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How to eSign a document: digital signature lawfulness for small businesses in Mexico

[Music] welcome to grow money business the podcast dedicated to helping business owners optimize income pay less in tax and invest prudently here's your host Grant bledo hello everybody Grant bledo here welcome back to grow money business Our Guest on the show this week is Kenny detman Kenny comes back on the show this week to tell us all about the corporate transparency act Kenny was a guest here a few months back and enlightened us on the employee retention tax credit which the IRS has cracked down on since his interview thankfully but he comes today to tell us about the corporate transparency act which is a piece of legislation passed kind of under the radar back in 2021 when everybody was focusing on coid but we'll have wide reaching ramifications in 2024 when the regulation becomes effective basically any business with less than $5 million of Revenue is going to have to file a new beneficial owners information Report with finsen which is the financial crimes enforcement uh Authority so Kenny joins us today to tell us all about the ACT who's eligible for it who is exempt from it and what the reporting requirements will be and at the end of next year if you don't if if you're supposed to file one of these reports and you don't the penalties are pretty stiff $500 a day for non-compliance with a limit of $10,000 uh of fines for not having this reported so as you can imagine there are a whole bunch of businesses across the country that fit that category of having less than $5 million of Revenue and the estimates are that this bill will impact somewhere between 30 and 50 million businesses so make sure you're aware of it we haven't heard a whole lot about these reporting requirements yet can you comments that the federal government has not done a great job of community outreach and publication but rest assured this is a thing you will need to comply with it starting next year I really enjoyed talking to Kenny he's very articulate he's great at explaining these Technical taxs and other uh regulatory nuances and uh he was certainly helpful for me to understand the situation I enjoyed the conversation uh and I hope you do as well hey everyone I need to project quickly to remind you all that nothing found in today's episode or any other episode of grow money business should be considered Financial investing legal tax Fitness or even relationship advice it's content that you're free to use and to deploy on your own terms and before taking any actions on content found on the show please do consult with your tax professional your attorney or your financial planner if you don't have a financial planner head on over to Three Oaks wealth.com to learn more about what we do in terms of financial planning and invest Ms and how we help clients on an ongoing basis Kenny welcome back to the show I I think you have the distinguished uh designation of being one of the few repeat guests we've had on the show we're we're maybe four years into it but our last interview a few months ago was so good that I am thrilled to have you back and Enlighten us on some more attack stuff um welcome back and and I I'm looking forward to chatting thanks for having me Grant yeah I've turned into a bit of a a Serial entrepreneur after my recovery from my days as a tax account so this this may not be the last time um you had me on my show so it's a real treat to be here so thank thanks for having me right on you you you had a bunch of cool projects kind of in the hopper last time we we talked and I'm I'm looking forward to hearing how all of those are going uh you're back from paternity congratulations first first child little girl we were just chatting about it absolutely uh you took the uh the shortcut of getting a Night Nurse which I'm I'm thrilled to hear Too to Total Game Changer if if if you want to have a podcast on the uh the the benefits of a Night Nurse I'm happy to do that as well highly recommended so today we want to focus on the corporate transparency act and as you were just explaining to me and I know a little bit about this I know there's some filing requirements coming up I don't know the Genesis of it I don't think our listeners probably know the Genesis of it I would guess that most of our listeners have not even heard of this thing but it is going to create uh a a pretty big additional to-do for small businesses starting next year why don't we start from the beginning could you describe what this is and why it exists sure absolutely so the corporate transparency Act was passed back in January of 2021 so you know this is if we if we take ourselves back to January 2021 this is hot off of the American Rescue plan going live which was the second stimulus bill this was after the FDA emergency approved two out of the you know the three major vaccines people weren't paying attention to what was going on with non-id related legislation and so the corporate transparency act kind of snuck its way into a a defense uh authorization bill for fiscal year 2021 president Trump actually vetoed the bill um it was overridden by two two-thirds Congress Bo vote which sort of says oh this this garnered bipartisan support but largely you know it's kind of been explained that the corporate transparency Act was so so far in the um you know de deep into these into these uh these bills that um Congress really wasn't paying much attention to them so there there are some out there that said that this one really slipped through the cracks so so signed January 1st 2021 it gave rise to a new reporting obligation called The Beneficial ownership information report or what we're casually calling the Boi report that goes live in 2024 and the purpose of this reporting is for the federal government to collect information about the ownership whether that's direct ownership or indirect ownership of of LLC corporations other types of of vehicles that are potentially being used to perpetuate money laundering perpetuate uh tax evasion perpetuate terrorist funding so th