Effective business tax planning is essential to the success of any organization, and with filing season just around the corner it is vitally important that we remain up-to-date with business tax laws and regulations so we can plan effectively.
Starting in 2024, companies must report their beneficial owners (BOI) to FinCEN; businesses with multiple states or international operations may face further compliance difficulties.
1. Taxes
Taxes are mandatory levys collected by governments in order to finance public goods and services, often on properties, income, transactions, importations or business activities. They may be levied upon property ownership, income earned through work activities, transactions made or imported, importation activities and/or business activities undertaken within sovereign states or their political subdivisions.
Taxation of individuals and businesses is an integral source of government revenue, shifting resources from private individuals to government for use on behalf of society at large. Through taxes, governments are able to fund infrastructure (like highways, police force and justice system ) as well as public goods that would be otherwise difficult for citizens themselves to afford independently.
With an uncooperative government and intensely partisan politics, the outlook for new tax policy in 2024 is uncertain. There remains considerable unpredictability surrounding global supply chains and digital taxation policies; multinationals should prepare themselves accordingly as risks continue to shift. Furthermore, potential expiration of Tax Cuts and Job Act provisions on individual and pass-through business taxes further complicate matters.
2. Compliance
Maintaining compliance with ever-evolving regulations in 2024 will be a challenge for businesses of all kinds, but chief compliance officers (CCOs) can prepare their teams by encouraging innovation and adaptability within their teams. By harnessing technology to streamline compliance certifications and attestations processes and digitally transform programs, companies will be more equipped than ever to swiftly adapt to regulatory changes.
One key issue to watch closely is FinCEN’s implementation of its Beneficial Ownership Reporting (BOI) rule, which will affect most small business owners by mandating that they submit beneficial ownership information directly to the federal government.
Compliance culture is crucial to protecting your company against legal and reputational risks, creating a positive workplace culture, attracting top talent and improving workplace efficiency. Stay on top of your compliance responsibilities using a comprehensive checklist shared among team members; that way you will be better prepared for any compliance challenges in 2024.
3. Reporting
Starting on January 1, 2024, the Corporate Transparency Act (CTA) mandates certain domestic and foreign corporations, limited liability companies, limited partnerships, business trusts and other entities to submit their beneficial ownership information (BOI) to FinCEN for review. There are 23 exemptions from this requirement including securities issuers, domestic governmental authorities and banks.
The BOI reporting rule is intended to combat money laundering and other illicit activities by helping law enforcement identify the true owners of shell and front companies. Under CTA legislation, civil penalties of $500 daily up to $10,000 as well as imprisonment may apply if people fail to report BOI.
Though the exact rules and filing requirements remain to be defined and an electronic filing system has yet to be made available, businesses should begin assessing whether they meet the definition of a “reporting company” now, considering amending their operating agreements, shareholders’ agreements and/or by-laws to accommodate these new reporting obligations. Non-attorney tax professionals cannot assist with preparation or filing as this falls within the practice of law.
4. Payments
2024 will likely witness fundamental shifts in payments as new thinking and structural approaches radically alter traditional methods. From modern point-of-sale systems returning to real-time global payment networks; to remittance companies helping international workers get paid; streaming platforms offering content creator payments worldwide and insurance providers providing claims settlement services internationally, payments could experience dramatic changes that challenge current norms across industries.
Finance and accounts payable (AP) leaders have seen the effects of emerging trends impact their roles dramatically, especially the trend toward embedding payment services into AP systems, which reduces friction, improves efficiency and promotes data integrity while aiding fraud prevention efforts and creating greater payment transparency to maximize forecasting. Finexio stands at the forefront of this innovation using groundbreaking machine learning technology to optimize supplier conversion efforts by identifying those most responsive to virtual cards or ACH payments.
