Keep Your Business Compliant – ZenBusiness https://www.zenbusiness.com Start & Grow Your Business With The ZenBusiness Platform Tue, 11 Mar 2025 20:46:00 +0000 en-US hourly 1 https://wordpress.org/?v=6.6.2 https://res.cloudinary.com/zenbusiness/q_auto,w_32/v1/shared-assets/logo/circle-logo-teal.svg Keep Your Business Compliant – ZenBusiness https://www.zenbusiness.com 32 32 House Votes to Extend Corporate Transparency Act Deadline https://www.zenbusiness.com/blog/cta-deadline-extended-to-2026/ Thu, 13 Feb 2025 21:20:29 +0000 https://www.zenbusiness.com/?post_type=blog&p=927922 Small business owners may soon get a break from the looming Corporate Transparency Act (CTA) deadline. On February 10, the House of Representatives unanimously passed the Protect Small Businesses from Excessive Paperwork Act of 2025, a bill that would extend the CTA filing deadline to Jan. 1, 2026, for all businesses formed before Jan. 1, ...

The post House Votes to Extend Corporate Transparency Act Deadline appeared first on ZenBusiness.

]]>

Important Note: On February 17, 2025, a Texas Federal Judge lifted the final remaining nationwide injunction on enforcement of the Corporate Transparency Act. This means the Beneficial Ownership Information Report is required again and the new deadline to file is March 21, 2025. You can learn more about the current status of the beneficial ownership information (BOI) report on our BOI Report Requirements Timeline.

Small business owners may soon get a break from the looming Corporate Transparency Act (CTA) deadline. On February 10, the House of Representatives unanimously passed the Protect Small Businesses from Excessive Paperwork Act of 2025, a bill that would extend the CTA filing deadline to Jan. 1, 2026, for all businesses formed before Jan. 1, 2024. The bill now heads to the Senate, where it’s expected to pass this week.

What does this mean for small businesses?

If the bill becomes law, businesses created before Jan. 1, 2024, would have an extra year to file their Beneficial Ownership Information (BOI) report with the Financial Crimes Enforcement Network (FinCEN). However, businesses formed on or after Jan. 1, 2024, would still be subject to the original 30-day filing deadline — unless FinCEN changes its guidance.

What’s happening with the CTA in court?

The CTA, which went into effect on Jan. 1, 2024, requires most small businesses to report beneficial ownership information details to FinCEN. However, on March 1, 2024, a federal court in Alabama ruled the law unconstitutional in National Small Business United v. Yellen. This ruling temporarily blocks FinCEN from enforcing the CTA against National Small Business United (doing business as the National Small Business Association) members, but it does not apply to all businesses. Meanwhile, another case — Smith v. U.S. Department of Treasury — made its way through the Fifth Circuit Court of Appeals.

On February 17, 2025, a Texas Federal Judge lifted the final remaining nationwide injunction on enforcement of the Corporate Transparency Act from Smith v. U.S. Department of Treasury. This means the Beneficial Ownership Information Report is required again, and the new deadline to file is March 21, 2025.

Courtney Dickey, Chief Legal Officer at ZenBusiness, had weighed in on the case earlier, saying, “The fact that the Department of Justice, on behalf of the Department of Treasury, is appealing the injunction in the Fifth Circuit Smith v. Department of Treasury, indicates that there’s some interest in survival of the Corporate Transparency Act in some (possibly abbreviated) version.”

What happens next?

If the Senate passes the Protect Small Businesses from Excessive Paperwork Act of 2025, businesses formed before Jan. 1, 2024, will have until Jan. 1, 2026, to file their BOI reports. However, businesses created in 2024 or later would still be required to file within 30 days.

“The Protect Small Businesses from Excessive Paperwork Act of 2025 is attempting to preempt FinCEN’s continually delayed deadline by affirmatively assigning a deadline of January 1, 2026, for all entities created before January 1, 2024 [this deadline was originally January 1, 2025], despite any judicial decisions,” Dickey explained.

She continued, “With that being said, the bill does not address entities created after January 1, 2024, so we can only assume that FinCEN would revert back to a 30-day deadline for those entities, assuming the CTA survives the current judicial scrutiny.”

What should business owners do now?

As of this writing (Feb. 19, 2025), the nationwide preliminary injunction halting the enforcement of the Corporate Transparency Act’s reporting requirements from the Smith v. U.S. Department of the Treasury has been lifted. This means that BOI report filing is again mandatory. The Senate could also pass the extension, so business owners should continue monitoring FinCEN’s updates and any new court rulings.

For more information and background about the BOI report, see our Beneficial Ownership Report Guide.

How ZenBusiness Helps You Prepare for Compliance

At ZenBusiness, we understand that legal compliance can be confusing and stressful, and the current court battle over the CTA certainly illustrates that. That’s why we offer our Beneficial Ownership Information Filing Service. With this service, we guide you through the process of BOI reporting so that you’ll have the peace of mind of knowing you’re in compliance. With ZenBusiness, you can focus on growing your business while we handle the complexities of compliance.

Beneficial Ownership Reporting
Requirements Timeline

DateEvent
January 1, 2021Corporate Transparency Act Enacted: The CTA was passed as part of the National Defense Authorization Act for Fiscal Year 2021, establishing the foundation for BOI reporting requirements.
September 29, 2022Final Rule Published: FinCEN issued the final BOI reporting rule, setting the compliance date for January 1, 2024, to allow reporting companies time to prepare.
November 29, 2023Deadline Extension Announced: FinCEN extended the deadline for reporting companies created or registered in 2024 to file their initial BOI reports from 30 to 90 calendar days after receiving notice of their creation or registration.
January 1, 2024Effective Date of BOI Reporting Rule: The BOI reporting rule became effective, requiring certain entities to report beneficial ownership information to FinCEN.
December 3, 2024Nationwide Preliminary Injunction Issued: A federal court in Texas granted a nationwide preliminary injunction, halting the enforcement of the CTA’s reporting requirements, thereby making BOI filing optional pending further legal proceedings.
December 5, 2024Government Appeals Injunction: The U.S. Treasury Department filed a notice of appeal against the preliminary injunction, seeking to reinstate the BOI reporting requirements.
December 23, 2024BOI Reporting Requirement Reinstated with Deadline Extensions: The U.S. Court of Appeals temporarily overturned the earlier decision to pause the CTA requirements. Businesses are once again required to file the BOI Report. To give businesses more time to adjust to this change, FinCEN extends the deadline for filing these reports to January 13, 2025.
December 26, 2024Nationwide Injunction Re-Issued: A different appellate panel put the earlier pause on the CTA back in place, thereby making BOI filing optional once again, pending further legal proceedings.
December 31, 2024Emergency Application to Reinstate CTA Filed: The Department of Justice (DOJ) filed an emergency application with the Supreme Court to reinstate the CTA requirements. One of the Supreme Court judges, Justice Alito, set a deadline for the plaintiffs to respond by January 10, 2025 at 4PM EST.
January 10, 2025Plaintiffs Respond to Emergency Application: The plaintiffs filed a 317-page response to the U.S. Supreme Court by the January 10 deadline. Now, the matter will go on a conference list (the Justices meet in private conference twice a week) to decide whether or not they will hear oral arguments. If they don’t, the nationwide injunction will remain in place.
January 23, 2025Ongoing Litigation Despite Supreme Court Order: The Supreme Court granted the government’s motion to lift a nationwide injunction issued by a federal judge in Texas (Texas Top Cop Shop v. Garland). As a separate nationwide order issued by a different federal judge in Texas (Smith v. U.S. Department of the Treasury) still remains in place, reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action in Texas Top Cop Shop.
February 5, 2025Department of Justice Files Appeal: The Department of Justice on behalf of the Department of Treasury filed an appeal to the Fifth Circuit Court in the one remaining case with a nationwide injunction on enforcement of the Corporate Transparency Act: Smith v. Department of Treasury. Upon learning of the appeal, FinCEN issued a notice stating that if the appeal is granted, and the injunction is lifted, it would push back reporting requirements by 30 days.
February 17, 2025BOI Report Required Again: A Texas Federal Judge lifted the final remaining nationwide injunction on enforcement of the Corporate Transparency Act. This means the Beneficial Ownership Information Report is required again and the new deadline to file is March 21, 2025.

As of February 17, 2025, filing your BOI report is required again and the new deadline is March 21, 2025. We’re here to help you file securely and accurately.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

The post House Votes to Extend Corporate Transparency Act Deadline appeared first on ZenBusiness.

]]>
Corporate Transparency Act Injunction Pauses BOI Filing Requirements https://www.zenbusiness.com/blog/cta-injunction/ Thu, 13 Feb 2025 15:42:24 +0000 https://www.zenbusiness.com/?post_type=blog&p=922896 In December, a federal court issued a Corporate Transparency Act injunction, temporarily halting the enforcement of Beneficial Ownership Information (BOI) report filing requirements. This development has left many small business owners wondering, “Is BOI still required?” Because of recent developments, the answer is yes. On February 17, 2025, a Texas Federal Judge lifted the final ...

The post Corporate Transparency Act Injunction Pauses BOI Filing Requirements appeared first on ZenBusiness.

]]>

Important Note: On February 17, 2025, a Texas Federal Judge lifted the final remaining nationwide injunction on enforcement of the Corporate Transparency Act. This means the Beneficial Ownership Information Report is required again and the new deadline to file is March 21, 2025. You can learn more about the current status of the beneficial ownership information (BOI) report on our BOI Report Requirements Timeline.

In December, a federal court issued a Corporate Transparency Act injunction, temporarily halting the enforcement of Beneficial Ownership Information (BOI) report filing requirements. This development has left many small business owners wondering, “Is BOI still required?” Because of recent developments, the answer is yes.

On February 17, 2025, a Texas Federal Judge lifted the final remaining nationwide injunction on enforcement of the Corporate Transparency Act. This means the Beneficial Ownership Information Report is required again, and the new deadline to file is March 21, 2025.

Here’s what you need to know about the injunction, the BOI filing requirements, and what could happen next.

On December 3, 2024, a federal court in Texas granted a nationwide preliminary injunction halting the enforcement of the Corporate Transparency Act’s reporting requirements, thereby making BOI report filing optional pending further legal proceedings. But the injunction against the CTA has been lifted now, meaning that BOI reporting is again required.

