There’s significant news affecting small businesses, especially those structured as limited liability companies (LLCs). Thanks to a recent law called the 2021 National Defense Authorization Act, these companies, no matter what they do, now have to disclose exactly who owns them to the government. It’s like a new rulebook, and it’s making a lot of people nervous.
The rules are a bit complicated, but basically, if you have an LLC, you might have to spill the beans about who’s really in charge.
Now, if you own 25% or more of a limited liability company, partnership, or another small entity that owns real estate or runs a small business, or if you’re the president, CEO, general counsel, or COO of a company, you need to pay extra attention. Even if you don’t have one of those titles, but you do a similar job or have “substantial control” over any company, these rules apply to you. Starting in 2024, you’ll need to register, or be registered, in a new federal database designed to uncover criminals, money launderers, and other bad actors who use companies to hide their identities and do bad things. This registration requirement applies to every company for which you answered “yes” to any question in the previous paragraph and maybe more.
The registration process is quite detailed. You’ll need to provide your name, date of birth, residential street address (a business address won’t do), a driver’s license or other ID number, and a photograph of the document that supports that number. This information will mostly be collected online.
But here’s the catch – if you’re registered in the database and move to a new residence, you must report the new address within 30 days. Someone will have to keep tabs on where a company’s executives and owners live, as well as any time they relocate. These added measures are aimed at keeping a closer eye on the people behind the scenes to ensure transparency and accountability. The consequences for not complying with these rules are steep, with fines and potential legal consequences looming for those who don’t play by the book. The clock is ticking, and the deadline for compliance is just around the corner. It’s a new era for small businesses, and navigating these regulations is crucial to avoid the pitfalls that lie ahead.