Could your business face hefty fines for missing a crucial deadline?

Small businesses must comply with new reporting requirements set by the U.S. Treasury Department under the Corporate Transparency Act by January 1, 2025, or face penalties. These requirements aim to combat illicit finance and involve reporting beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). Approximately 32.6 million businesses need to submit initial Beneficial Ownership Information Reports, with about 9.5 million filings completed as of early December 2024. Non-compliance can result in civil penalties up to $591 per day and criminal fines reaching $10,000, with severe violations potentially leading to prison sentences. Businesses must provide specific details about beneficial owners, defined as individuals owning 25% or more of a business or having significant control. Existing businesses from before 2024 face a January 1, 2025 deadline, while those formed in 2024 and later have shorter timeframes. Exemptions apply for businesses meeting certain criteria, such as over $5 million in gross sales or employing more than 20 full-time workers. A federal court in Texas has temporarily blocked the enforcement of these rules, yet businesses are advised to file their information to adhere to the existing deadlines.

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