What Small LLC Owners Need to Know About the Corporate Transparency Act
Update: All entities created in the United States — including those previously known as “domestic reporting companies” — and their beneficial owners are now exempt from the requirement to report beneficial ownership information to FinCEN.
The Corporate Transparency Act is a federal law that requires most small businesses, including LLCs, to report information about their owners to the government. The goal is to prevent illegal activities like money laundering and fraud.
Does this affect your LLC?
Most likely, yes. If you own an LLC, you probably need to comply with this law unless you fall into one of the exemption categories (like being a large company with more than 20 employees and $5 million in annual sales).
Does it apply to cannabis businesses that are LLCs?
Yes.
What you need to do:
File a report with FinCEN (Financial Crimes Enforcement Network)
Provide basic information about your business and its "beneficial owners" (that's you and anyone else who owns or controls your LLC)
Keep this information updated when changes occur
When to file the report:
You have 30 days after the formation of your LLC to file
After that initial filing, you only need to update your report when there are changes to the information you previously submitted. For example, if:
There's a change in beneficial ownership (someone buys or sells their stake in the LLC)
A beneficial owner's information changes (such as a new address)
There are significant changes to your LLC's information
When such changes occur, you have 30 days to update your filing with FinCEN.
This "file once, update as needed" approach makes compliance simpler than an annual filing requirement would be, though you do need to remember to submit updates whenever relevant changes happen.
What happens if you don't file?
There are serious penalties for not complying, including fines up to $500 per day and potential criminal penalties.
The good news is that filing is free, and once you've done it, you only need to update the information when something changes.
This website provides detailed information: https://www.fincen.gov/boi