Beneficial Ownership Reporting
Requirements Timeline

DateEvent
January 1, 2021Corporate Transparency Act Enacted: The CTA was passed as part of the National Defense Authorization Act for Fiscal Year 2021, establishing the foundation for BOI reporting requirements.
September 29, 2022Final Rule Published: FinCEN issued the final BOI reporting rule, setting the compliance date for January 1, 2024, to allow reporting companies time to prepare.
November 29, 2023Deadline Extension Announced: FinCEN extended the deadline for reporting companies created or registered in 2024 to file their initial BOI reports from 30 to 90 calendar days after receiving notice of their creation or registration.
January 1, 2024Effective Date of BOI Reporting Rule: The BOI reporting rule became effective, requiring certain entities to report beneficial ownership information to FinCEN.
December 3, 2024Nationwide Preliminary Injunction Issued: A federal court in Texas granted a nationwide preliminary injunction, halting the enforcement of the CTA’s reporting requirements, thereby making BOI filing optional pending further legal proceedings.
December 5, 2024Government Appeals Injunction: The U.S. Treasury Department filed a notice of appeal against the preliminary injunction, seeking to reinstate the BOI reporting requirements.
December 23, 2024BOI Reporting Requirement Reinstated with Deadline Extensions: The U.S. Court of Appeals temporarily overturned the earlier decision to pause the CTA requirements. Businesses are once again required to file the BOI Report. To give businesses more time to adjust to this change, FinCEN extends the deadline for filing these reports to January 13, 2025.
December 26, 2024Nationwide Injunction Re-Issued: A different appellate panel put the earlier pause on the CTA back in place, thereby making BOI filing optional once again, pending further legal proceedings.
December 31, 2024Emergency Application to Reinstate CTA Filed: The Department of Justice (DOJ) filed an emergency application with the Supreme Court to reinstate the CTA requirements. One of the Supreme Court judges, Justice Alito, set a deadline for the plaintiffs to respond by January 10, 2025 at 4PM EST.
January 10, 2025Plaintiffs Respond to Emergency Application: The plaintiffs filed a 317-page response to the U.S. Supreme Court by the January 10 deadline. Now, the matter will go on a conference list (the Justices meet in private conference twice a week) to decide whether or not they will hear oral arguments. If they don’t, the nationwide injunction will remain in place.
January 23, 2025Ongoing Litigation Despite Supreme Court Order: The Supreme Court granted the government’s motion to lift a nationwide injunction issued by a federal judge in Texas (Texas Top Cop Shop v. Garland). As a separate nationwide order issued by a different federal judge in Texas (Smith v. U.S. Department of the Treasury) still remains in place, reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action in Texas Top Cop Shop.
February 5, 2025Department of Justice Files Appeal: The Department of Justice on behalf of the Department of Treasury filed an appeal to the Fifth Circuit Court in the one remaining case with a nationwide injunction on enforcement of the Corporate Transparency Act: Smith v. Department of Treasury. Upon learning of the appeal, FinCEN issued a notice stating that if the appeal is granted, and the injunction is lifted, it would push back reporting requirements by 30 days.
February 17, 2025BOI Report Required Again: A Texas Federal Judge lifted the final remaining nationwide injunction on enforcement of the Corporate Transparency Act. This means the Beneficial Ownership Information Report is required again and the new deadline to file is March 21, 2025.

As of February 17, 2025, filing your BOI report is required again and the new deadline is March 21, 2025. We’re here to help you file securely and accurately.

What the Injunction Means for BOI Filing Requirements

The Corporate Transparency Act (CTA) was designed to combat financial crimes like money laundering by requiring certain businesses to disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). Beneficial owners are individuals who own at least 25% of a company or have substantial control over it. The BOI filing requirements took effect in 2024, but the CTA injunction has put them on hold. 

This injunction meant that businesses temporarily didn’t have to file BOI reports while legal challenges to the CTA were being resolved. However, the injunction has now been lifted.

Is BOI still required?

Yes, BOI filing is now required. Still, businesses should remain prepared for possible changes. Staying informed about these developments is crucial for small business owners.

Why the Injunction Was Issued

The court’s decision to issue the Corporate Transparency Act injunction stems from ongoing legal debates about the scope and impact of the BOI filing requirements. Critics argue that the reporting rules place an undue burden on small businesses, many of which lack the resources to navigate complex compliance obligations.

What is the BOI report?

The BOI report is a key component of the CTA. It requires certain businesses to disclose information about the business and the owners. Each owner will need to provide:

  • Their legal name
  • Date of birth
  • Current address (residential address or business address)
  • An identification number from a non-expired document like a U.S. passport, state ID, or foreign passport
  • An image of that ID

The BOI report also asks for the following information about the company: 

  • The full legal business name
  • Any trade name or DBA the business holds
  • Current business address (must be in the U.S.)
  • Jurisdiction where the business was formed
  • Taxpayer identification number (foreign reporting company) or employer identification number (domestic reporting company)

Not all businesses are subject to BOI filing requirements. For example, publicly traded companies and financial institutions are exempt from BOI reporting. Small business owners should verify whether their entity type is required to file. 

What should you do now?

Here’s how to stay ready for possible changes to the BOI filing requirements:

  • Stay informed: Follow trusted sources like FinCEN for updates about the CTA and BOI requirements.
  • Gather your information: If you haven’t already, collect details about your business’s beneficial owners.
  • Work with trusted partners: ZenBusiness can help you navigate compliance and stay prepared for whatever comes next.

How ZenBusiness Helps You Prepare for Compliance

At ZenBusiness, we understand that legal compliance can be confusing and stressful. That’s why we offer our Beneficial Ownership Information Filing Service. With this service, we guide you through the process of BOI reporting so that you’ll have the peace of mind of knowing you’re in compliance. With ZenBusiness, you can focus on growing your business while we handle the complexities of compliance.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

The post Corporate Transparency Act Injunction Pauses BOI Filing Requirements appeared first on ZenBusiness.

]]>
2025 Regulatory Changes Business Owners Can’t Afford to Ignore https://www.zenbusiness.com/blog/new-small-business-regulations/ Tue, 28 Jan 2025 14:13:23 +0000 https://www.zenbusiness.com/?post_type=blog&p=923900 Running a small business is no small feat, and staying on top of regulatory changes is crucial for staying compliant and operating efficiently. As we head into 2025, our CEO Ross Buhrdorf highlights several regulatory shifts set to significantly impact small business owners. We’re here to help break down the complexities of these changes and ...

The post 2025 Regulatory Changes Business Owners Can’t Afford to Ignore appeared first on ZenBusiness.

]]>

Running a small business is no small feat, and staying on top of regulatory changes is crucial for staying compliant and operating efficiently. As we head into 2025, our CEO Ross Buhrdorf highlights several regulatory shifts set to significantly impact small business owners. We’re here to help break down the complexities of these changes and provide simple steps you can take to stay ahead of the curve. Let’s explore the key changes to watch for and how to prepare your business.

New Reporting Requirements for Payment Platforms

Starting in 2025, third-party settlement organizations, such as CashApp, Venmo, PayPal, and Airbnb, are required to report transactions for goods or services where the total payments received are more than $2,500, down from $5,000 in 2024. Starting in 2026 and beyond, the threshold will be lowered to $600.

Why Transaction Reporting Matters for Your Business:

  • If you use these platforms to accept payments for your business, these transactions will now be reported directly to the IRS.
  • This means more scrutiny during tax season, and any unreported income could result in penalties or additional taxes.

What can you do?

  • Track Your Payments: Ensure you’re keeping detailed records of all transactions on these platforms. This will help you verify accuracy and avoid discrepancies.
  • Revisit Your Accounting Practices: If you’re not already using accounting software, now is the time to invest in one that integrates with these platforms for seamless tracking.
  • Seek Professional Advice: Consult with a tax professional to understand how these changes affect your tax obligations and ensure compliance.

State-Level Overtime and Minimum Wage Changes

Labor laws are evolving at the state level, with many states implementing new minimum wage rates and overtime rules in 2025. For example, the California minimum wage will increase to $16.50 per hour for all employers. In New York, overtime eligibility thresholds are changing, expanding the number of employees entitled to overtime pay.

Why State-Level Wage Changes Matter:

  • These changes can significantly impact your payroll costs and overall budget.
  • Non-compliance with labor laws can lead to costly fines and damage your business’s reputation.

What can you do?

  • Audit Your Payroll: Review your current wage and hour policies to ensure they align with your state’s requirements.
  • Budget for Increases: Anticipate higher payroll costs and adjust your financial planning accordingly.
  • Educate Yourself and Your Team: Stay informed about labor laws in your state and train your management team to comply with new regulations.

The Impact of Tariffs on Small Businesses

Tariffs continue to pose challenges for small businesses, especially those relying on imported goods or engaging in international trade. In 2025, new tariffs and adjustments to existing ones could drive up costs for essential supplies and products.

Why Tariff Laws Matter:

  • Tariffs can increase the cost of goods, forcing businesses to either absorb the costs or pass them on to customers.
  • Unpredictable trade policies make it harder to plan long-term pricing strategies.

What can you do?

  • Diversify Your Supply Chain: Reduce dependency on imports by exploring domestic suppliers or alternative markets.
  • Review Your Pricing Strategy: Adjust your prices thoughtfully to maintain profitability without alienating your customers.
  • Stay Updated: Keep track of trade policy announcements and be ready to adapt your business strategies as needed.

Key Takeaways and Next Steps 

Regulatory changes can feel overwhelming, but proactive planning will keep your business protected. Here’s a quick recap of how to stay ahead:

  • Prepare for New Payment Platform Rules: Keep meticulous records, use accounting tools, and consult tax professionals.
  • Adapt to State Wage and Overtime Changes: Audit your payroll, plan for increased costs, and stay informed.
  • Mitigate Tariff Impacts: Diversify suppliers, adjust pricing strategies, and monitor trade policies.

We’re here to help you navigate these changes with confidence. From compliance guidance to tools and resources tailored for small business owners, we’ve got your back. Let’s tackle 2025 together and set your business up for success!

Watch the full video on YouTube!