this was a a a data collection um uh you know this will be a data collection exercise across virtually all companies in the United States that don't meet very very limited exemptions for them to report report to the federal government about who you know who who owns these entities and also information about the owners of these entities so there is you know some personally ident you know P pii that is going to be required to be reported with these forms and the report goes to finsen finsen is the financial crimes enforcement network finsen is a bureau of the of the US Treasury it is not an organization that many business bus owners would be familiar with who is familiar with finsen banks are familiar with finsen finsen is what puts the onus on financial institutions to be responsible for adhering to know your customer rules and anti-money laundering rules so largely the the effect or the influence of finsen has been felt by financial institutions not by Mom and Pop business owners uh the other the the the other reporting obligation that some folks that are familiar with with finen are aware of is something called a foreign bank account report if you're a US person a US taxpayer and you have funds that are held offshore and offshore bank accounts there is a annual obligation to report to finen about on accounts over $10,000 in value the other place you might have heard of finsen is that they were casually mentioned on an episode of Ozark uh finen was mentioned in the movie the accountant but you know my bet is that most of your listeners are not readily familiar with finsen have not interacted with finsen so this is a new reporting obligation to an organization that is not the IRS it's a federal reporting obligation business owners are used to reporting to their state and they're rep they're used to reporting to the IRS all of a sudden 2024 new obligation to finsen I think it's going to to to Really um Blindside a lot of business owners to learn that they are in in fact obligated to file this form this is very interesting so this is a uh piece of of legislation that was thrown in uh kind of under the radar along with a a much larger piece piece of legislation you you used a framing that it was was kind of thrown in um at the last minute and tried to the the the um Originators of of these requirements the the the the writers of this portion of the legislation tried to push one past the goalie quickly what are the motivations where where was what's the argument for having this and who wanted it in in legislation in the first place it is a little bit wild to think that the the United States federal government nor the the the respective 50 states are collecting information about the ownership of legal entities in the United States so you know as of today you can still form a Delaware limited liability company and not tell the state of Delaware or not tell the federal government about who owns um the the LLC um corporate transparency beneficial ownership information reporting is actually something that's very prevalent across the world um today even in the Cayman Islands in the bvis where you used to be able to kind of discreetly and anonymously hide hide money offshore they have Boi report reporting um so the the intent the the reason behind this legislation is to try to deter bad activity nefarious activities that are promulgated by being able to stay Anonymous um with a with a US LLC Corporation or or other type of corporate entities so the intent is a I would I would say it's a a good intent but the fact that it you know it it's really going to dramatic Ally affect um you know mostly uh businesses that that are not intended to um you know perpetuate nefarious activities and the penalties are quite steep so you know uh to to sort of re restate the answer it's to bring the United States in line with what the rest of the world is doing regarding transparency um it is going to capture virtually all businesses all companies in the United States that don't either meet a five five million um dollar Revenue threshold or not otherwise very highly regulated so our estimation is 95% of corporate entities in the United States are going to be subject to this reporting um that number probably uh W will increase um once once we start talking about um the different types of exemptions and I think we're going to find that a lot of entities that are kind of on the on the fence as to whether they qualify for these exemptions will just decide to proactively file interesting so this is this is something that the rest of the world has been doing for a long time it seems legitimate that we should have some kind of uh database or reporting so that the the government does know the the actual ownership of llc's and corporations in the country currently we don't have that uh so it's to me at least off the cuff it seems like a legitimate thing that we should probably have but in order to get it P they had to slip it under the radar are because I'm guessing uh people on the right side of the aisle who want smaller government and more business friendly environment are um pushing back against that is that a fair characterization that that is fair you know I'll give you an example in in the United Kingdom um you you're able to search in something called company's house you can go online you can search any legal entity and it's going to to give you paperwork that shows every single owner and you can keep following the chain of ownership if you're talking about multi- tiers of of um ownership with the beneficial ownership information reporting this data is not going to be publicly accessible the federal government is going to POS uh possess and Safeguard this data to some extent it may be shared with financial institutions what would be the purpose of that well financial institutions as of today are required to follow regulations under finsen to make sure that they understand ownership um so this is sort of a cross reference so banks are doing this on their own the federal government is now going to be is going to start independently collecting data about legal entities and and and you