (CTA). The CTA is intended to fight money laundering and funding for terrorism by connecting specific professionals to LLCs and other businesses without clear ownership records. Do new businesses have to worry about the CTA?
Filing a report may be mandatory
Under the CTA, those who have an ownership interest in an LLC and those who help form an LLC have to identify themselves. The organization must submit a beneficial ownership interest (BOI) report to the Financial Crimes Enforcement Network (FinCEN) within the first 90 days of the organization’s existence in 2024, which drops to 30 days beginning January 1, 2025.
Failure to do so could lead to allegations of non-compliance. There can be up to $500 per day in civil fees assessed. The individuals accused of non-compliance may also be at risk of criminal prosecution. Some businesses in specific fields or that meet certain standards may be exempt. Most other new LLCs need to file a BOI report with FinCEN promptly to avoid accusations of non-compliance.
Learning more about the laws that govern different types of businesses can be beneficial for those in the process of starting new companies. Proactive compliance helps an organization start out on the right path, and entrepreneurs may need help identifying what rules and laws apply to them.
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