Does the Corporate Transparency Act Apply to Your Business?

Hello, Geniuses. Did you have a good Thanksgiving? I pray that you had a great holiday and that you got some rest and things of that nature. As of recording, like today, it’s Thanksgiving Eve and I’m taking time to record this podcast because I really want to make sure that you get this information. If you’re on my email list, then, you got it last week, but if you’re not, here we go. But anyway, Thanksgiving eve and I got a lot of stuff to do, you know, after I run… record this podcast. 

I am going to go do some peep bling, run some errands, and then I’m going to come back and start making my desserts and prepping some food for tomorrow. And then I was just wondering, because my mom’s always asking, hey, have you started cooking yet? I’m like, no, it’s like Tuesday or Wednesday morning. Why would I start cooking? And then, I’m thinking maybe ‘I’m the odd one, because I was out the other day and I heard someone saying that they were going to start cooking on Monday.’ You let me know. First, did you cook Thanksgiving dinner? Second of all, when did you start? When did you start cooking Thanksgiving? Today is all about the desserts in this household. We’re making an apple cheesecake. We’re making a pecan pie. I’m not making sweet potato pie. I introduced my family last week to something a little bit controversial. Pumpkin spice cake. I know, I know. We’re not supposed to like pumpkin spice and pumpkin things, but listen, that pumpkin spice cake, it hits, it slaps whatever terms that people are using these days. It is all of that. Where you have a sweet potato casserole, I’m not really worried about a sweet potato pie. I am not making pumpkin pie yet. I have not crossed that road yet. But this pumpkin spice cake, ooh, it is so good. Anyway, you are not here to listen to me talk about my baked goods and Thanksgiving dinner. We are here to talk about this Corporate Transparency Act of 2024. Let me know in the comments if you’ve heard of the Corporate Transparency Act of 2024. If not, here goes. 

Welcome back to the Own Your Genius podcast where we discuss building businesses, growing brands, and what else? Own Your Genius. I’m your host, Attorney LaConya Murray, owner of Off The Mark IP Solutions. Off The Mark is a boutique intellectual property firm representing innovative entrepreneurs, aka geniuses, who are looking to protect their brand and grow their business with ongoing legal support and business mentorship. We have a good one for you today, so let’s get started. 

Essentially, what this act, Corporate Transparency Act of 2024, was created for was to be able to know the source of businesses, like the people who form businesses, and they keep their name off it, because they’re trying to prevent money laundering. Typically, when you launder money, you have these private accounts, and nobody knows who the owner is. Like banking institutions don’t know, government agencies can’t find you. And to make it easier for them, they came up with this act, it’s really been almost 20 years in the making. Just now, finally, they have something that this is what we came up with. Beginning January 1st, 2024, you cannot file before then, but beginning January 1st, 2024, reporting companies are going to have to provide certain information to the website called FinCEN. That’s the name of the website. The companies that are responsible for reporting this information are corporations, limited liability companies, and any other business entity that is formed by filing similar documents with the secretary of state or whatever agency that’s in your state. Everyone doesn’t have a secretary of state in Alabama. We have a secretary of state. Some other states have different agencies where you conduct your business. But if you have to file documents to form that business, this one’s for you. The reporting companies, now that we know what they are, and I will tell you that there are some exceptions to those reporting companies. 

But unfortunately, and the reason that we’re recording this podcast is because micro businesses, businesses that are run oftentimes by one person and have one or two employees are using contractors, they are not exempted. And that’s most of our target market are small and micro business owners. That’s why we’re putting this information out here because just being a small business or just being a solopreneur that doesn’t have LLC or so a single member LLC, it’s not enough to exempt you from doing what we’re talking about today.  

The reporting company has to report these three things. You have to report the company information. You have to report the beneficial owner information. And you also have to report the company applicant information if that business was formed after January 1st, 2024. Regarding the company information, when you are reporting to FinCEN.gov, you’re going to report your company information. They want to know the company’s legal name, which is the name that you filed with your secretary of state. They also want to know any type of DBA or trade name that you’re using, your address that you’re operating out of physically, or should I say your principal place of business. So where is that place that you’re operating out of physically? If you have a post office box, that’s not it. It’s going to be your address, if you’re working from home, it’s going to be a residential address. They also want to know your taxpayer identification number. Whether or not that’s your social security number or your EIN, whichever one you’re using to identify your business for tax purposes, that’s what they want to know for company information. For the beneficial owner, before we talk about what they want, let’s talk about who a beneficial owner is. That beneficial owner is one or two people, someone who has substantial control over the business either directly or indirectly, you’re going to exercise like you’re saying what’s happening in that business. Or someone who directly or indirectly owns 25% or more of that reporting company. Remember, the reporting company are those companies that are corporations, limited liability companies, or any other type of business entity that’s formed by filing documents with their secretary of state or similar agency.  
 