know the ability now for banks to cross reference to check what they've discovered through their own procedures against what's self-reported by companies creates a a Val a valuable tool for ident you know identifying um situations where things uh potentially don't look um as they should seem right right and and you know if if you're back there listening to this and and you're of the opinion that the government needs to stay out of my business there's no reason for us to be reporting that I I get that and and ordinarily I kind of feel the same way but here's an argument in favor of this too you think back to the paycheck protection uh uh program right uh where the government is just handing out checks in huge quantities and there is there has been so much rampant fraud that the government has no way of knowing whether it's uh a cartel operator from Mexico or um you know somebody from Iran or Saudi Arabia behind an LLC or whether it's a legitimate US based business that's taking out this free money that the government is handing out right this is a pretty basic thing that we should probably have some some infrastructure around yeah so it got passed uh because their eyes were on coid related things now we have to start to adhere to this next year who's who needs to pay attention to this and who is exempt okay so there's three important definitions that that we'll we'll talk through the first is a reporting company a reporting company is a company that's required to file the second definition is a beneficial owner so once we've established that we have a reporting company who is the reporting company required to identify as a benefit official owner and provide information on behalf of and then the third is a company applicant company applicant is only applicable to new entities that are formed after January 1st 2024 and in short it describes um you know the lawyer or the paralal or whoever was was involved with the actual formation of the of the company so a reporting company it's broken down into two different categories domestic reporting company and a foreign reporting company a domestic reporting company is going to be a us-based LLC Corporation or really any type of company that files paperwork with a secretary of state to establish its existence this could also include General Partnerships which are not legal entities but still file paperwork and this also would include um potentially tribal organizations so reporting company is what we think of Delaware LLC Cal California corporation uh Florida nonprofit these are reporting companies until or unless they find themselves exempt and we'll talk quickly through the exempt categories a foreign reporting company is quite obvious this is a foreign company that has registered with a secretary of state to be authorized to conduct business activities in that state think of a Cayman limited partnership that registers with the state of Delaware to um you know uh you know uh source source Capital through uh through through a you know a raise or it could also be what you know I'm from South Florida we have lots of South Americans who establish Florida llc's for the purpose of holding us real property in some cases they're actually registering their foreign limitadas or or other vehicles directly in U in the State of Florida as opposed to establishing a domestic entity so um domestic and foreign reporting companies what are the exemptions I break can I can I ask a quick question first absolutely you mentioned uh Organization for domestic um entities organizations that have to file paperwork with the secretary of state I'm assuming that your sole Proprietors are not included in that group what about Partnerships sole proprietor that is not um is is truly a sole proprietor and not a single member LLC is is not required to file anything you can't own yourself or I suppose you could but um the the federal government doesn't need to know about um the ownership of uh of a sole proprietorship that's established as a a DBA um that information is easy to find fine it's it's it's filed with the DBA applications a partnership whether it be a limited liability company that's a partnership for tax purposes or a limited partnership a double LP a triple LP absolutely they all file paperwork with the secretary of state to establish their existence gotcha gotcha so you were before I interrupted you about to explain exemptions exemptions there's technically 23 categories of exemptions I break them down into four more simplified categories large operating entity or large operating company greater than $5 million in Revenue more than 20 full-time employees has a US physical presence through an office or a warehouse and files a US tax return um not the overwhelming or anywhere close to the majority of Corporations or llc's in the United States um the second exemption would be for an inactive entity an inactive entity would be truly dormant it's not a holding company that's got you know an operating business below it um we're not expecting this to be a very expansive exemption this is going to be an LLC that was set up that somebody abandoned the purpose of of conducting activities through it or perhaps a LLC that sold off all of its assets and just wasn't wound down um so not not expecting a great volume of um of of inactive entities then we get into what I described as highly regulated these are Banks insurance companies um registered accounting firms so public accounting firms Public Utilities nonprofits these are organizations where the federal government is already collecting enough about them by virtue of of other regulations that it really isn't necessary to to net them into the corporate transparency Act and the Boi and then the last category is subsidiaries of um any of these three categories so if you're a subsidiary if you're a controlled member of a large operating company um then you're exempt the one very important exemption on the subsidiaries that doesn't apply if you think about most private Equity Funds um Venture Capital funds family office Vehicles they are typically going to fall within the category of a highly