At Haeuser, Valluzzo & Piasta PC we focus on serving small and regional business owners. As part of our commitment to our Sonoma community we want to raise awareness among our fellow business owners of changes in the law that may impact the business.
There are several new laws that may impact your business if you have employees. We are pleased to share that the firm has grown to include a specialized employment law practice. There are several new laws that impact employers and now, through our affiliate, we have the expertise to advise and counsel you on these new laws and other labor and employment matters.
Also new this year is a federal law that may impose new reporting requirements on your business. The Corporate Transparency Act (“CTA”) became law on January 1, 2021. It is being enforced by the U.S. Treasury Financial Crimes Enforcement Network (“FinCen”). This new law imposes a reporting requirement related to the beneficial ownership of certain business entities, with significant penalties for false reporting or failure to report. The purpose is to identify individuals that are engaged in criminal acts that are using shell or front companies to hide their identities. While the purpose is to identify owners engaged in criminal acts, the effects of the law extend into everyday businesses.
Business entities created prior to January 1, 2024 will be required to make their first report by January 1, 2025. Businesses created on or after January 1, 2024 must submit the report within 90 days of formation/registration. Thereafter, any change in ownership or other reportable information must be reported within 30 days of the change. The reporting is done electronically through a secure filing system provided by FinCen. The instructions and other guidance on the filing system are now available on the FinCen website.
Reporting companies include corporations, limited liability companies (LLCs) and any other entity created under a document filed with the secretary of state. It also includes foreign companies that were formed under the law of another country, and they are registered to do business in the US, under a document filed with the secretary of state. The law does provide exemptions for certain types of business entities.
If your business entity does not fall within an exemption, you are required to report certain information related to the beneficial owners of the business. A beneficial owner is any individual who, directly or indirectly, exercises substantial control over the business OR owns or controls at least 25% of the ownership interest of the business. You will need the following information from each beneficial owner: 1) Name, date of birth, residential street address, ID number from an acceptable form of identification, its issuing entity, and an image of the document.
Additionally, if your business is subject to this reporting, you may want to consider amending your governing documents, whether it be an operating agreement (for an LLC) or corporate bylaws and/or a shareholder agreement
(for a corporation), to include a requirement that the beneficial owners of the business provide the necessary reporting information in a timely manner.
Please reach out to our team if you would like to engage our services. We are here to review your employment practices and advise you on employment and labor laws. We are also prepared to perform an analysis of your specific business entity to determine whether it is a reporting company under the CTA.