If you are either one of those two things, then you are considered a beneficial owner. And what they want from you is your legal name that’s on your birth certificate, whatever, or if you had a name change, whatever that legal name is. They want to know your date of birth and they want to know where do you live, what’s your residential address. They also wanna know one of your identification numbers, whether it’s your driver’s license number, the social security number, passport, driver’s license. Either one of those things, they want to know that. They want to know what state issued that identification and then they want a copy of that identification. I’m just going to sit here and let you take that all in because some of you are like, why do they want to know all that? That’s a lot of information. It is a lot of information, but you should know that when they take this information, they’re not putting it out publicly. They’re not publishing this information for the public to see. It’s really going to stay locked until either a banking institution or a government agency needs this information. 

And even the government agents, they’re going to have to show why they need it. Those are some things that should make you feel a little bit better about reporting. The third thing they need, if you have formed your business after January 1st, 2024, is the name of the individual who formed the business. Our clients hired us to form the business. We would have to report our information. We have to report the same thing as the beneficial owner, except for using our residential address, we would use the company’s address. And that’s really the only thing that’s different. This is going to start January 1st, 2024. If you are already in business, you don’t have to file until January 1st, 2025. If you are forming your business on or after January 1st, 2024, you have 30 days to submit this information. You also need to know that the information that you submit will need to be updated. Well, let me say this first. You only need to submit this one time. This is not an annual report. The only time you would need to file something is in two instances. One, if you made an error and you need to make a correction. Two, if something changed, if the beneficial owner changed, if an address changed, or something of that nature, you would need to report those things.  

One thing I want you to be aware of, especially when this goes live, is spamming. Because people spam all the time. If you filed your trademark, you know once that application is in, you’re going to start getting these letters. We know that these letters are out there because our clients are calling us. And I expect the same thing to happen with this. One of the things that they’re going to do is spoof the domain, meaning that it’s going to look like we get an email. It’s going to look like it’s coming from www.fincen.gov. But if you click on it and you open it up, it’s going to come from some random Joe@gmail.com, right? Do not respond or send private information that way. I’m sure if the authorities need information, they’re going to way for you to do it. Just don’t give information out via email and be careful of the links that you click in emails, because they might not be from this government agency. Again, the website is fincen.gov, not .org, not .com, not .co, not .law… none of those. It’s fincen.gov.  

Another thing people do is buy websites, these domain names that have very similar names, and you think, oh, I’m here at this agency, let me just put this information in. No. We’ll leave a link in the show notes so you can get there safely. And we’ll also leave a link to where you can get more information, because this is literally just a summary. To let you know that this is out here and it’s something that you need to be aware of, especially if you are forming a business like, hey, I want to start a business, but I’m not starting until next year. You have 30 days to file this information. We want to make sure that you know this is here and if it affects you, what you need to report. The other question I think you might have is ‘how much does this cost?’ It doesn’t cost a thing. There is no fee, that’s another thing. If people call you asking for money, run. Because there’s no fee associated with this unless you get fined. If you fail to report, or if you willfully provide false information, you can have civil penalties that are up to $500 per day. Like if you fail to report what you’re supposed to, they can charge you up to $500 per day until you report. Or even criminal penalties that can include up to two years in prison and fines up to $10,000. That’s why we not only did we do a newsletter and a blog post, but we’re also doing this podcast and we want to make sure that you get this information so that you can do what you must do and avoid these penalties. If you have any questions, we’re going to drop the link to their small entity compliance guide so you can get more because again this was a summary.  

Let’s take this conversation over to the Mark Legal Community. I want you to share this episode with three people and have them meet you there. But you know what to do before you go. Make sure you hit that subscribe button and rate the podcast. Until next week, I want you to keep building your business, growing your brand and owning your genius.