regulated under under the the definition of a pooled investment vehicle so they're pooling you know investment capital and they're deploying that into portfolio Investments their subsidiaries are not exempt so yes the fund itself maybe the top vehicle that's pooling Capital exe is exempt the the the the Investments of that do not fall within the exception for subsidiaries so that is reporting company interesting okay so this is going to impact a whole lot of businesses across the country what are the estimates on the number of impacted organizations So currently finen is estimating somewhere between 30 and 50 million businesses will be affected in um 2024 when the when the reporting obligations go live so you're going to have the the the reporting obligations we'll talk through deadlines are broken up into two categories one is pre-existing entities so if you came into 2024 as a corporation or NLC or otherwise a reporting company um you are a pre existing entity if you are an entity formed after such time you're a new entity and they're estimating around 5 million new entities will be caught into the Boi net and some somewhere in the in the 30 to 45 million company range for pre-existing entities wow so what are the reporting requirements then and if there's a huge difference I would think that if you're considering something new in the next year you might want to get around to forming before the end of the year so that you can qualify as a pre-existing organization it's it's only a mildly uh augmented obligation if you're a new entity so we'll talk through um the distinction before we get there let's talk about what's a beneficial owner so now we have a reporting company um what do we need what do we need to report we need to report pretty simple from the company's perspective the name of the company DBA address employer identification number um not a heck of a lot of information there's no financial data that's shared now let's talk about beneficial owners a beneficial owner is determined based on either Equity interests or control and control can get very subjective Equity you know pretty black and white and you know for most companies sometimes you're going to deal with different classes of units and different sharing of profit losses and capital um but they set the Threshold at 25% for Equity so substantial from an equity perspective is greater than 25% now let's talk about control control is fairly expansive it's surprisingly expansive the the finsen rules and the guidance today says that substantial control is going to include anyone in your SE Suite so chief executive officer Chief Financial Officer Chief Operating Officer general counsel in many cases these are not folks that are used to be you know be being ident ified as being substantial you know the the equivalent of substantial Equity holders um members of your board that have enough influence to control who's on the SE Suite those are also going to be substantial control owners that are beneficial owners and then there's really a catchall category um sort of at the at the bottom of of the the the uh the fins sense guidance um they provide some flowcharts that are very useful at the bottom is this catch all of well anybody else who has substantial control and they sort of loosely put control at at a 25% metric um which is kind of whacky to say well you know does the C coo have 25% influence um so there's some sort of blending of objective and subjective in these determinations and so once you have determined who the beneficial owners are which is not a simple feat for every company you're reporting their name their home address which we know that you know people don't really like provid and anytime um you know you get a form that says report your home home address and you know you're sitting in your office as a business owner you're often just say let me just put my business address they don't need to know you know where I live um so that is a statutory requirement to provide your home address your date of birth and here's the really annoying one a copy of your driver's license or passport and if you imagine a company that has 10 beneficial owners um you know seite directors Equity the exercise of having to go retrieve 10 different copies of passports and driver's license is going to be a pain it's it's really not something your accountant wants to do it's not something your lawyer wants to do so it sort of begs the question of you know who who's going to be helping businesses comply with these requirements and and we'll get a little bit into the the platform I've established to to to help business owners with the Boi reports but so now we framed the reporting companies what they need to file beneficial owners how to determine who's a beneficial owner what information is required to be reported by a beneficial owner and the last definition we talked about was a company applicant pre-existing companies January 1st 2024 2024 um and prior they are going to be abstain you know they're going to be able to abstain from telling finsen who helped them form the company but after January 1st 2024 you are going to have to tell send the law firm that was involved or in fact the individual lawyer that was involved with helping you file paperwork to form your entity and if somebody within the company was meaningfully involved in um uh preparing the application or preparing the forms they would be reported as well and it's very similar information that they need to provide as what the beneficial owners need to provide interesting okay okay so with regard to decision makers those with control it's 25% of the equity or control we're not talking about and right so if you have your Chief um legal in-house you know legal council that exerts control but only has 2% of the equity they're they're going on the report too correct so it's a it's an or you know you you may have a an operating business with $4 million in Revenue um it's owned by one high net worth individual and you think oh easy we've got one beneficial ownership to report not true there might be a board and there's almost certainly a seite