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

The post 2025 Regulatory Changes Business Owners Can’t Afford to Ignore appeared first on ZenBusiness.

]]>
Getting a Commercial Lease — Without Signing a Personal Guarantee https://www.zenbusiness.com/blog/getting-a-commercial-lease-without-signing-a-personal-guarantee/ Thu, 16 Jan 2025 12:11:00 +0000 https://www.zenbusiness.com/?p=569408 There was a time when entrepreneurs and small business owners were able to negotiate commercial leases without a personal guarantee. Landlords were often willing to forgo a guarantee in exchange for higher rents, longer lease terms, or larger common area maintenance (CAM) fees. But now, when leasing commercial space, the times are changing. Landlords, like ...

The post Getting a Commercial Lease — Without Signing a Personal Guarantee appeared first on ZenBusiness.

]]>

There was a time when entrepreneurs and small business owners were able to negotiate commercial leases without a personal guarantee. Landlords were often willing to forgo a guarantee in exchange for higher rents, longer lease terms, or larger common area maintenance (CAM) fees. But now, when leasing commercial space, the times are changing.

Landlords, like banks, think in terms of “reasonable risk.” If your business fails and defaults on its lease, then your landlord is liable for the balance. Recently, hard times for the commercial real estate market have caused landlords to reconsider what constitutes a reasonable amount of liability.

Across the country, from New York to California, skittish landlords are demanding personal financial guarantees from business owners, even if the business in question has been organized as a limited liability company (LLC). And even if you have a strong record of repayment and your business is in the black, a landlord may require a time-limited guarantee in order to reduce their own financial risk.

If your landlord absolutely will not budge, then it may be possible to negotiate the terms of your guarantee to limit its impact on your personal finances, your business’s operational capacity, or both. Here are some options for finding a compromise that satisfies your landlord while protecting your personal assets.

Understanding Commercial Leases

A commercial lease is a legally binding contract between a landlord and a business tenant that outlines the terms and conditions of renting a commercial property. Unlike residential leases, commercial leases can be more complex and involve extensive negotiation. As a business owner, it’s crucial to understand the intricacies of these agreements to help ensure you’re securing the best deal for your business.

Key elements of a commercial lease agreement include the rent amount, security deposit, lease duration, and any additional costs the tenant may incur. For instance, some leases may require the tenant to cover maintenance or utility expenses. Being well-versed in these terms can help you avoid unexpected costs and ensure that the lease aligns with your business needs.

Types of Commercial Leases

Commercial leases come in various forms, each with its own set of characteristics. Understanding these types can help you choose the best option for your business:

  • Gross Lease: In a gross lease, the landlord covers all property-related expenses, including utilities, insurance, and maintenance. This type of lease offers simplicity, as the tenant only needs to pay a fixed rent amount.
  • Net Lease: A net lease requires the tenant to pay a base rent plus additional expenses such as utilities, insurance, and maintenance. This type of lease can be further divided into single, double, or triple net leases, depending on the number of expenses the tenant is responsible for.
  • Modified Gross Lease: This lease combines elements of both gross and net leases. Typically, the tenant and landlord share the property expenses, making it a flexible option for both parties.
  • Percentage Lease: In a percentage lease, the tenant pays a base rent plus a percentage of their gross income. This type of lease is common in retail spaces where the landlord benefits from the tenant’s business success.

Negotiating the Terms of Commercial Lease Agreements

Just because your landlord is demanding a guarantee doesn’t mean that you can’t negotiate a creative, mutually beneficial lease.

  • Request a time-limited guarantee. Ask your landlord to reduce the period covered by the personal guarantee to one or two years rather than the entire term of the rental. Most unsuccessful businesses fail within the first two years, so it’s entirely reasonable to request that your guarantee expires after 18, 24, or 30 months, provided that all other payments and fees are up to date.
  • A landlord may be willing to accept a so-called “good guy” guarantee. This agreement holds the guarantor liable until the tenant has lawfully left the premises (see our guarantor definition guide for more information on this term). This protects the landlord from “cut-and-run” defaulters. If your business is failing, or if you need to relocate to another space, the landlord agrees not to enforce the guarantee, provided that you pay your rent until the agreed-upon departure date.
  • It’s wise to ask that your guarantee be waived upon transfer of the lease. If you sell your business to a new operator, or if your landlord transfers ownership or management of the space to a new lessee, then you don’t want to be stuck guaranteeing anything!

Key Terms to Know

When negotiating a business lease, it’s essential to understand the key terms and conditions to protect your interests:

  • Rent: The monthly payment the tenant makes to the landlord for occupying the commercial space. It’s crucial to ensure the rent amount is sustainable for your business.
  • Security Deposit: A deposit paid by the tenant to secure the lease. This amount is typically refundable at the end of the lease term, provided there are no damages or unpaid rent.
  • Lease Duration: The length of time the tenant has the right to occupy the property. Lease terms can vary, so it’s important to choose a duration that aligns with your business plans.
  • Tenant Improvement Allowance: A sum of money provided by the landlord to cover the cost of improvements to the property. This allowance can help you customize the space to meet your business needs.
  • Personal Guarantee: A clause that holds the business owner personally responsible for fulfilling the lease obligations. Understanding this term is crucial, as it can impact your personal finances.

Resolving Disputes

Disputes can arise during the term of a commercial lease, and having a plan in place for resolving them is essential. Common disputes include disagreements over when and how you pay rent, property use, and lease termination. To resolve these issues, consider the following strategies:

  • Negotiation: Open communication with your landlord can often resolve disputes amicably. Discussing the issue and finding a mutually beneficial solution can prevent escalation.
  • Mediation: If direct negotiation fails, mediation can be a valuable tool. A neutral third party can help facilitate discussions and guide both parties toward a resolution.
  • Legal Assistance: In more complex or contentious disputes, hiring a commercial real estate attorney can provide the expertise needed to protect your interests and navigate the legal aspects of the dispute.

Is it still possible for a business owner to avoid a personal guarantee?

So the question still remains… Is it possible to negotiate a true no-personal-guarantee business lease? Absolutely! But it’s not easy. For first-time entrepreneurs, a personal guarantee may be unavoidable, but if your business has a demonstrable record of repayment, adequate capital, and a strong balance sheet, you may be able to convince a landlord to waive the guarantee entirely.

Typically, a landlord will ask that you offer a retainer or a larger security deposit in lieu of a personal guarantee. The down side? This means tying up cash that could otherwise be accumulating interest.

You need to keep your balance sheet in mind and make sure that a cash deposit will not undercapitalize your business. The number one reason why unsuccessful small businesses fail? Insufficient working capital. If possible, it’s always best to offer non-cash corporate assets — equipment, for instance — as collateral rather than a cash deposit.

When all is said and done, your peace of mind is invaluable. As the business owner, you need to be able to objectively appraise your business, make decisive decisions, and stand behind your choices.

Seeing clearly and acting with certainty will always be more difficult when your personal wealth and personal assets (and, by extension, the financial security of yourself and your loved ones) are at stake. In the end, you may decide that it’s best to sacrifice a small amount of working capital for the sense of well-being afforded by a no-personal-guarantee loan.

Working with a Commercial Real Estate Attorney

Navigating the complexities of a commercial lease agreement can be challenging, which is why working with a commercial real estate attorney can be invaluable. These professionals offer several benefits:

  • Expert Knowledge: Attorneys have a deep understanding of commercial lease agreements and can help you comprehend the fine print.
  • Negotiation Skills: An attorney can negotiate favorable terms on your behalf, ensuring the lease aligns with your business needs.
  • Representation: During lease negotiations, having an attorney represent your interests can provide peace of mind and ensure a fair outcome.
  • Dispute Resolution: If disputes arise, an attorney can offer guidance and representation, helping you resolve issues efficiently and effectively.

By partnering with a commercial real estate attorney, business owners can secure the best possible lease terms and avoid potential pitfalls, helping their business thrive in its new commercial space.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

The post Getting a Commercial Lease — Without Signing a Personal Guarantee appeared first on ZenBusiness.

]]>
HR Lessons Need Not Be Learned the Hard Way https://www.zenbusiness.com/blog/hr-lessons-need-not-be-learned-the-hard-way/ Thu, 02 Jan 2025 12:37:00 +0000 https://www.zenbusiness.com/?p=570658 One of the most frustrating things I encountered back when I practiced law was just how often I would see small business owners in my office, in trouble, because they had bad information. Example: One fellow decided that, in order to be friendly, he would ask job candidates about their holiday plans — “So, what ...

The post HR Lessons Need Not Be Learned the Hard Way appeared first on ZenBusiness.

]]>

One of the most frustrating things I encountered back when I practiced law was just how often I would see small business owners in my office, in trouble, because they had bad information.

Example: One fellow decided that, in order to be friendly, he would ask job candidates about their holiday plans — “So, what are your family Christmas traditions?” or “Hanukkah eh? That’s interesting. How do you celebrate that exactly?”

Now, I knew the guy. He didn’t have a malicious bone in his body. But the Christian woman who didn’t get the job didn’t know that; she was convinced that she wasn’t hired due to religious discrimination. Even though she was incorrect, she seemingly had “proof.” It cost my client a pretty penny to learn the hard way that you cannot ask religious questions when hiring.

That experience is but one reason why the most recent ComplyRight National Small Business Compliance Pulse Survey is so interesting. The survey surveyed owners, CEOs, and others charged with handling HR responsibilities at 300 small businesses (five to 100 employees) across the U.S. One of the first things that jumped out at me was that less than half of the small business owners surveyed said that they were “very confident” that they were aware of all federal, state, and local labor laws that could affect their businesses.

That’s really dangerous because the fact is, what you don’t know can hurt you.

And, what’s worse is that when they do want to learn more about employment law, small business owners often turn to sources that are not always the best:

  • First, the survey found that entrepreneurs look to written notifications from federal and state agencies. The problem with this is that agencies rarely provide such notifications or updates.
  • Next, small business owners look to their own lawyers, accountants, or other business advisors. The problem here is that many of these advisors have limited knowledge of labor laws due to the complexity and rapidly changing nature of the beast.
  • Finally, respondents reported that they rely on the knowledge of friends and colleagues. No commentary is even necessary here.

