12/23/2024 – It’s been reinstated. https://www.uschamber.com/co/start/strategy/small-business-corporate-transparency-act
12/3/2024 Update: Enforcement has been blocked per this article but still important to know about.
Everyone needs to be aware of the new FinCEN reporting requirement that has a deadline of January 1, 2025, for most companies.
Under the Corporate Transparency Act (CTA), companies are required to share critical information about their beneficial owners. This reporting is done by filing a beneficial ownership information (BOI) report, which discloses specific ownership details. See FinCen website here: https://www.fincen.gov/boi
What is a BOI report?
BOI reports share contact details about your company, like its legal name and employer identification number. Companies must also disclose key information about their beneficial owners, such as their name, address, and identification number from a driver’s license or passport.
Who files a BOI report?
BOI reporting applies to domestic companies created by filing a document with the Secretary of State or a similar office. Notably, domestic companies may include corporations or LLCs. Certain entities created in foreign countries and registered to do business in the United States are also required to file a BOI report; these entities are referred to as “foreign reporting companies.”
Companies that are subject to outside regulation may be exempt from BOI reporting. Exempt entities may include tax-exempt organizations, financial service firms, publicly traded companies, accounting firms, and other large operating companies.
When are BOI reports due?
If your company existed before 2024, you have until January 1, 2025 to file your BOI report. Yet, if you started your business in 2024, you have 90 days from when your company began to file your BOI report.
Do I file a BOI report every year?
There is no annual BOI reporting requirement. Instead, you update your company’s BOI online when fundamental information about your beneficial owners changes.
What happens if I don’t file a BOI report?
If you fail to file or provide false information on a BOI report, you could be penalized up to $591 per day for individuals, with a cap of $10,000. You could also be subject to additional fines and/or imprisonment for intentional false reporting or willful failure to provide accurate information.
Do I still need to file when BOI reports were ruled unconstitutional?
A recent ruling from the federal court in Alabama found the CTA’s reporting requirement unconstitutional. However, the ruling was limited to only plaintiffs included in the lawsuit. You likely have a reporting requirement unless your company was part of the lawsuit or meets an exemption. However, companies that joined the National Small Business Association after March 1, 2024, are not exempt from the reporting requirement.
This requirement may feel confusing. Please be sure to consult with legal counsel for specific advice. Richard (Rick) A. Weintraub is available to consult on this matter or others. Rick is the Founder and Managing Partner of Weintraub Law Group PC. Practicing law for 40 years, Rick is an ’AV’-rated attorney by Martindale Hubble. He has been Lead Counsel in more than 500 public and private offerings and more than 200 mergers and acquisitions. Rick has extensive experience in the negotiation and structuring of hundreds of business transactions. He specializes in the formation of business entities; venture capital transactions; mergers, acquisitions, and divestitures; public and private offerings, and debt financing
Weintraub Law Group PC
10085 Carroll Canyon Road, Suite 230
San Diego, CA 92131
Office: (858) 566-7010
Mobile: (858) 337-2019
How to Plan When You’re Too Busy to Plan
Your daily responsibilities as a successful business owner can make planning for a successful future seem impossible. But with the right process, you may find that this planning is both achievable and a means to give you even more time to do what you want. Consider this three-step process for how to plan when you’re too busy to plan.
1. Find people to plan for you
A big misconception is that you must do all of your business planning by yourself. Under this mindset, planning for a successful future is indeed challenging to fit into your daily routine.
Instead of trying to plan everything by yourself, consider planning for a successful business future by letting other experts do it for you.
This doesn’t mean that you hand over your vision of success to other people. Instead, find advisors who can help you bring your vision of success to life. And a piece of good news is that you likely have some of these experts on your team already—perhaps in the form of your financial advisor, CPA (or CA), and business attorney.
The key is to begin creating a longer-term plan that your Advisor Team can execute while you commit to your daily routine. In many cases, this team is led by an Exit Planning Advisor, who has expertise in leading Advisor Teams toward a business owner’s longer-term goals.
In many cases, working toward your longer-term goals means that your Advisor Team takes steps to make you inconsequential to your business.
2. Make yourself inconsequential
Some business owners find it challenging to imagine business success without themselves at the helm. However, one of the most important parts of planning for a successful future is having a business that runs well without you.
Many business owners want to one day leave their businesses during their lifetime. To do this, it’s critical for them to achieve financial independence upon leaving the business (unless you want to work for someone else . . . which isn’t common among business owners).
