Carlson: New reporting requirements for small businesses carry costly penalties

If you are a business with fewer that 20 employees and annual gross receipts of less that $5 million, chances are you will need to report your Beneficial Ownership Information to the Financial Crimes Enforcement Network as part of the Corporate Transparency Act.

Under a bi-partisan law passed in 2021 and made effective as of Jan. 1, 2024, the CTA aims to combat fraudulent activity by requiring businesses to report information about the individuals who directly or indirectly own 25% or more of the business.

If your business was formed before Jan. 1, 2024, you have until Dec. 31, 2024, to file your initial BOI report; for businesses formed on or after that date, the reporting time window decreases to 90 days from the formation of the business. For any changes to BOI information, the time window decreases even further to just 30 days. The most critical takeaway of the CTA is that failing to file your report, reporting incorrect information, of failing to update the information if it changes, can subject your business to penalties of up to $500 per day, or criminal penalties, including imprisonment for up to two years and fines of up to $10,000.

Businesses exempt from these reporting requirements include tax-exempt entities, large operating companies, banks and credit unions, insurance companies, inactive entities, and several others. For the complete list of exemptions and more information about the Corporate Transparency Act visit the FinCEN website at www.fincen.gov.

Thank you to the team at Cary Millar PC for recently presenting this information to our members and for helping support the needs of our business community. If you have questions about the CTA or need any assistance for your business, please contact the Peoria Chamber of Commerce at 623-979-3601 or email me at rcarlson@peoriachamber.com.