So, the situation is this: Even though we’re in an era of increasing employment law intricacies, a time of ever-changing state, local, and federal regulations, many small business owners have no set processes in place for staying up to date with those changes, let alone learning what it is they need to know.

But even so, at least they have state-of-the-art processes for managing their HR issues, right?

If only.

Get this: Almost half of the small business employers surveyed (46%) rely on “pen, paper, and sticky notes” for their HR process. Indeed, only 17% have invested in contemporary HR systems — technology that can manage HR-related information in one place with one program. The problem with an analog process in a digital world is that not only can this lead to significant legal and financial problems, but it also translates into stress and reduced productivity among the employees who are managing compliance.

So, the question is this: What should small business owners and office and HR managers do to manage all of these regulations such that they are never forced to sit across from their own lawyer, lamenting their lack of HR savviness?

I would suggest that the best practice is actually fairly simple:

  1. Take time to investigate, and invest in, up-to-date technology and processes such as web-based HR solutions
  2. Choose compliance-minded vendors and partners who fully understand the importance of labor law regulations
  3. Protect your company by regularly updating employee policies to cover and address new developments that have a direct impact on the business and employees

A well-structured HR system, supported by comprehensive HR services, can help you attract and retain top talent, improve employee performance, and create a positive company culture.

The bottom line is that the smart small business owner will invest in modern HR solutions, knowing that, in reality, it doesn’t cost; it pays.

The Importance of HR in Small Businesses

Human resources (HR) plays a vital role in the success of small businesses. As a small business owner, managing HR tasks can be overwhelming, especially when you’re already handling multiple responsibilities. However, neglecting HR can lead to decreased employee morale, increased turnover rates, and even legal issues. A well-structured HR system can help you attract and retain top talent, improve employee performance, and create a positive company culture. By investing in HR, small businesses can help ensure that their employees are motivated, productive, and aligned with the company’s goals.

Building a Strong HR Foundation

Building a strong HR foundation is crucial for small businesses. This involves creating a comprehensive employee handbook that outlines company policies, procedures, and expectations. It’s essential to include information on employee benefits, compensation, and performance management. A well-written employee handbook can help prevent misunderstandings, reduce conflicts, and help ensure compliance with federal employment laws. By clearly communicating what’s expected of employees and what they can expect in return, small businesses can foster a transparent and fair working environment.

HR Compliance and Risk Management

HR compliance and risk management are critical aspects of HR management. Small business owners must ensure they comply with federal employment laws, such as the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA). Failure to comply can result in costly fines and penalties. HR professionals can help small businesses navigate complex employment laws and regulations, reducing the risk of non-compliance. By staying informed and proactive, small businesses can protect themselves from legal issues and create a stable and compliant workplace.

Performance Management and Employee Growth

Performance management and employee growth are essential for small businesses. Regular performance evaluations can help identify areas for improvement, provide feedback, and set goals for employee development. HR professionals can help small businesses create a performance management system that rewards employees for their achievements and provides opportunities for growth and development. By focusing on continuous improvement and recognizing employee contributions, small businesses can boost morale and drive long-term success.

Company Culture and Employee Well-being

Company culture and employee well-being are critical components of HR management. A positive company culture can improve employee morale, increase productivity, and reduce turnover rates. HR professionals can help small businesses create a more inclusive workplace culture that promotes employee well-being, diversity, and inclusion. This can include offering competitive benefits packages, providing employee training and development opportunities, and promoting work-life balance. By prioritizing employee health and well-being, small businesses can create a supportive and thriving work environment.

Steve Strauss is a senior small business columnist at USA Today and author of 15 books, including The Small Business Bible.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

The post HR Lessons Need Not Be Learned the Hard Way appeared first on ZenBusiness.

]]>
3 On-Site Problems That Pose a Risk to a Safe Working Environment for Your Employees https://www.zenbusiness.com/blog/3-onsite-problems-that-pose-a-risk-to-your-employees/ Thu, 02 Jan 2025 10:10:00 +0000 https://www.zenbusiness.com/?p=586692 Employers have various legal obligations they need to adhere to each day, which can range from OSHA regulations to tax requirements. Running a company can ultimately be a minefield for legal breaches and health risks, which could severely impact your business. If you want to deal with multiple challenges throughout your company’s lifespan effectively, learn ...

The post 3 On-Site Problems That Pose a Risk to a Safe Working Environment for Your Employees appeared first on ZenBusiness.

]]>

Employers have various legal obligations they need to adhere to each day, which can range from OSHA regulations to tax requirements. Running a company can ultimately be a minefield for legal breaches and health risks, which could severely impact your business.

If you want to deal with multiple challenges throughout your company’s lifespan effectively, learn more about the following on-site problems that pose a risk to your employees.

Understanding Workplace Hazards

Workplace hazards are situations or conditions that can cause harm or injury to employees in the workplace. These hazards can be physical, chemical, biological, or ergonomic in nature and can have serious consequences if not identified and addressed. Understanding workplace hazards is crucial for maintaining a healthy work environment. By recognizing and mitigating these hazards, employers can help ensure the safety and well-being of their workforce, thereby fostering a productive and positive workplace.

Types of Hazards in the Workplace

There are several types of hazards that can be present in the workplace, including:

  • Safety hazards: These are hazards that can cause physical harm or injury, such as slips, trips, and falls, or being struck by an object.
  • Biological hazards: These are hazards that can cause illness or infection, such as exposure to bacteria, viruses, or other microorganisms.
  • Chemical hazards: These are hazards that can cause harm or injury through exposure to chemicals, such as toxic substances or flammable liquids.
  • Ergonomic hazards: These are hazards that can cause physical strain or discomfort, such as repetitive motion injuries or poor posture.
  • Physical hazards: These are hazards that can cause physical harm or injury, such as loud noises, extreme temperatures, or radiation.

Understanding these common workplace hazards is the first step in creating a safer work environment. Each type of hazard requires specific strategies for mitigation and control to help ensure occupational health and safety.

Occupational Safety and Workplace Hazards

Federal law entitles every U.S. employee to work in a safe environment each day. Hazard identification is a crucial step in recognizing and documenting safety risks in the workplace. It is, therefore, a business owner’s responsibility to remove potential safety hazards that could impact a worker’s health and well-being.

For example, if you run a construction firm, you could eliminate slips, trips, and falls by removing debris and unnecessary material on-site. To do so, you may need to rent or buy transfer trucks to collect and dispose of any potentially hazardous materials.

Intoxicated Employees and Workplace Safety

Inebriated employees are not only a danger to themselves, but they can also impact the health and safety of everyone on-site, especially if they’re required to operate heavy machinery, such as a forklift truck, excavator, or drive a company vehicle.

Common signs an employee has been drinking can include:

  • A loss of balance
  • Slurred speech
  • Coordination issues
  • Irrational behavior
  • The smell of alcohol on their breath

If you suspect an employee has been drinking, you must talk to them in a non-confrontational, calm manner regarding the issue. If they’re intoxicated, you should refer them to an employee assistance program.

You can also prevent staff from driving a company vehicle by introducing an ignition interlock device. Every staff member that sits behind the wheel will need to provide a three-second breath sample to unlock an ignition. It promotes road safety and can prevent accidents.

Lack of Training and Safety Hazards

As mentioned, employers are legally required to provide their teams with a safe environment. That’s why it’s imperative to ensure your staff have the appropriate health and safety training for their roles, which can minimize the chances of a health and safety issue in the workplace.

Sadly, if an employee has not received the necessary training, they could operate heavy machinery that could lead to a fatal or non-fatal injury. Protect your staff at all costs and ensure your business is never liable for compensation by investing your company’s time and money into OSHA and on-the-job training. Conducting regular hazard assessments to identify and assess hazards is crucial.

Creating a Safe Working Environment

Creating a safe working environment requires a proactive approach to identifying and addressing potential hazards. This can involve:

  • Conducting regular hazard assessments to identify potential hazards
  • Implementing safety protocols and procedures to mitigate hazards
  • Providing personal protective equipment (PPE) to employees
  • Offering training and education on safety procedures and protocols
  • Encouraging employees to report hazards and near-misses
  • Maintaining a healthy work environment through regular cleaning and maintenance

By taking these steps, employers can create a safe and healthy work environment that protects employees from workplace hazards and promotes overall well-being. A comprehensive health program and commitment to occupational safety are essential for fostering safe workplaces and ensuring the long-term success of any business.

Conclusion

Running a company is not without its challenges, as business owners will have multiple responsibilities they will need to juggle each day. Yet, few aspects of your business are more important than your employees’ health and well-being.

For this reason, you must aim to create a safe working environment for everyone, tackle individual issues head-on, and provide your team with the appropriate training for their job role.

Business Resources:

FAQ – Federal Tax ID Numbers EIN and FEIN Guide

Generate New Business Ideas for your Next Startup – Business Idea Generator

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

The post 3 On-Site Problems That Pose a Risk to a Safe Working Environment for Your Employees appeared first on ZenBusiness.

]]>
How to Register a Trademark https://www.zenbusiness.com/blog/how-register-trademark/ Sun, 29 Dec 2024 18:01:00 +0000 https://www.zenbusiness.com/blog/how-register-trademark/ You’ve come up with a great name for your product or business, and you want to be sure no one else uses your product or business name. Do you need to get it trademarked? Is registering a trademark something you can do on your own? Or maybe you’ve just come up with a snappy product ...

The post How to Register a Trademark appeared first on ZenBusiness.

]]>

You’ve come up with a great name for your product or business, and you want to be sure no one else uses your product or business name. Do you need to get it trademarked? Is registering a trademark something you can do on your own?

Or maybe you’ve just come up with a snappy product name, and you’ve decided you want to trademark it. What should you do next? Is it really as easy as the U.S. Patent and Trademark Office (USPTO) website says it is? Can you really do it without a trademark lawyer?

Understanding the federal registration process is crucial for securing your trademark rights and protecting your brand identity.

We’ll be honest; trademarks can be a bit tricky. In general, it’s helpful to get assistance from a lawyer or trademark filing service even though it’s legal and possible to do it on your own. Here, we’ll walk you through the basics of what a trademark is, the protection it does and doesn’t give you, the gist of the trademark registration process, and more.