in that operating company now all of a sudden somebody on the company side or maybe an adviser they hire is going to be responsible for going out and collecting information from all of these individuals who are probably not overly keen on providing their home address and a copy of their passport or driver's license um this is a company level oblig so it is the company's responsibility to file obviously the company can't file a complete and accurate submission without the participation of beneficial owners so another thing you're going to be seeing and hearing about is amendments to operating agreements or shareholder agreements that say that you know if you are in fact um you know admitted as a member or a shareholder that to the extent you are deemed to be a beneficial owner you have to provide buy this information um we are going to see a lot of beneficial owners in 2024 saying you know what I'm not I don't want anything to do with this this is you know this is your problem company I you know I'm just a passive investor here leave me alone right right interesting so what are your what are your deadlines when what do you have to file when do you have to have it in by so pre-existing companies have time they are require to complete the filing by uh the end of 2024 so there's a you know a full year and two you know two and a half months to file for pre-existing entities for simple ownership structures you know probably not a uh you know something to treat as super urgent right now but for I mean think of a family office or a private Equity Fund with you know hundreds if not thousands of legal entities in their structure this is going to take a lot of time to to analyze who's a reporting company who's a beneficial owner do we have the information we need to to to report um so for more complex organizations I'd say the sooner the better so end of 2024 for pre-existing if you form a company on or after January 1st 2024 current legislation says that you have 30 days to file your beneficial ownership information report Vincent has just put out proposed regulations to stretch that to 90 days but only for the purpose of the first year um this is a one-time filing obligation on its face once you file it you know you're sort of in the clear well that's not exactly the case if any information changes on from your original submission you change your address your driver's license expired and therefore there's a different driver's license number on your new driver's license you have to file again you have to file within 30 days of a change of information so you know for for law firms uh accounting firms company formation um businesses they need to be paying attention to this right now they need to set the infrastructure up because they only have 30 days under the current rules to help you know their clients submit these Boi reports so what about now we're the I'm I'm I'm trying to remember back to the exemptions F if you have more than $5 million in revenues than 5 million Revenue 20 employees us physical pres okay 5 million if you've got more than 5 million uh in Revenue you don't have to worry about this but a lot of companies in the two to four and a half million doar range uh are going to have kind of a rotating base of ownership making this kind of a constant thing to pay attention to yeah oh absolutely I mean think think of a a new entity that's formed with no employees no se Suite you know first thing you do is form the entity you get the Ein and then 3 months later you start building out your SE suite and every time you make an addition to your SE Suite you got to file again um in in your example absolutely the rotational of you know SE Suite directors and ownership every time something happens you know 30 days so there there needs to be you know um a real lean on technology here to make that uh to make both identifying a change of information efficient and then also of course make the the filing itself efficient um we haven't talked yet about the penalties so you know the beneficial owner says I don't want anything to do with this I'm I'm a passive investor um the omission of the filing or filing an incorrect form which would include an incomplete form because your beneficial owner wouldn't G give you information gives rise to a penalty H it's not a discretionary penalty it's an automatic penalty of $500 per day that the filing is late up to $110,000 if there is willful um uh you know will willful uh negligence or there is you know an intent to perpetuate fraud or provide false information this this does spill over from civil to criminal so there are criminal penalties for willfully failing to file or or filing you know inaccurate or incorrect information so while on its face you might say yeah well you know um I this is an invasion of my privacy this is the the government uh o overstepping their bounds these penalties are you know not not something to take lightly I can sense hundreds thousands of legal disputes coming over the next 18 months you know if if you're if you're running an organization with a SE Suite of four or five individuals and your coo simply doesn't want to give out their personal address on one of these things you you don't really have a choice if if you know they dig their heels in I guess you have to let them go right I mean there's this is the the business's responsibility and uh there this will absolutely come up for people yeah so I I've seen this play out a little bit before um with the foreign bank account report I mentioned so foreign bank account reports are required to filed by us individuals that have greater than $10,000 offshore but also um US legal entities so if a corporation has a subsidiary in Bermuda and that subsidiary has $10,000 in its bank account that gives rise to a foreign bank account reporting obligation and it used to be that you were only required to file these if you had an economic interest in the entity you you had a you know an indirect economic interest you own that underlying bank account they changed that um o over the course of my career such that signature Authority also gave rise to have having