Quarterly Compass 7/1/24
Welcome to “The Quarterly Compass,” the email newsletter of True North Legal Group. This resource is designed for entrepreneurs, small business owners, executives, and business-minded professionals in Northern Michigan.
Every quarter, we’ll head in four directions. First, the “East” section (directly below) will be dedicated to legal updates from TNLG that may be relevant to your venture. Then head “South,” where we’ll highlight a local business or entrepreneur doing great things in Northern Michigan. Out “West,” you’ll find information about future events or developments that may soon impact you, your business, or your employees. Finally, True “North” will include a short, actionable insight for personal or business growth.
No matter your bearing, we hope you’ll find “The Quarterly Compass” to be a helpful resource along the way.
How the CTA Impacts Your Small Business
Navigating the maze of business regulations can be overwhelming, especially with new laws coming into play at every turn. One such law that’s creating quite a buzz is the Corporate Transparency Act (CTA). As a small business owner or entrepreneur, it’s crucial to understand what this Act entails, its origins, current status, and how it impacts you. Let’s dive in and break it down.
What is the Corporate Transparency Act?
The Corporate Transparency Act (CTA) is a significant piece of legislation passed as part of the Anti-Money Laundering Act of 2020. The primary aim of the CTA is to curb illicit activities such as money laundering, terrorism financing, and other financial crimes by enhancing transparency in business ownership. In simple terms, it requires businesses to disclose information about their beneficial owners—the individuals who ultimately own or control the company. The CTA requires companies to report this information to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, who can investigate illegal activity.
Current Status in the Court System
Since its enactment, the CTA has faced several legal challenges. Some industry groups and privacy advocates have raised concerns about the privacy implications and the administrative burden it places on businesses, and the law has even been declared unconstitutional as applied to members of the National Small Business Administration. Despite these challenges, many courts have upheld the CTA, recognizing its importance in safeguarding national security and financial integrity. The ongoing debates and legal battles indicate that while the Act is likely here to stay, there may be future adjustments or clarifications in its implementation.
Basic Requirements for Small Business Owners
Now, let’s get to the details—what does the CTA mean for you as a small business owner? Under the CTA, many businesses are required to report their beneficial owners to FinCEN. Here’s the basic information you’ll need to provide: full legal names, dates of birth, addresses, and unique identifying numbers (driver’s license, passport, government-issued ID) for each beneficial owner.
Who Needs to Report?
Most small businesses, including corporations, limited liability companies (LLCs), and other similar entities, need to comply with the CTA unless further legal challenges are successful. If your business falls into one of these categories and doesn’t qualify for an exemption, you’re required to file the report.
Exemptions
Not every business is subject to the CTA’s reporting requirements. Here are some key exemptions:
- Larger Companies: Businesses with more than 20 full-time employees, over $5 million in annual revenue, and a physical operating presence in the U.S. are exempt.
- Certain Regulated Entities: Banks, credit unions, insurance companies, and other entities that are already subject to federal or state regulations regarding beneficial ownership information need not file.
- Inactive Entities: Companies that have been in existence for over a year and haven’t engaged in any business activities, hold no assets, and haven’t sent or received any funds are exempt from the law.
How to File Your Report
If your business needs to report, you’ll do so through FinCEN’s online system (below). The reporting process is designed to be straightforward, but it’s essential to ensure accuracy before filing to avoid potential penalties. If you are a business that subscribes to True North Legal Group’s small business law services, we will ensure this process is handled for you.
Final Thoughts
The Corporate Transparency Act represents a major shift in business transparency and accountability. While litigation about the act’s application is ongoing, complying may be necessary for your small business.
FinCen Website: https://fincen.gov/boi.
Perma Studio: Creating Net Positive Landscapes in NoMi
When Megan Gilger, the multi-talented business owner and champion of all things sustainability, approached me a few months ago to work together, I was beyond excited. Her residential and commercial landscape design company, Perma Studio, is aimed at creating regenerative gardens and food systems that create a net-positive impact on the ecosystem.
Enjoy this brief Q&A with Megan:
1. What drew you to Northern Michigan and Leelanau County in particular?
I have deep roots in the region. My great-grandfather painted buildings in Harbor Springs and both my parents grew up here, so this region is home to me. Beyond that, I love the land and the seasons. After traveling much of the world, this place was clearly where I belonged and what spoke to me the most. I care so much about preserving the beauty of this region and keeping things as wild as can be. The passion that launched Perma Studio came from my desire to help as much land remain true to the area, even where homes may have been constructed.
2. What are the key characteristics of our community that inspired you to start a new venture?
The people in this region have one common interest despite politics or anything else; we love the land. This place draws people because of the beauty, agriculture, seasonal way of living, and the fresh water. That said, everyone here in some way wants to preserve what is truly cultural here. Without the land and fresh water, the culture of this place disappears. I feel northern Michigan is uniquely aware of the importance of how we treat our landscapes and wild places around our homes in a way that gives back.
3. What excites you about the next twelve months of your business?
My clients. Truly, I get to work with some amazing humans right now, and I feel absolutely inspired by their trust in me and my understanding of the lands they call home. I am really excited to see some of these projects I am designing — like a food forest for a chef-owned B&B — begin to take shape, or the vineyard I am working on that will integrate other crops to diversify and lower our need for inputs, or even the natural approach we are taking to materials, plant procurement, and furniture to integrate into the landscapes. It takes a lot of time to see these landscapes really take shape, so a year is like a month to a landscape designer in the span of time, but to start setting the designs into motion is really over the top exciting to me.
To work with Megan on a beautiful, environmentally-focused landscape design for your home or business, visit www.permastudio.com.
Generative AI Creating Legal Challenges
Generative artificial intelligence (AI) is changing the world of small business. As an example, even portions of this newsletter were ChatGPT-generated. Shocking, I know. But what are the legal implications for using this technology in business? The issues range from improperly-cited authorship of AI-generated content to addressing the ethical ramifications of AI-based decisions. Copyright, trademark, and patent concerns are also growing as AI tools increase their power and consume a larger set of data. The legal industry is seeing a surge in demand to help navigate these complex areas, especially concerning compliance, intellectual property rights, and AI ethics. Stay tuned for more updates on this emerging area of business law.
Serving Others
In June, I finished reading Will Guidara’s Unreasonable Hospitality, a book about the culture of Eleven Madison Park, a NYC-based restaurant that rose to #1 in the world. Guidara’s message was transformative for our business at TNLG, so I thought I’d share a key excerpt with you:
“Serve only what you want to serve, and you’re showing off. Serve only what you think other people want, and you’re pandering. Serve what you genuinely want to receive, and there will be authenticity in the experience.”
Thank you for reading “The Quarterly Compass,” the email newsletter of True North Legal Group designed to help small business owners, entrepreneurs, executives, and business-minded professionals in Northern Michigan.