Introduction to Trademarks

A trademark is any word, phrase, symbol, design, or combination of these things that identifies a business and distinguishes its products or services from others in the market. Trademarks play a crucial role in protecting a business’s brand identity and intellectual property. By registering a trademark, businesses can prevent others from using similar marks, which can help to build customer trust and loyalty.

Why wait? Form your business with ZenBusiness for $0 + state fees.

Benefits of Trademark Registration

Federal trademark registration offers several benefits to businesses, including:

  • Exclusive Rights: Registering your trademark grants you exclusive rights to use the mark in connection with your goods or services, preventing others from using a similar mark.
  • Protection Against Infringement: A registered trademark provides legal protection against trademark infringement, allowing you to take legal action if someone uses your mark without permission.
  • Increased Brand Recognition: A registered trademark enhances your brand’s credibility and recognition, making it easier for customers to identify and trust your products or services.
  • Business Expansion: With a registered trademark, you can expand your business operations and enter new markets with confidence, knowing your brand is protected.
  • Enhanced Legal Protection: Registration provides robust legal protection and enforcement options, making it easier to defend your trademark rights in court.

What is a trademark, and why register?

As mentioned above, a trademark is a word, phrase, symbol, design, or combination of these things that identifies and distinguishes the source of goods or services of one party from those of others. Registering a federal trademark for your business name or mark provides you with exclusive rights to use it nationwide in connection with the products and services it’s registered for.

As a trademark owner, you gain the ability to safeguard your business name and other brand elements from unauthorized use. This not only discourages competitors from using your name or creating similar-sounding names to deceive customers but also enhances your brand’s credibility.

The ability to legally use the ® symbol next to your name is another significant advantage. Moreover, having a registered trademark allows you to file a lawsuit in federal court to enforce your trademark rights, providing robust legal protection for your brand.

Who owns a trademark?

Under common law, the person or entity that owns a trademark is whoever uses it first in business, making it an identifiable part of their brand. Trademark owners must also be diligent in maintaining their trademark rights by filing necessary documents and renewals with the United States Patent and Trademark Office (USPTO). The owner could be a sole proprietor, a partnership, a limited liability company, a corporation, or another business structure. But the first person to use it in commerce is, technically speaking, the mark’s owner.

After that definition, you might find yourself wondering if it’s even worth going to the USPTO to get a federal registration for your trademark.

Having a registration certificate from the USPTO (or even your state office) doesn’t grant you ownership of the trademark because you already “owned” it to begin with. A trademark registration simply proves that you own it; if anyone infringes on your name, your registration will give you a resource to pursue legal action against them if needed.

How do I determine if I own a trademark?

Before you get into the registration process, you need to check that you have the right to use the name or mark in the first place. The easiest way to start is by running a trademark search on the USPTO website and checking the trademark office’s database. An internet search is always essential, too. Run a similar check with the state trademark office (or offices if you operate in more than one state). You can also hire a special search company to check through telephone listings, company names, and so on; this is the most thorough option.

These searches won’t guarantee that your name doesn’t infringe on any registered marks, but it’s a crucial step for proper trademark use.

How to Register a Trademark

If you decide to go for a national mark and you want to try to apply on your own, you can go to the U.S. Patent and Trademark Office website and complete the application online through the Trademark Center. As of January 18, 2025, the USPTO has replaced the Trademark Electronic Application System (TEAS) with the Trademark Center, a new online platform for filing trademark applications, paying fees, and tracking application status.

Note that this is the process for applying for federal trademarks. States have their own procedures for obtaining a state trademark, and fees vary by state.

This is a basic breakdown of the federal trademark application process. More details can be found on the USPTO website. As mentioned above, all trademark applications must now be filed through the USPTO’s Trademark Center. This platform allows applicants to:

  • Submit new applications
  • Pay application-related fees
  • Track the status of applications using a docketing feature

The trademark application process involves several steps, including preparing and submitting trademark applications through the USPTO’s online system. After submission, the USPTO will review your trademark application. If the examining attorney raises no objections or if you successfully address any objections, your mark will be published in the “Official Gazette.”

This publication allows any party who believes they may be damaged by the registration to file an opposition or request an extension to oppose within 30 days. Essentially, the notice gives other companies the opportunity to object to a registration that infringes on their own.

If no one raises an objection within 30 days of that publication date and the USPTO determines that your trademark applications are eligible, your application will go through.

Step 1: Confirm availability

Before filing a trademark application, it’s essential to confirm that the desired mark is available for use. This involves conducting a thorough search of existing trademarks, including:

  • Online Databases and Search Engines: Check for similar marks using online databases and search engines.
  • Social Media Platforms: Search social media platforms to ensure no one else is using a similar mark.
  • Trademark Office Databases: Use the trademark office’s databases to search for registered and pending trademarks. This includes checking your state’s trademark database for state trademarks.
  • Industry-Specific Directories: Look through industry-specific directories to ensure your mark is unique within your field.

To do a more thorough search, some businesses hire a trademark attorney or trademark search company to conduct the search for them, though this can be expensive.

By confirming availability, businesses can avoid potential conflicts and help ensure that their mark is unique and distinctive.

Step 2: Prepare and file the trademark application

Once availability is confirmed, the next step is to prepare and file the trademark application. This involves:

  • Gathering Required Documents and Information: Collect all necessary documents and information needed for the application.
  • Completing the Trademark Application Form: Fill out the trademark application form accurately and completely.
  • Paying the Filing Fee: Pay the required filing fee for the application.
  • Submitting the Application to the Trademark Office: Submit the completed application to the trademark office.

Note that this is the process for applying for federal trademarks. States will have their own processes for getting a state trademark.

This is a basic breakdown of the trademark application process. More detailed information is available at the USPTO website. As we mentioned earlier, the Trademark Center is where you can file a new trademark application, pay application-related fees, and use the docketing feature to track the status of applications filed through the Trademark Center.

It’s recommended to work with a trademark attorney or trademark filing service to help ensure that the application is accurate and complete.

Step 3: Respond to trademark office actions

After filing the trademark application, the trademark office will review the application and may issue office actions. These actions may include:

  • Requests for Additional Information or Clarification: The trademark office may request more information or clarification about your application.
  • Objections to the Mark or Application: The office may raise objections to the mark or the application itself.
  • Requirements for Amendments or Corrections: You may be required to make amendments or corrections to your application.

Businesses must respond to these actions in a timely and effective manner to help ensure that the application process moves forward.

Trademark Office Review and Approval

Once the trademark application is complete and all issues have been resolved, the trademark office will review and approve the application. This may involve:

  • Examining the Mark for Distinctiveness and Uniqueness: The trademark office will examine the mark to ensure it’s distinctive and unique.
  • Verifying the Accuracy of the Application and Supporting Documents: The office will verify that the application and supporting documents are accurate.
  • Ensuring Compliance with Trademark Law and Regulations: The application must comply with all relevant trademark laws and regulations.

If the application is approved, the trademark office will issue a registration certificate, which grants the business exclusive rights to use the mark.

Trademark Classes and Fees

When registering a trademark, it’s important to understand the concept of trademark classes. If your name is used for more than one type of goods or services, you may need to register it in multiple classes. Each class represents a category of goods or services, and registering in multiple classes requires additional fees.

The USPTO charges a flat fee of $350 per class of goods or services for all trademark applications filed through the Trademark Center. As of January 18, 2025, the TEAS Plus and TEAS Standard filing options have been eliminated, and all applications now follow a single Base Application Fee structure.

Additional Surcharges:

  • $100 per class for applications missing required information
  • $200 per class for using free-form descriptions instead of pre-approved ones
  • $200 per class for exceeding character limits in specific fields

These fees are non-refundable, so it’s crucial to ensure that your application is complete and accurate before submission.

How long should I expect the trademark application process to take?

The USPTO trademark application process can be lengthy, even if everything is completed correctly.

  • Standard Timeline: If there are no objections or office actions, the process typically takes 12 to 18 months from the initial filing to final registration.
  • Delays: If the USPTO examining attorney requests additional information or if another party files an opposition, the process can extend beyond two years.

Applicants should regularly check the status of their application through the Trademark Center docketing feature to stay informed of any updates or required actions.

In most cases, when your federal trademark is approved, you would be protected against anyone in the United States using your product or service name on a similar product.

Unfortunately, it’s not always the case that your application for trademark registration goes through quite this easily. Often, when the examining attorney reviews an application, they may ask for more information, such as a rewrite of your statement of use. They might ask for a different sample of your mark instead, or someone might object to your mark. These sorts of cases can take much longer.

Can I go without a federal registration for my trademark?

Federal trademark registration is not legally required, but it offers stronger protection than common law rights.

  • Common Law Protection: If you were the first to use a mark, you technically own it. However, without a federal registration, you must prove prior use in a legal dispute, which can be challenging. You can sue someone for trademark infringement if they copy your name for a similar product. But without registration, the court battles can be trickier. You’d have to clearly prove that you were the first to use the mark. But if you registered, you’d have proof, giving you more robust trademark protection.
  • Federal Registration Benefits: A registered trademark gives you nationwide rights, appears in the USPTO database (which discourages others from using similar marks), and allows you to enforce your trademark in federal court.
  • State vs. Federal Registration: A state trademark only protects your brand within a single state, while a federal trademark protects your brand nationwide. A state trademark is simpler, quicker, and less expensive to get. The protections of a state registration are pretty good, but they apply only within the confines of your state. What happens when you border another state? What if someone just over the way starts using your product name for a similar product? It’s rather difficult to limit your “territory” in the days of the Internet and easy transportation. Again, a national trademark would definitely make your life easier.

Please note that you can also register your mark internationally once your company grows to the extent that you are trading overseas. If you go the foreign registration route, it’s highly recommended to work with an experienced trademark attorney.

Do I need to hire a trademark attorney to help me with my trademark registration?

Since a trademark application is pretty complicated, it’s generally recommended to work with an attorney or a trademark filing service. The trademark application process can be complex, making it beneficial to work with an attorney. But it’s not legally required to hire an attorney if you’re domestic to the United States or its territories.

That said, foreign applicants are required to hire a licensed attorney. They’ll represent you at the USPTO.

