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How the Corporate Transparency Act Will Affect the Trades Industry

By FileForms | October 10, 2023
How the Corporate Transparency Act Will Affect the Trades Industry

Those in the trades industry, especially small businesses and tradesmen such as electricians, HVAC specialists, roofers, carpenters, painters, plumbers and similar professionals, are constantly balancing a variety of tasks that require their attention, time, and resources. From scheduling client appointments and maintaining tools and equipment, to handling emergency calls and vehicle maintenance, the list of responsibilities seems endless. 

While these pressing duties keep the attention of most small business tradesmen, there is a federal requirement that is fast approaching of which they should also be aware: the Corporate Transparency Act and the filing of a Beneficial Ownership Information (BOI) report. This is an initiative by the federal government to foster commercial transparency. 

Beneficial ownership refers to individuals who have control or influence over a business or asset, even if it’s registered under another name. To counteract money laundering and terrorist financing, the U.S. Congress rolled out the Corporate Transparency Act (CTA) on January 1, 2021. As a segment of the Anti-Money Laundering Act of 2020, the CTA obliges businesses to disclose their beneficial ownership details to the Financial Crimes Enforcement Network (FinCEN) beginning January 1, 2024.

The Importance of the Corporate Transparency Act for Trades Businesses 

While the BOI report might initially appear as just another administrative task, it’s actually a serious requirement set in motion by the federal government. Crafted as a robust protective measure, the BOI report aids in ensuring business transparency and fostering legitimate trade operations. 

The consequences of neglecting this duty could potentially be severe. Unprepared or uninformed businesses could face hefty financial penalties, jeopardizing their financial stability. Entities, including trades businesses, found guilty of deliberate non-compliance or oversight, can face penalties ranging from substantial fines to potential incarceration. This underscores the gravity of these federal directives and the necessity for thorough awareness and readiness.

There Are Heavy Consequences for Missing the BOI Report Filing Deadline 

The repercussions for non-compliance are as serious as the reporting requirement itself. Businesses that fail to comply could incur fines of up to $500 daily, capping at $10,000. Deliberate misinformation or non-compliance could result in criminal charges, with potential imprisonment of up to two years.

Does it Matter if the Government Does Not Communicate Well?

Historically, the U.S. Federal Government’s communication about new mandates has been somewhat limited, leading to instances where businesses and even entire industries were taken by surprise. Past mandates like the Immigration and Visa Deadlines, Real ID Act, and Medicare Enrollment are clear examples of how the government communicates via their own platforms.

However, the U.S. Federal Government has already distributed information regarding the Beneficial Ownership Information report through these platforms:

These provide comprehensive guidelines and resources to help trade businesses navigate the compliance landscape.

Explaining the Corporate Transparency Act (CTA) 

The CTA’s introduction was a landmark moment for financial transparency and corporate governance. This pivotal legislation puts a focus on structures like shell companies and other covert corporate entities. Under the CTA, businesses are required to disclose extensive details about their beneficial owners to FinCEN.

Essential information for a BOI report includes:

  • Legal name
  • Trade names or aliases
  • Current U.S. street address:
    • Principal place of business for domestic companies
    • U.S. business address for foreign companies
  • Jurisdiction of formation or registration
  • Taxpayer Identification Number

Indicate type of filing:

  • Initial report
  • Correction of a prior report
  • Update to a prior report

Information required for individual beneficial owners and company applicants:

  • Full legal name
  • Date of birth
  • Current address
  • Unique identifying number and its issuing jurisdiction (e.g., U.S. passport or driver license)
  • Image of the document showing the identifying number

Optional:

  • Obtain a FinCEN identifier to use in future filings as an alternative to the above details

FileForms Provides the Corporate Transparency Act Solution for Trades Businesses

Given the potential penalties and legal consequences, a passive approach to the BOI report is a recipe for disaster. Being proactive and informed is paramount.

FileForms serves as your all-encompassing solution for all business forms and report submissions. Leveraging state-of-the-art technology and expert services, we ensure that every client’s filing and reporting needs are met with precision. We offer invaluable guidance for beneficial owners mandated to submit a BOI report to FinCEN, guaranteeing compliance with all necessary standards.

Our expertise encompasses:

  • Beneficial Ownership Information Reports
  • Annual Reports and Registered Agent Services
  • Foreign Bank Account Reports
  • Foreign Account Tax Compliance Act Reporting

Our method emphasizes the significance of accurate filing while maintaining a the utmost data security, showcasing FileForms’ dedication to our clients.

As the deadline for the Beneficial Ownership Information report draws near, its importance becomes even more evident. This isn’t just a formality; it’s a mandate by the U.S. Federal Government. Get started with FileForms today and stay proactive, transparent, and compliant in the trades industry.

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