The Corporate Transparency Act, a new federal regulation, is causing a stir among small businesses as they face potential fines of $500 a day for non-compliance. The law requires LLCs, Corporations, and other business entities to provide Beneficial Ownership Information to the U.S. Treasury Department, including details such as name, date of birth, and identification numbers of all owners.
The National Federation of Independent Businesses (NFIB) argues that the law unfairly targets small businesses, as larger companies and non-profits are exempt from the regulation. NFIB Vice President of Federal Government Relations Jeff Brabant criticizes the Act for subjecting small business owners to penalties for minor paperwork violations.
Businesses established before January 1, 2024, have until January 1, 2025, to file their information, while those created after the deadline must comply within 30 days. Nellie Akalp, founder and CEO of CorpNet.com, a company that helps businesses with legal paperwork, has reached out to customers offering assistance in meeting the new requirements.
While federal authorities argue that the regulation will help combat money laundering through shell corporations, critics like Brabant believe it imposes unnecessary burdens on small businesses. The future of the Act remains uncertain, with a U.S. District Judge ruling it unconstitutional in March. Legislators, led by U.S. Representative Warren Davidson and U.S. Senator Tommy Tuberville, are now working to repeal the Act permanently.