Maintaining Your Trademark Protection

To keep your federal trademark registration active, you must file periodic maintenance documents with the USPTO:

  • Between the 5th and 6th year: File a Section 8 Declaration of Use to confirm that the trademark is still in active use.
  • Between the 9th and 10th year: File both a Section 8 Declaration of Use and a Section 9 Renewal Application to renew the trademark for another 10 years.
  • Every 10 years thereafter: File a Section 9 Renewal Application to keep the trademark valid.

Updated 2025 Renewal Fees:

  • Section 8 Declaration of Use: $325 per class
  • Section 9 Renewal Application: $325 per class
  • Combined Section 8 and 9 Filing: $650 per class

Failure to file these documents on time may result in your trademark being canceled or marked as abandoned.

Filing these renewals helps prove that you are still using the mark in commerce. Remember that usage is what gives you “ownership” of the mark in the first place, so it’s important to prove that you’re using it.

If you fail to file a statement of use or an extension request within six months from the date the notice of allowance was issued, your application will be considered abandoned. In such cases, you can file a petition to revive the application within two months of the abandonment date. Staying on top of these requirements helps ensure that your trademark remains protected and enforceable.

Considering LegalZoom?

See why Forbes, NerdWallet, and other major media outlets have named ZenBusiness the go-to LLC service.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

The post How to Register a Trademark appeared first on ZenBusiness.

]]>
Beneficial Ownership Report Guide https://www.zenbusiness.com/blog/boi-reporting/ Sun, 01 Dec 2024 12:34:00 +0000 https://www.zenbusiness.com/?p=826845 Starting in 2024, a lot of small businesses were required to file a beneficial ownership information report to the Financial Crimes Enforcement Network (FinCEN). But what is a beneficial ownership information (BOI) report, and which businesses need to file one? If you aren’t familiar with this report, don’t worry; in this guide, we’ll cover the ...

The post Beneficial Ownership Report Guide appeared first on ZenBusiness.

]]>

Important Note: On February 17, 2025, a Texas Federal Judge lifted the final remaining nationwide injunction on enforcement of the Corporate Transparency Act. This means the Beneficial Ownership Information Report is required again and the new deadline to file is March 21, 2025. You can learn more about the current status of the beneficial ownership information (BOI) report on our BOI Report Requirements Timeline.

Starting in 2024, a lot of small businesses were required to file a beneficial ownership information report to the Financial Crimes Enforcement Network (FinCEN).

But what is a beneficial ownership information (BOI) report, and which businesses need to file one? If you aren’t familiar with this report, don’t worry; in this guide, we’ll cover the essential facts you need to know to successfully file the beneficial ownership information report.

What is a beneficial ownership information (BOI) report?

In 2019, Congress introduced (and later passed) the Corporate Transparency Act, designed to prevent money laundering and terrorism funding through American business structures. The act is designed to promote transparency regarding the owners and leaders of a business, ideally helping prevent companies from using shell corporations to hide any financially nefarious dealings. 

Under the terms of the act, beginning in 2024, certain business entities — namely limited liability companies, corporations, and any other entities that are created by filing a registration form with a secretary of state or any similar U.S. office — must file a beneficial ownership information report to FinCEN, the Financial Crimes Enforcement Network. (Read more on what FinCEN means here: FinCEN definition.)

The BOI report provides information about a business’s “beneficial owners.” A beneficial owner is a person who meets any of the following criteria: 

  • They have substantial control over the corporation or LLC
  • They hold 25% or more of the entity’s ownership interest
  • Economically, they benefit substantially from the entity’s assets

Need more clarity? Check out our beneficial owner definition page.

By requiring this information, FinCEN gains clear information about who owns and operates a company.

When are beneficial ownership reports due? 

Missing a BOI filing deadline to report beneficial ownership information can lead to compliance issues. Businesses should mark their calendars and establish reminders for reporting deadlines, as they can vary annually.

The BOI filing requirement went into effect on January 1, 2024. Businesses that were created before that date originally had until January 1, 2025, to file. Businesses created during the 2024 calendar year were supposed to file within 90 days of their formation. Finally, businesses that started on or after January 1, 2025, had 30 days to file their BOI report.

However, the CTA faced some challenges in court that temporarily blocked its enforceability. But on February 17, 2025, a Texas federal judge lifted the final remaining nationwide injunction on enforcement of the CTA. This means the Beneficial Ownership Information Report is required again, and the new deadline to file is March 21, 2025.

If a company’s beneficial owner information changes, then they’ll have just 30 days to report an update to their information.

See more on our CTA deadlines page. These due dates also apply to a qualifying foreign reporting company.

If your state requires you to file an initial report after creating your business, we recommend reporting beneficial ownership information at the same time and knocking out both tasks at once. If not, it’s best to file your beneficial owner report as soon as your business is approved to ensure the task doesn’t get lost in the shuffle.

What about company applicants?

“Company applicants” are the people who were primarily responsible for the creating of a business entity. Under the Corporate Transparency Act, there are technically two types of company applicants.

The first type of company applicant is someone who personally filed the business’s formation documents. The other type is an individual who directed the process of filing the formation documents but didn’t file the forms personally.

You aren’t always required to report company applicant information. A domestic reporting company or foreign reporting company created before January 1, 2024, isn’t required to include their company applicant information on their beneficial ownership report. All new business entities will need to list at least one (but not more than two) company applicant.

Determine if you need to file a beneficial ownership report

While many limited liability companies and corporations can report beneficial ownership information, not all of them qualify as reporting companies. Here are a few businesses that are exempt from being reporting companies and filing a BOI:

  • Entities that are already registered under the Commercial Exchange Act or another Exchange Act
  • Public utilities
  • Governmental authorities
  • Insurance companies and state-licensed insurance producers
  • Pooled investment vehicles
  • Businesses related to securities: a security reporting issuer, a securities exchange or clearing agency, or a broker or dealer in securities
  • Financial institutions: banks, credit unions, money services businesses, accounting firms, investment companies or investment advisers, venture capital fund advisers, and financial market utilities
  • Organizations with tax-exempt status OR an organization assisting a tax-exempt entity
  • Entities that meet the criteria for being considered “inactive” (formed before January 1, 2020, not actively doing business, has no foreign owners, hasn’t had any changes in ownership in the last 12 months, and hasn’t sent or received funds exceeding $1,000 in the last 12 months)
  • Entities that meet the subsidiary exemption requirement, meaning it is owned or controlled by an exempt entity
  • Large operating companies: entities that have more than 20 employees, more than $5,000,000 in gross receipts, and a physical office in the U.S.

Generally speaking, businesses that are exempt from the BOI requirement either exist for nonprofit purposes or have already registered their ownership information for another reason. For example, large, publicly traded companies don’t file a BOI because they’ve already completed registration with the U.S. Securities and Exchange Commission.  

If your LLC or corporation doesn’t meet one of the criteria listed above, then you may want to file a BOI. Certain partnerships might also need to. As a general rule, if you file formal formation paperwork with your state (and you don’t qualify for an exemption), then you should file a BOI with FinCEN. 

Recommended:

State requirements for beneficial ownership filing

BOI Filing for LLCs: Guide to Beneficial Ownership Reporting

What’s the difference between a domestic reporting company and a foreign reporting company?

Both domestic reporting companies and foreign reporting companies can report beneficial ownership information. But what’s the difference between the two?

Reporting companies created under the laws of a state or territory in the United States are considered domestic. But if a company is organized in a foreign country, and it’s filed paperwork to be able to transact business in the U.S., it’s regarded as a foreign reporting company.

We can help file your BOI report

Filing your BOI report can be stressful. We’re here to help you file securely and accurately so you can stay compliant.

How to Report Beneficial Ownership Information

When the time comes to file a BOI application, it’s essential to file it properly. Let’s talk through the steps you’ll need to follow. 

Gather ownership information for your beneficial owners

When you report beneficial ownership information, you’ll be asked to provide the following information for each beneficial owner:

  • Their full legal name
  • Their current residential or business address
  • Their birthdate.
  • An acceptable identification document like a personal identification card or driver’s license OR an ID number from a valid foreign passport with the individual’s photo and date of birth

For a full checklist of the information you need to provide about each beneficial owner, check out FinCEN’s Small Entity Compliance Guide.

Who are your beneficial owners?

Before you can dive into beneficial ownership information reporting, you need to double-check who your beneficial owners are. As we mentioned earlier, the typical beneficial owner is someone who exerts control over or substantially owns the company (or both). But there are some people who might be exempt owners even though they meet those criteria. Here are a few of them: 

  • A beneficial owner who is a minor
  • A person who’s acting as an agent or representative for another person
  • An employee whose economic benefit comes only from their employment in the business
  • A creditor of the business
  • Any individual who has a stake in the business by inheritance alone

Those beneficial owners are exempt from the BOI report. All others need to be included in the paperwork.

File your initial BOI report online with the Financial Crimes Enforcement Network

The Financial Crimes Enforcement Network’s website offers a helpful e-filing platform where you can submit your BOI report. The portal will walk you through the process, prompting you to provide information for each beneficial owner, your business name, your trade names, your business address, your EIN, and so on. 

As you go, type in all the requested information about your business; be very careful to input the correct information so you don’t have to make any corrections later on. The Department of Treasury does provide a way to correct mistakes, but it’s a hassle. Avoiding those mistakes from the get-go is easier.

FinCEN does not charge a filing fee for initial BOI reports. 

Create a FinCEN Identifier (Optional)

On the Financial Crimes Enforcement Network’s website, you’ll be offered a chance to sign up for a FinCEN identifier, or a FinCEN ID. This number is especially helpful for individuals or reporting companies that want to simplify their reporting process. If you have a FinCEN identifier, you can list that number on your beneficial ownership report instead of your name, address, and other information. 

To apply for a FinCEN identifier, you’ll need to provide the following information: 

  • Your legal name
  • Your current address
  • An ID number from an acceptable government identifying document like a driver’s license or passport
  • An image of your identifying document

While you don’t have to get a FinCEN identifier, it can make it easier to report beneficial ownership information later on. 

Keep a transcript

It’s best practice to keep a copy of the information you list on the beneficial ownership report. It’s much like keeping a record of your tax filings; since it’s a federal filing, you’ll want to keep documentation of it. Plus, having a copy on hand is helpful if you ever need to reference the information.