to file an fbar so you could have no economic interest whatsoever in the underlying bank accounts or the offshore funds but if you had signature account account Authority if you were a CFO of that um us multinational with lots of offshore accounts now all of a sudden you get brought into fbar reporting what I can tell you based on my experience there is that fin sen quickly realized they were probably getting too aggressive in um what they were asking for and you know in what period of time so we did see with with the with the case of the fbar rules getting revised finsen kept delaying the deadline or they would keep the deadline but they would wave the penalties so I would wouldn't encourage your listeners to you know simply anticipate some leniency there but I can tell you that I would not be surprised if we don't see some dramatic changes to how they're at least approaching the deadlines or the penalties in 20124 sure and as you said they're already uh drafting um a a proposed amendment to stretch it out from 30 to 90 days for new entities right so see a little bit much in in a way for you know and just for 2024 you know what what what sort of annoys me too about the rolling you know 30 whether it's 30 or 90 days tax nerds like myself lawyer like we're used to sort of fixed deadlines right we're used to things being due on the 15th day of you know April um or the last day of the month you know if you're a lawyer who's forming legal entities for clients you know every day or every other day now of a sudden you have deadlines that are you know all throughout the year as opposed to a mid-mon or a mid mid uh or or an end of month deadline so we're actually submitting in in this proposal to move from 30 to 90 days my organization is actually submitting some comments to finsen to encourage them to rethink of you know the way this rolling deadline works you know the the suggestion would be it should be due either you know on the 15th or the last day of say you know the month following whenever um you know either the the the the company formation took place so the change of information took place sure sure well this is uh this is very interesting if you're finsen at the end of next year how how are you going to go about enforcing this I I guess it would be pretty easy to compare the uh EI you know the list of EIN with a list of organizations related to those Ein that have submitted the documentation and then just start with the gaps how would you think about this if you're an enforcement a agency well my my initial reaction is they there probably be won't be much enforcement or you know activity in the early stages um I think um you know when when we compare this and I'll I'll compare it back to the fbar again the F Bar is where an individual or a company is reporting to finsen about the existence of offshore funds there's a corollary piece of legislation called fatka the foreign account tax compliance act that's where financial institutions around the world not you not you know this is mostly applicable to non- us financial institutions are required to report back to their government and then indirectly the US government about us persons that are holding accounts with them so you sort of have this all right we have the self-re reporting system with the fbar and then we have the financial institution reporting system with fatka we should be able to cross reference and find you know irregularities or anomalies as far as we know there's not been much done with the data collected through fatka um so you know it it takes the government you know the government has the data it's a question of what are they going to do with it when are they going to do something with it how you know what what technology um with you know with with the proliferation of AI you would think that um you know there there should be some methods for for for making this data useful so let's bring that back to to to Boi and finsen we're going the opposite we we already have the financial institution regulations now we're getting the self-reporting regulations it will be you know you know it will be interesting to see what finsen does with that data how they use that data the the obvious thing would be exactly as you you mentioned to cross reference reference it to other publicly well not publicly but publicly stored data through BSA the bank secret Bank secrecy act through finsen regulations um so to to be determined I have a I have a hunch that you're not going to see a hide you know whether they wave the penalties or not I don't foresee finsen taking a super hard line on organizations businesses that miss this solely by virtue of just not knowing about it so we we always have something called reasonable cause in the tax World it translates into other you know other other regulations in the finsen world if you have reasonable cause um I mean imagine somebody who does their 1040 with Turbo Tax and all they have is an Airbnb property that they hold through you know a single member LLC they don't have a tax accountant or a lawyer out there to tell them hey there's this new obligation that the federal government is not doing a very good job of creating education around um how do they know they're supposed to file the Boi report right right and that was exactly what I was going to ask you next is I didn't know about this until you mentioned it to me a few months ago why are we not hearing about this why you should you would think that there should be a little bit more public engagement uh public Outreach communication it's picking up the I don't I don't know whether it was a a formal obligation or sort of a soft commitment from finsen to work with the secretary of states right that that's where you know if you're a legal you know if you're responsible for a legal entity you're typically filing an annual report with you know um your your State Division of Corporations so that's sort of the first place that you might look to for new or changed regulations so finsen has said that they are or or are about to start working with the you know State divisions of Corporations or you know Sim similar