The Corporate Transparency Act (CTA) is a significant piece of legislation that will impact millions of small businesses across the United States. While the act’s primary goal is to combat illegal activities and enhance national security, it also introduces new reporting requirements that business owners must take seriously. Failing to comply with the CTA can result in severe consequences, including substantial fines and even criminal penalties.

Under the CTA, businesses that willfully violate the reporting requirements may face fines of up to $500 per day, with a maximum penalty of $10,000. These fines can accumulate quickly, putting a significant financial strain on small businesses. Moreover, individuals who knowingly violate the act may be subject to criminal penalties, including imprisonment for up to two years.

To avoid these severe consequences, small business owners must prioritize compliance with the CTA. This involves carefully reviewing the act’s requirements, determining whether your business qualifies as a “reporting company,” and gathering the necessary documentation to submit accurate and timely Beneficial Ownership Iinformation Reports (BOIR).

For more details, watch a free webinar we did on the topic, or visit Small Business Resources | FinCEN.gov.

It’s essential to recognize that the CTA’s reporting requirements are not optional. The federal government takes these obligations seriously, and enforcement actions are likely to be swift and severe for those who fail to comply. By taking a proactive approach and seeking guidance from experienced legal professionals, small business owners can mitigate the risks associated with non-compliance and ensure their organizations remain in good standing. As the CTA’s effective date approaches, now is the time for small business owners to act.

Wegman Hessler Valore specializes in business law for business leaders, applying legal discipline to solve business problems to help leaders run smarter. For over 50 years, this Cleveland law firm has provided full-service strategic legal counsel for closely held businesses, corporations, and individuals. Practice areas include: business law; municipal law; litigation; corporate governance; estate planning and wealth protection; intellectual property; HR and employee matters; commercial real estate; business acquisition, and more. Get in touch to learn more.

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