Share This Article
Small business owners face severe penalties if they don’t report to the federal government by year’s end.
Thousands of businesses may not realize they are subject to a new reporting process mandated under the Corporate Transparency Act, which went into effect in January 2024.
For most eligible businesses, the filing deadline is Jan. 1, 2025, according to the U.S. Chamber of Commerce.
“Those who fail to file by this deadline — or fail to update this information if needed — could face up to two years imprisonment and fines up to $10,000, in addition to civil penalties of up to $591 per day,” the U.S. Chamber of Commerce website reads.
The Corporate Transparency Act originally caught the attention of business owners when it became law in January 2021, said Roger Miller of Mizick Miller & Company, an accounting firm that serves clients throughout North Central Ohio. But then three years passed before the new law became effective.
Businesses that meet the reporting criteria must submit a Beneficial Ownership Information Report to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), according to the U.S. Chamber of Commerce.
The law was created “to combat illicit activity including tax fraud, money laundering and financing for terrorism by capturing more ownership information for specific U.S. businesses operating in or accessing the country’s market,” the chamber website explained.
If someone wonders if they may have created an LLC for themselves in the past, they can check online.
“Go to the secretary of state and see if there’s a name in there,” Miller said. “We’re recommending even if they’re inactive to file.”
Anyone unsure about the process should contact their attorney or accountant for more information.
The alternative is to wait and see how serious the federal government is about penalizing those who fail to comply.
“We don’t know what they’re going to do,” Miller said. “They sure scared everybody.”