organizations to create awareness um the aicpa by the way is up in arms about this they're they're saying this needs to be suspended not enough awareness out there the other thing that's a little tricky with CPAs is that many state CPA boards are not comfortable that helping with this filing does not constitute the unauthorized practice of law so CPAs are always really nervous about um tripping a line and Crossing into oh wait I'm practicing law now your state CPA boards and they shes are telling them whoa whoa whoa we're not sure yet this this might be Crossing that line so where do you look to do you look to your lawyer who charges you you know 300 to $1,500 an hour to help you with this um it's a great question and I am seeing more traction in the amount of thought leadership that's being put out there on this but you know until uh you know the New York Times And The Wall Street Journal and um you know all all the major media you know Outlets are creating a awareness about this I don't know that anybody's going to you know have an easy way to find out that's unfortunate but something that we run into SE semi-frequently when there's new stuff rolled out so you've you've been working on a couple side projects uh over the last what year or two and one of them has to do with government filings directly applicable to the corporate transparency act why why don't you tell about this sure so we have we have over the course of the last 12 months spun up a technology platform called file forms simple simple name um that's what we do we we help business owners and and operators and and and folks that are in the SP sphere of influence with businesses satisfy Regulatory and statutory filing obligations we are not a CPA firm trying to help with tax filings we're here to help with annual reports registered agents um foreign informational reports reports to the Bureau of economic analysis but the flagship product that we're coming out with is around you guest it the beneficial ownership information report so file forms serves as a third-party platform for business owners and operators to use to help them collect the information for filing The Beneficial ownership information reports and ultimately when the when the fins sense system is live file forms will will submit these on behalf of the business owners it is a turbo tax- like solution it's step by step it's easy to understand and manage one of the one of the core features is the ability for if you're imagine you know you talked about a a operating business with say $4 million in revenue and let's imagine they have 10 different beneficial owners um file forms enables what we call the company admin so somebody in that organization is ultimately going to be the one saying hey um we're we're going to make sure that this thing is filed and and we're going to be respon maybe it's the general councel the general Council doesn't want to go around and collect information from 10 beneficial owners so what file forms enables the company admin to do is to send out push notifications for those beneficial owners to create their own profiles and that information is not shared with the other beneficial owners so there's some protection of information there ease of collecting and in particular the driver's license and passport ease of collecting information and then there's the ability to reuse that information let's say there are multiple entities involved in the structure you just described there's a subsidiary below that um now you got two entities do you want to have to repeat the process from scratch to do the subsidiary absolutely not so what file forms enables to you to to do is reuse what we call the boo profile um so it's a it's a much simpler system than we envision what finsen will put out there we don't know because it doesn't exist but I've got years of experience filing F bars and my money is not on finsen you know investing a lot in UI and ux to to you know enhance and improve the user experience and one one thing I'll add is the ease of filing that second or third or fourth instance of a Boi report is going to be much easier using a file forms versus using um the fins sense system it should be as easy as going in you know identifying where the change of information happened and pressing submit even better file forms will enable a monitoring service there is a a database of all the corporate information across all 50 states that we hook into and we look for those changes so if we see a change we're going to notify the the the company admin and say hey we noticed that in the the state of Wyoming you changed your address you need to file a beneficial ownership information report very cool so is file forms live now with other forms businesses might need to get to the reg regular uh secretaries of State Regulators whomever today file forms is 100% focused on the Boi we we are sort of slow playing the the additional Services why would you want to use um file forms now as opposed to in 2024 it's to get your ducks in a row we also offer ear early bird discounts so if you if you use our platform now you can prepay for the filing you're also going to get a filing analysis so um as part of using file forms we are going to provide you with a file that doesn't go to finsen but goes in your your desk drawer your filing cabinet that establishes you know why you're reporting company how we determined or how you determine who your beneficial owners are um summary of that information it's effectively going to be you know your your your backup in case finsen does come ask and says you know how did you determine you were you were required to file why did you report these beneficial owners um so it it does produce a bit of a of a of a bulletproof backup to substantiate the information that you did in fact submit to to finen or will submit in 2024 sure sure so if you're let's our our audience is mostly owners of smaller organizations fewer than 15 or 20 employees a lot of them are doing great Revenue wise but certainly under the five million threshold that would make them um eligible to to have to um submit this report starting