Keep your beneficial ownership report information updated

It’s not uncommon for a reporting entity to need to update its BOI information somewhere down the line. Here are some of the reasons you might need to update your BOI:

  • The beneficial owners have changed in a way that meets the 25% ownership threshold
  • The business’s legal name changed, or a new DBA (doing business as) name was acquired
  • A beneficial owner’s name, address, or unique identifier changed
  • A minor owner reaches adulthood

In general, you have 30 days to file an updated BOI report when any of the above information changes.

What if I find a mistake in my BOI information?

If you discover that you accidentally listed faulty information on your report — for example, you accidentally wrote 1981 instead of 1982 for an owner’s birth date — you’ll need to correct it. FinCEN requires you to file this update within 30 days of discovering the error.

Like the initial beneficial ownership report, your corrected report has no filing fee.

See more: BOI Compliance Guide: Common Mistakes and How to Avoid Them

What happens if my business dissolves or closes down?

There’s an important distinction to make here: whether you’ve dissolved your business or simply halted operations. If you dissolve your LLC or corporation, your company ceases to exist; it can’t be required to adhere to the Corporate Transparency Act.

But let’s say that you just stop selling products and transacting business without formally dissolving your business entity. If that’s the case, you’d still be considered a reporting company responsible for filing beneficial ownership information to FinCEN.

Because of this (and other potential consequences), it’s highly recommended for legal entities to formally file dissolution paperwork when they intend to close down.

Try ZenBusiness

Still feeling anxious about filing your beneficial ownership information report? Our ZenBusiness Beneficial Ownership Information filing service can help you. We can also help you start and maintain your business. Whether you need help starting an LLC or corporation, a platform to manage your finances, or peace of mind that your business is compliant, we can help. Let us handle the red tape side of things so you can focus on growing your business.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

The post Beneficial Ownership Report Guide appeared first on ZenBusiness.

]]>
Top Reasons You Should Consider Incorporating a Consulting Business https://www.zenbusiness.com/blog/reasons-consultants-should-consider-incorporating/ Sun, 01 Dec 2024 11:38:00 +0000 https://www.zenbusiness.com/?p=741336 If you’re thinking of incorporating yourself as a consultant, then you might find yourself wondering if it’s worth the effort. There are many reasons to consider starting a corporation for your consultancy. Granted, corporations aren’t right for everyone, but they’re definitely worth considering. In this guide, we’ll cover the basics of forming a corporation for ...

The post Top Reasons You Should Consider Incorporating a Consulting Business appeared first on ZenBusiness.

]]>

If you’re thinking of incorporating yourself as a consultant, then you might find yourself wondering if it’s worth the effort. There are many reasons to consider starting a corporation for your consultancy. Granted, corporations aren’t right for everyone, but they’re definitely worth considering.

In this guide, we’ll cover the basics of forming a corporation for a consultant business, including what a corporation is, its benefits and drawbacks, and an alternative structure if a corporation doesn’t seem like the right fit.

What is a corporation?

A corporation, sometimes called a profit corporation or business corporation, is a popular business entity structure in the United States and abroad. It’s owned by shareholders and governed by a board of directors. Many corporations also appoint a CEO, president, and other officers to handle the day-to-day management of the business.

Corporations are the only business type that can sell shares of stock to raise capital. With that privilege comes a lot of corporate formalities, including holding shareholder meetings, creating bylaws, and more.

Should I incorporate as a consultant?

One of the luxuries of operating your own consulting business is that you have options. You can choose to stay an independent contractor, operating as a sole proprietorship. But you also have the option to create a registered business, including incorporating as a corporation. Many consultants actually find the benefits of a corporation to be well worth the extra effort to create one.

But what are those benefits, you ask? Let’s look at those perks.

Limited Liability Protection for Personal Assets

In our opinion, the single biggest benefit to creating a corporation for your independent consultant work is limited personal liability. Operating without registering with your Secretary of State — as a sole proprietorship — is perfectly legal as long as you have any required licenses. But from a legal standpoint, you and your business will be the same legal entity. If your business is sued or defaults on a loan, your personal assets can be seized to pay the business debts. This makes it crucial to form a legal entity to protect your personal property from being used to pay the company’s debts.

In contrast, when you create a corporation, you form a separate legal entity. The corporation can be held liable (and be sued) for its own debts. Its corporate veil usually protects you, the owner, from its liabilities. Typically, if the corporation is sued, creditors can’t come after your personal assets. They can only seize business assets.

Easier Time Separating Your Business and Personal Accounts

When you operate as a sole proprietor, it’s recommended to keep your personal finances separate from your business ones by opening a business bank account. It can be tricky to manage that if you’re operating from a single bank account. However, as a corporation, having separate accounts is actually a legal requirement. Not separating your business accounts can compromise your corporate veil.

Thankfully, forming a corporation necessitates getting an employer identification number (EIN), which in turn allows you to get a separate business bank account (most banks require an EIN for opening a business bank account).

ZenBusiness is a financial technology company and is not a bank. Banking services provided by Thread Bank, Member FDIC.

Tax Savings

You might be wondering, “How on earth can a corporation save me money on taxes — aren’t they subject to double taxation for their business income?” And you’re correct; corporations do pay taxes on two levels: once at the corporate level (under the corporate tax rate) and again on the individual level (at personal tax rates). But in some cases, being taxed as a C corporation, or better yet, an S corporation, can actually save you money on self-employment taxes. It also allows you to qualify for certain tax deductions.

Many consultant businesses can qualify for S corporation status, which gives you two main perks. First, you can still pay pass-through taxes at personal income tax rates. But you can also pay yourself a reasonable salary like an employee, potentially reducing your tax liability for employment taxes. Instead of paying self-employment taxes on all your profits, you would only pay them on your salary. This could be a difference of thousands of dollars in some cases. You wouldn’t have that luxury as a sole proprietor.

Note: Taxes can be extremely complicated. A tax benefit for one business might increase the taxable income for another. If you’re curious whether being taxed as a corporation would save you money, we highly recommend consulting with a licensed tax professional.

Increased Credibility

The general public is very comfortable doing business with corporations; the “inc.” designator adds a lot of legitimacy to a business name. Doing business as a sole proprietor is perfectly legal, but unfortunately, some potential clients just aren’t as comfortable working with sole proprietors. Whether they’re just leery of it or genuinely prefer working with businesses that are accountable to the state, it’s a common reality.

If you operate as a corporation instead, you’re less likely to encounter issues with customer confidence. Your consulting service business will be a recognized, separate legal entity.

Ability to Raise Funds by Selling Shares

Starting up a business is expensive. Whether you need supplies and equipment, new office space, your first employee, or anything in between, the costs add up quickly. If you’re a sole proprietor, your options for raising start-up capital are limited. Loans and grants are your most viable options.

However, if you’re a corporation, you have the option to sell shares of stock to raise capital. This does, of course, come with strings, such as registering with the U.S. Securities and Exchange Commission (SEC) for public offerings and regular reports and shareholder meetings. But for many businesses, it’s worth the effort.

Ability to Do Business Internationally

Even as a solo operator, you never know what opportunities will come your way. It’s possible that you might even find yourself with potential international clients down the road. If that happens, you’ll be most successful with a corporation. That’s because a corporation is recognized internationally (in many, but not all, countries). Without a corporation, serving international clients would be difficult — if not practically impossible.

Granted, this advantage doesn’t matter to every business owner, but it’s worth mentioning.

Disadvantages of Incorporating

Incorporating your consultant business has a lot of benefits, but it’s not right for everyone. In addition to the double taxation we mentioned earlier, there are some drawbacks. For one, there’s a rigid management structure to a corporation: a board of directors and officers, at minimum. And depending on your state, you may be required to have multiple directors or officers (state laws vary).

Corporations must also uphold corporate formalities, so you’ll have to deal with a good bit of red tape every year. You’ll also have to deal with state filing fees, such as filing your Articles of Incorporation, submitting your annual report, and more. None of these disadvantages are insurmountable, but they might mean a corporation isn’t quite the right fit for you.

Alternative: Forming an LLC for Your Business Structure

If you’re not sold on forming a corporation for your consultancy, a limited liability company (LLC) might be a better business structure for your needs. Like a corporation, an LLC consultancy offers personal asset protection for its owners. It’s also better favored by cautious customers because it’s a separate entity that’s accountable to the state. You still might be able to elect S corporation status to save on self-employment taxes, but you’ll be taxed as a pass-through entity by default.

One key advantage LLCs have over corporations is that they’re much more flexible to manage and easier to run. In all states, LLCs can be owned by a single member (a single-member LLC) or multiple members (a multi-member LLC). And the members ultimately get to decide how the business is managed. For many consultants, that flexibility is desirable.

Setting Up a Consulting Business: The Basics

No matter whether you form a corporation, LLC, or another business structure for your consulting company, there are a few basic steps you’ll want to follow to set yourself up for success.

Step 1: Draft a business plan

When starting a consulting business, the first step is to draft a comprehensive business plan. This plan should outline your goals, target market, and unique value proposition. Think of it as your roadmap, guiding you through the initial stages and helping you stay focused on your objectives. A well-crafted business plan not only clarifies your vision but also makes it easier to communicate your business’s potential to investors and stakeholders.

Step 2: Choose a business name

Equally important is choosing a business name. Your business name is a critical part of your brand identity. It should be professional, memorable, and easy to spell. Before you settle on a name, make sure it’s not already in use by searching the United States Patent and Trademark Office (USPTO) database. Trademarks also exist at the state level, so seek out your state government’s trademark search engine. This step will help you avoid legal issues and help ensure that your business name is unique in the marketplace.

Step 3: Choose a business entity structure

Selecting the right business entity is crucial for your consulting business. As we’ve mentioned earlier, you have several options, including a sole proprietorship, partnership, LLC, or corporation. Each business structure has its own set of advantages and disadvantages, so it’s essential to consult with an accountant or attorney to determine the best fit for your needs. The right business structure can provide you with the necessary legal protections and tax benefits.

Step 4: Open a business bank account

Once you’ve chosen your business entity, the next step is to open a business bank account. This is vital for keeping your personal and business assets separate. A dedicated business bank account will help you manage your business expenses, income, and taxes more efficiently.

