Overview of Compliance Obligations for Distributors Under the Corporate Transparency Act
As the leading software in Beneficial Ownership Information reporting, we at FincenFetch are excited to share some insights. Therefore, our focus today is on Corporate Transparency Act compliance specifically tailored for distributors. Whether you’re just getting started or looking to ensure your existing practices are up to date, we’ve got you covered.
Understanding Corporate Transparency Act Compliance
The Corporate Transparency Act (CTA), was enacted to combat illicit activities such as money laundering and terrorism financing. Additionally, the regulation requires most U.S. businesses to report their beneficial ownership information to FinCEN.
Therefore, as a distributor, this means you’ll need to disclose key details about the individuals who own or control your company.
Compliance Obligations for Distributors
Distributors have various legal and regulatory obligations, including those under the CTA, which took effect on January 1. The Corporate Transparency Act requires that distributors provide detailed information about company ownership. However, this is only necessary if they do not qualify for one of the CTA’s 23 specific exemptions. Additionally, distributors must report on any individuals who exert substantial control over the company.
Exemptions for Corporate Transparency Act Compliance
Large distributors and publicly traded companies may be exempt from the CTA if they meet certain criteria, such as employing more than 20 full-time employees in the U.S. or having more than $5 million in gross receipts or sales. It’s crucial to consult with legal counsel to determine whether your company qualifies for an exemption and to understand other aspects of the CTA.
For a comprehensive overview of all 23 exemptions under the Corporate Transparency Act, be sure to check out our detailed article on BOIR exemptions. This resource will help you determine if your business qualifies for any of these exemptions, ensuring you stay informed and compliant. Additionally, the article contains a link to our exemption check quiz, which provides an easier determination of your qualification status.
Reporting Beneficial Ownership Information (BOI)
Non-exempt distributors must report information about their Company Applicants and Beneficial Owners to FinCEN.
Who Are Company Applicants?
A Company Applicant is the individual who filed the documents (e.g., Articles of Incorporation) with the secretary of state or similar agency forming the company. Notably, this reporting requirement applies only to Reporting Companies created on and after January 1, 2024.
Who Are Beneficial Owners?
A Beneficial Owner is defined as any person who, directly or indirectly:
- Owns or controls at least 25% of the company’s ownership interests; or
- Exercises “substantial control” over the company.
Substantial control can include senior officers, those with authority over appointments, or individuals influencing significant company decisions, such as:
- Entry into and termination of contracts.
- Acquisition, sale, or lease of the company’s principal assets.
- Reorganization, dissolution, or merger.
- Amendment of any company governance documents.
Reporting Deadlines for Corporate Transparency Act Compliance
The CTA’s compliance deadlines depend on the company’s formation date:
- Entities Formed in Calendar Year 2024: Must report BOI within 90 days of formation.
- Entities Formed Before January 1, 2024: Must report BOI by January 1, 2025.
- Entities Formed on or After January 1, 2025: Must report BOI within 30 days of formation.
Penalties for Non-Compliance
Failing to comply with the CTA’s reporting requirements can result in severe penalties, including:
- Civil penalties of $500 per day.
- Fines of up to $10,000.
- Up to 2 years of imprisonment.
With litigation challenging the constitutionality of the CTA pending, distributors should consult with experienced counsel to determine their obligations under the CTA and ensure compliance.
How FincenFetch Can Help with Corporate Transparency Act Compliance
FincenFetch is here to make Corporate Transparency Act compliance easier. Our software is designed with distributors in mind and offers a suite of powerful features to ensure CTA compliance is effortless and efficient:
- Automated Reporting: Streamline BOI reporting for your clients with our automated processes that minimize errors and save you valuable time.
- Secure Data Storage: Protect your clients’ sensitive information with our top-tier security measures, including SOC 2 compliance, ensuring their data is safe and secure.
- Compliance Alerts: Stay ahead of deadlines with timely notifications, keeping you and your clients updated on all reporting requirements and changes.
With FincenFetch, you can focus on providing top-notch service to your clients, while we handle the compliance. Our intuitive software makes it easy to manage and file Beneficial Ownership Information on behalf of your clients, giving you confidence and peace of mind. Experience the benefits of a trusted partner in compliance management, and elevate your service offering with our reliable and secure solutions.
Additionally, incorporating FincenFetch into your service portfolio can open up a new revenue stream. By offering comprehensive BOI filing services to your clients, you not only enhance their compliance experience but also boost your business’s profitability.
Discover the FincenFetch Advantage Today!
Ensuring compliance with the Corporate Transparency Act is crucial for distributors. It not only guarantees that your clients’ businesses operate transparently and legally but also fosters trust and stability in the marketplace. FincenFetch is here to make your BOI reporting process seamless, protect sensitive data with top-tier security, and help you stay effortlessly compliant.
Imagine the peace of mind that comes from knowing every aspect of CTA compliance is expertly managed. With FincenFetch, you can offer your clients streamlined, error-free reporting, SOC2 data protection, and timely compliance alerts. Plus, you can unlock a new revenue stream by expanding your service offerings.
Don’t wait to transform your compliance process and elevate your business. Book a Demo Today and see how our innovative solutions can benefit you and your clients.
