A sea change has transformed the landscape of business ownership in America. A new federal law now mandates hundreds of thousands of business owners in Alabama to declare ownership details or face the risk of severe civil and criminal financial penalties, even possible imprisonment.
What Is the New Federal Mandate?
Passed in 2021, the Corporate Transparency Act took effect on January 1, 2024, which boosts business transparency to curb illegal activities like money laundering.
While this law doesn't apply to entities that employ more than 20 full-time employees, reported gross receipts exceeding $5 million in their federal income tax return, and have a significant operating presence in the United States, the majority of the burden to disclose ownership information to the federal government falls upon smaller businesses.
Who Has to Comply, and Is There an Added Burden?
Mainly, small businesses with under 20 full-time employees and making less than $5 million in sales are the focus. They are required to report detailed information. That includes the beneficial owner's full legal name, residential or firm's street address, date of birth, and a unique identifying number, such as a passport or driver's license, to the Treasury Department's Financial Crimes Enforcement Network (FinCEN).
According to State Rep. Kerry Underwood, "This law might sound like a setup - intrusive and intimidating. But it's clear what they're trying to do - prevent money laundering."
However, for small business owners already grappling with their daily operations, this brings an additional responsibility that could quickly become a burden. Furthermore, changes in disclosed information like an address change or change in ownership interest must be reported within 30 days, a provision that could be cumbersome and easily overlooked. These details can potentially introduce a slew of penalties and expose the business to considerable risk.
How Could This Affect Businesses?
Rosemary Elebash, Director of a small business trade organization, has started to hear concerns about this new law. The compliance stress is compounding with the existing challenges of running a small business.
On the other end of the spectrum, companies formed in 2024 and beyond have stricter deadlines to report to FinCEN: 90 days for those formed in 2024 and a brief 30-day period for those formed in 2025 or later. Meanwhile, existing companies must file their disclosure by December 31, 2024.
Considering these regulations, the crucial question is: who will be responsible for filing the initial forms and keeping track of the company and its owners for possible updates?
Don't Bear the Burden Alone - Seek Professional Counsel
Amidst the storm of changes, businesses must find solace in professional help. Given the complexities associated with the Corporate Transparency Act, seeking the assistance of experienced lawyers can ease the stressful path towards compliance.
Legal professionals can help businesses navigate the intricacies of disclosure, ensuring your company remains within the confines of the new law. As businesses adjust to this new norm, it's worth considering that this isn't a battle that must be faced alone. Your lawyer should be your trusted partner in this journey to compliance. Invest in the top-notch legal help your business needs to weather the storm of change.
Are you looking for experienced legal help in this new era of transparency? Reach out now, and let's ensure your business stays ahead.