next year if you're in that situation let's say that you have h a business attorney that you have a relationship with you have maybe a tax person or or and or a bookkeeper who should be talking to you about this stuff who should you expect to hear from you you'll hear from your accountant but they'll probably say we don't we you know here here's information but we're not going to do this um either a because they're too busy accountants are are totally spread thin and this is just another thing that you know they they'll try to avoid getting thrown on their plate they're worried about it being an the unauthorized practice of law um and they're not interested in the admin of having to go you know figure out who beneficial you know it's not really an accounting test um and you know do they want to be chasing passports and driver's license probably not so your accountant will probably let you know about it if they do charge you for it it's probably not going to be cheap um yeah simple information but um you know there's uh you know there there's a an increase in the um uh well there's there's certainly a shortage in the number of of accountants there is a a a sharpening increase in the in the hourly rates and the fee structures of good accountants out there so expect to pay a you know a meaningful amount for your accountant to facilitate this and then the same goes with the lawyers is this really something that you know an attorney billing out at you know $300 to $1,500 an hour is going to be uh wanting to have to manage so if you if you are fortunate enough to to have a business that uh has a external counsil that is on retainer sure they'll they'll probably let you know but as you know most of your clients probably don't just have you know some some accountant who's an extension of the organization um so expect to potentially hear from one of the two but then you know you've got you guys out there who are self-preparing their taxes and may have some LLC set up for investment purposes I'm not sure who's going to tell them yeah yeah yeah well hopefully you will well that's that's what we're trying to do is is get the word out and we've created a tool on . file forms.com which is a free Boi qualification tool it's free to use it's going to take you through five a five-step questionnaire and at the end it's going to tell you whether you're a reporting company or not um if you are in fact a reporting company you can choose to use file forms now or you can wait until 2024 when the when the finsen portal is open and you could try to figure out how to do it yourself um we we encourage that from a risk mitigation perspective but also the perspective of being efficient from from you know the the the out- of-pocket cost from the business owner um file forms is likely going to be the certainly the cheaper option to to use as opposed to using your accountant or your lawyer very cool well this is uh this has been really interesting KY I appreciate you running us through the the back to front of all this what what have we not covered yet that's relevant to business owners subject to this new filing requirement so the we we touched on this a little bit but the the the the amendments to it's not just going to be amendments to operating agreements and shareholder agreements as you were alluding to with your coo who didn't want to file it's going to be amendments to employment agreements this is going to to touch a lot of legal paperwor work and so you know in thinking through not just am I a reporting company uh who are my beneficial owners who's the company applicant it's probably important to think about the you know the universe of legal documents that interplay and interact with us and so you know that is that is certainly for more sophisticated organizations they're really going to want to be paying attention to um whether they need to amend prior legal documents and certainly in drafting new legal documents you're going to see corporate trans transparency act and beneficial ownership information in in Incorporated in in new drafts of legal documents interesting well I appreciate your time as always Kenny this is this is great I I am 100% confident that this will make the Wall Street Journal here at some point in maybe the next few months or perhaps uh at some point next year hopefully but we'll start to hear about it more and more thanks to people like TR I've been paying the Wall Street Journal so we you know I've had a couple uh yeah couple of interviews and was was quoted in the Wall Street Journal uh earlier this year related to one of my other businesses and I'm I'm sort of you know trying to raise my arm up and say hey guys like this is important this is you know uh whether you're doing it because you want good you know good news good press or doing it because you know you also believe that um sort of the right of the the business owner to become aware of this before it goes live either either way way um you know certainly uh C certainly trying to get the word out so file forms.com did I get the URL right file for.com where else can people follow you and pay attention to this stuff so I'm as mentioned a bit of a serial entrepreneur so um we um we're also we've got a new Tax Technology platform out there called tax now um but the best way to keep track of what I'm doing is probably just to follow me on LinkedIn Kenneth detman and uh you know I I I do a lot of uh thought leadership and post content there and so you can find your way to file forums tax now and and my other business easy ERC right on well keep at it you're doing great work and I look forward to having you back on again in the future sounds good appreciate you having me Grant take care thanks for tuning in to grow money business the podcast dedicated to helping business owners optimize income pay less in tax and invest prudently be sure to subscribe to the podcast on iTunes Google Spotify or wherever you digest podcast to ensure you don't miss out on future episodes and announcements and feel free to submit questions to grow moneyb bus.com

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