Additionally, you’ll need to obtain an Employer Identification Number (EIN) from the IRS, which is required to open a business bank account. Keeping your personal and business finances separate is not just good practice; it’s essential for maintaining the integrity of your business’s financial records.

Even if you’re forming a sole proprietorship, a separate business bank account is a good idea.

Step 5: Obtain required licenses and permits

As a consulting business owner, you’ll need to obtain the necessary licenses and permits to operate legally. The specific requirements can vary depending on your location and the nature of your consulting services. You may need a general business license, a sales tax permit, or even a professional license, depending on your field of expertise. It’s crucial to check with your state and local government to determine the exact licenses and permits required for your business. Ensuring that you have all the necessary documentation will help you avoid legal issues and demonstrate your professionalism to potential clients.

We can help!

No matter where your consultant business takes you, you don’t have to go it alone. Here at ZenBusiness, we handle the red tape side of business so consultants can focus on their clients. Whether you need help starting your first LLC or corporation, an app for managing your business financials, a registered agent, or anything in between, we can help.


FAQs

How do I protect myself as a consultant?

Generally speaking, the best way to protect yourself as a consultant is to register as a corporation or LLC, as those business types offer limited personal liability. Sole proprietorships don’t. Beyond that, be sure to use carefully crafted contracts with every client to help protect you from legal liabilities.

We also recommend checking out our guide for what you should know about business liability.

What are the risks of being a consultant?

Any business comes with inherent risk; as a consultant, one of your biggest risks is that an unhappy client might attempt to sue you. Incorporating or forming an LLC mitigates that risk by helping protect your personal assets from being seized to pay business debts.

How do I brand myself as a consultant?

Branding yourself as a consultant isn’t much different from marketing a product; the key difference is that the product you’re selling is, well, you. And to build your client base, you have to sell yourself!

As a result, you’ll want to clearly communicate who you are and what value you can add to your potential clients’ lives. It’s also important to communicate your brand message consistently.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

ZenBusiness is a financial technology company and is not a bank. Banking services provided by Thread Bank, Member FDIC. The ZenBusiness Visa Debit Card is issued by Thread Bank pursuant to a license from Visa U.S.A. Inc. and may be used anywhere Visa debit cards are accepted. FDIC insurance is available for funds on deposit through Thread Bank, Member FDIC.

*Your deposits qualify for up to a maximum of $3,000,000 in FDIC insurance coverage when placed at program banks in the Thread Bank deposit sweep program. Your deposits at each program bank become eligible for FDIC insurance up to $250,000, inclusive of any other deposits you may already hold at the bank in the same ownership capacity. You can access the terms and conditions of the sweep program at https://thread.bank/sweep-disclosure/ and a list of program banks at https://thread.bank/program-banks/. Please contact customerservice@thread.bank with questions regarding the sweep program.

The post Top Reasons You Should Consider Incorporating a Consulting Business appeared first on ZenBusiness.

]]>
Corporate Transparency Act: Reporting Requirements for Small LLCs and Corporations https://www.zenbusiness.com/blog/corporate-transparency-act/ Sun, 01 Dec 2024 10:48:00 +0000 https://www.zenbusiness.com/?p=685935 The Corporate Transparency Act (CTA) is federal legislation that requires LLCs and corporations with fewer than 20 employees to start reporting ownership information to the federal government beginning in 2024. Here are details that may apply to your small business. As the owner of a limited liability company (LLC) or a corporation with few or ...

The post Corporate Transparency Act: Reporting Requirements for Small LLCs and Corporations appeared first on ZenBusiness.

]]>

Important Note: On February 17, 2025, a Texas Federal Judge lifted the final remaining nationwide injunction on enforcement of the Corporate Transparency Act. This means the Beneficial Ownership Information Report is required again and the new deadline to file is March 21, 2025. You can learn more about the current status of the beneficial ownership information (BOI) report on our BOI Report Requirements Timeline.

The Corporate Transparency Act (CTA) is federal legislation that requires LLCs and corporations with fewer than 20 employees to start reporting ownership information to the federal government beginning in 2024. Here are details that may apply to your small business.

As the owner of a limited liability company (LLC) or a corporation with few or no employees, you may want to zone out when you hear news about the Corporate Transparency Act (CTA). The name of the legislation makes it sound like it should apply to big corporations, not small businesses. Furthermore, the CTA is intended to help stop money laundering and other fraud. And the rule to implement the legislation came from the Financial Crimes Enforcement Network. So, the law shouldn’t concern your small business. Right?

Wrong.

In fact, LLCs and corporations with fewer than 20 employees are specifically targeted by the Corporate Transparency Act. Here’s what you need to know:

What is the Corporate Transparency Act?

The Corporate Transparency Act is a law that requires millions of the nation’s smallest business entities to report beneficial owner information (BOI) to the Financial Crimes Enforcement Network (FinCEN) starting in 2024. (FinCEN is a bureau of the U.S. Department of the Treasury.) See the filing deadlines for the Corporate Transparency Act here.

What is a beneficial owner?

According to FinCEN, the term “beneficial owner” includes any individual who, directly or indirectly, either

  • exercises substantial control over a reporting company (i.e., can make important decisions for the company)

or

  • owns or controls at least 25 percent of the ownership interests

See our page on the full definition of a beneficial owner.

Which businesses will need to file BOI reports?

Small businesses that match these criteria will be required to file BOI reports:

  • Have 20 or fewer full-time employees and less than $5 million in sales

and

  • Are LLCs, limited liability partnerships, corporations, business trusts, or other entities created by filing with a secretary of state, tribal jurisdiction, or similar office (see limited liability partnerships definition)
  • Foreign LLCs and corporations that are registered to do business in any state or tribal jurisdiction

Organizations with more than 20 full-time employees and over $5 million in annual gross receipts are excluded from reporting requirements.

It’s estimated that about 30 million existing businesses and 5 million new companies formed annually over the next decade will be required to report beneficial ownership information.

What’s the purpose of the CTA?

The law was enacted because “illicit actors” often set up small LLCs and corporations as shell companies or fronts to hide the identities of owners who are engaged in money laundering, financing terrorism, and other illegal activities.

According to a notice published in the Federal Register, collecting beneficial ownership information at the time of company formation will significantly reduce the amount of time currently required to research who is behind anonymous shell companies. (Existing companies will have to file ownership reports, too.)

Most state and tribal-level jurisdictions don’t require a business to disclose beneficial owner information at the time the business is formed or afterward. Additionally, most states don’t require much, if any, contact or other information about an entity’s officers or other people who control the entity.

That can make it difficult and costly for the government to obtain information about those owners when necessary. Collecting owner information in a centralized federal database is a step to help alleviate that problem.

What information about the owners has to be reported?

Companies will have to identify the following information for the entity:

  1. Full legal business name
  2. Any trade names
  3. Principal business address
  4. State, tribal, or foreign jurisdiction of formation
  5. Taxpayer Identification Number (TIN) – This can be an Employer Identification Number (EIN), Individual Taxpayer Identification Number (ITIN), or Social Security number (SSN)

They would then report these four pieces of information about each of the beneficial owners:

  1. Full legal name
  2. Any “doing business as” (DBA) name
  3. Birthdate
  4. Unique identifying number and issuing jurisdiction from an acceptable identification document (and the image of such document). An example might be a driver’s license number and an image of the license.

If an individual provides their four pieces of information to FinCEN directly, the individual may obtain a “FinCEN identifier,” which can then be provided to FinCEN on a BOI report in lieu of the required information about the individual. 

FinCEN Identifiers

A “FinCEN identifier” is a unique identifying number that FinCEN will issue to an individual or reporting company upon request after the individual or reporting company provides certain information to FinCEN. An individual or reporting company may only receive one FinCEN identifier.

When an individual who is a beneficial owner or company applicant has obtained a FinCEN identifier, reporting companies may report the FinCEN identifier of that individual in the place of that individual’s otherwise required personal information on a beneficial ownership information report.

An individual or reporting company is not required to obtain a FinCEN identifier.

Not sure what FinCEN is? Check out this FinCEN definition page.

Company Applicant Reporting Requirement

In addition to reporting company ownership information, companies created after January 1, 2024, will need to submit the same four pieces of information for the “company applicants.” The term company applicant is defined as:

  • An individual who directly files the document that creates the entity, or in the case of a foreign reporting company, the document that first registers the entity to do business in the United States.
  • An individual who’s primarily responsible for directing or controlling the filing of the relevant document by another.

Companies that were already in existence or registered before January 1, 2024, won’t have to file reports for company applicants.

This means a ZenBusiness employee who completes your filing is the Company Applicant. ZenBusiness will be providing that employee’s FIN to you so you can complete your report.

What will it cost?

There are no costs associated with filing directly with FinCEN. If you opt to use a third-party service to file your report, that third party will indicate the cost of its service.

Who will have access to the data?

FinCEN is developing a secure, non-public database called the Beneficial Ownership Secure System (BOSS) to receive and store BOI data. To maintain security and confidentiality, there will be limitations on who can obtain the data and for what purposes. As an example, the Federal Register notes, “Federal agencies…may only obtain access to BOI when it will be used in furtherance of a national security, intelligence, or law enforcement activity.”

When do companies have to submit BOI reports?

The regulations went into effect on January 1, 2024. Companies that were created or registered before January 1, 2024, have until January 1, 2025, to file their initial reports. Companies created or registered after January 1, 2024, but before January 1, 2025, will have 90 days after creation or registration to file their initial reports. Starting in January 2025, newly registered companies will have 30 days to file a BOI report.

If there’s a change in beneficial owner information after the initial report is filed, a company will have to file an update within 30 days of the change.

Filing your BOI report is currently optional. We’re here to help you file securely and accurately if you choose to file.

Where can I find the form to report?

The form to report beneficial ownership information can be found on FinCEN’s BOI webpage (linked in the resources below). To make things easy, we can also guide you through the process and take care of the filing for you. Visit our Beneficial Ownership Information (BOI) page to learn more.

Additional Resources

We can help file your BOI report

Filing your BOI report can be stressful. We’re here to help you file securely and accurately so you can stay compliant.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

The post Corporate Transparency Act: Reporting Requirements for Small LLCs and Corporations appeared first on ZenBusiness.

]]>