What Business Owners Need to Know About the Corporate Transparency Act

Business owners should stay informed about upcoming legal changes and how they protect and strengthen their businesses.

Life as a business owner is anything but predictable. Between juggling day-to-day operations, managing finances, and planning for the future, there’s often little time to keep up with the ever-changing landscape of laws and regulations. Yet, staying informed is crucial—rules and requirements can shift quickly, impacting everything from taxes to employment practices. Being proactive about understanding these changes helps protect your business and allows you to seize new opportunities and navigate challenges confidently.

Starting January 1, 2024, most U.S. businesses will need to comply with a new law called the Corporate Transparency Act (CTA). This law requires businesses to report personal information about their owners and key decision-makers to a secure government database called BOSS, managed by the U.S. Department of Treasury.

Why the CTA Matters

The CTA aims to combat illegal activities like money laundering and fraud by requiring transparency about who owns and controls businesses in the U.S. While the law targets bad actors like shell companies, it applies broadly to many legitimate small businesses.

Who Needs to Report

If your business is a corporation, LLC, or similar entity, you’ll likely need to file unless you meet specific exemptions, such as having 21+ employees, $5 million+ in annual revenue, and a physical U.S. office. Most small businesses won’t qualify for these exemptions.

Reports must include personal details like names, birthdates, residential addresses, and IDs for anyone owning 25% or more of the business or with significant control over it. Updates are required within 30 days of changes to this information.

What Happens if You Don’t Comply

Failure to file or update your information can result in fines of up to $10,000, daily penalties, and even jail time.

What You Should Do

We at Square One Small Business encourage you to:

• Talk to your accountant or attorney. They can help you understand how the CTA applies to your business.
• Prepare your records. Gather and organize ownership and control information now.
• Stay updated. Make sure you’re aware of reporting deadlines and requirements.

This new requirement may feel overwhelming, but taking proactive steps will help ensure compliance and avoid penalties. If you have questions, don’t hesitate to seek professional advice.

If you want to deepen your understanding of business legal essentials, you can learn more by watching a recording of a previous program Square One put on in partnership with the Blue Springs Chamber of Commerce and Polsinelli Law Firm.