But it’s exceedingly difficult to leave your business with financial independence if the business relies on you for success. Quite simply, buyers are unlikely to give you the money you need if they need you present for the business to continue to succeed, which means you never truly get to leave.
So, becoming inconsequential is important to planning for a successful future. Fortunately, a dedicated Advisor Team can help you create a process to do exactly that, by using some of the following strategies:
- Finding and implementing a next-level management team. This team takes your business to the next level by optimizing daily routines, giving you more time to focus on your plans for a successful future.
- Helping you determine what you want and need. Business owners tend to underestimate how much they need to live the life they want after the business. An objective Advisor Team can both help you define these things and help you achieve them on your terms.
- Planning for the unexpected. All business owners eventually leave their businesses, whether they expect to or not. An Advisor Team helps create plans to mitigate the likelihood that an unexpected event (e.g., death, incapacitation) will completely derail your life’s work.
3. Implement your plan to pursue what you want
Once you’ve outlined your goals, your Advisor Team takes the reins to implement the steps necessary to achieve them. As you and your team implement these steps, it’s likely that you’ll find that you have more time to dedicate to the things you want to do, as opposed to the things you must do to keep the business running.
And even if you plan to die at your desk, creating and implementing a plan for a future without your business could improve its efficiency and the effectiveness of operations. This can help you strengthen your business to the benefit of the people who will still rely on its success after you die.
Conclusion
Creating a plan for a successful future often means delegating at least some of your responsibilities to experts, giving you more time to do the things you want to do. As these experts do what they do best, your business is likely to rely on you less and less, which makes it more valuable to potential buyers. As this is happening, you can still reap the benefits of what you’ve built while reducing the time you must spend to assure the business runs smoothly.
We strive to help business owners identify and prioritize their objectives with respect to their businesses, their employees, and their families. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.
5 ‘Lease Gotchas’ in Office and Healthcare Leases: What Tenants Should Watch Out For
I was recently meeting with a prospect, now a client, and they asked me about “Lease Gotchas” – those lease terms that may not be obvious at first but can become significant pain points down the road for tenants. It was quite a fruitful conversation, as they shared a few issues they experienced over the years. Landlord’s often use the term “standard” as they negotiate leases, while they may be “standard” to them, I assure you they can make changes to their document, and often will if you are measured and reasoned in your approach – it’s important to have someone on your side in lease negotiations. Here are some common “lease gotchas” that tenants should watch out for:
1. Operating Expenses (Common Area Maintenance or CAM Charges) – CAM charges typically cover the landlord’s costs for maintaining shared spaces, building systems, etc. but the definition of what’s included can vary significantly. Some landlords might include capital expenses, which can be a surprise to tenants. Tenants should carefully review the scope of CAM charges and negotiate caps on these expenses, ensuring that any capital improvements are excluded or amortized over their respective useful life.
2. Repair and Maintenance Obligations – Leases may require tenants to be responsible for repairs and maintenance that aren’t obvious, such as HVAC systems or the roof, which can be costly. Clarify which party is responsible for major structural repairs and ensure any such obligations are properly capped or negotiated.
3. Operating Hours – Limitations on when services like heating, cooling, or security are provided can be restrictive, particularly for tenants with after-hours operations. Verify that the operating hours meet the business needs or negotiate extended hours and clearly define costs for after-hours services, in theory this should not become a profit center for a landlord.
4. Sublease and Assignment Clauses – Restrictions on subleasing or assigning the lease can limit flexibility, which could be problematic if a tenant needs to relocate or downsize. Ensure that the lease provides a reasonable ability to sublease or assign (especially in the event of a sale or merger) and avoid clauses that give the landlord too much discretion over strategic business decisions or impose heavy transfer fees.
5. Relocation Clauses – Some leases give the landlord the right to relocate the tenant within the building or complex. While this may seem minor, it can cause operational disruption and costs. When possible, negotiate to eliminate these clauses in their entirely, but at a minimum ensure that the Landlord bears all associated costs and that the new space is comparable in size, location within the building which may impact views, and make sure rent cannot increase as a result of the relocation.
These “gotchas” can lead to substantial unforeseen expenses if tenants aren’t vigilant, so paying attention to these clauses during lease negotiations can save them from future headaches.
Bryan Geisbauer is Senior Vice President at Kidder Mathews. He is a Corporate Real Estate Advisor specializing in representing tenants in the search and negotiation of office and healthcare spaces. Kidder Mathews is the largest fully independent commercial real estate firm in the Western U.S., with over 900 real estate professionals and staff in 19 offices in Washington, Oregon, California, Idaho, Nevada, and Arizona.
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