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Corporate Transparency Act

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A Magnifying glass looking at a folder icon with the text "corporate transparency act"

As a small business that supports other small businesses, we get pretty fired up when the government makes changes that have the potential to screw us over. Enter the Corporate Transparency Act (CTA).

If you haven’t seen Kim’s recent article on this, the CTA requires every small business in the country to provide their personal information to the federal government. It can lead to fines and even imprisonment for noncompliance if they don’t. In a world where small business owners are already at a disadvantage and constantly overburdened, is this really the message we want to send them?

So, why do we have the CTA? How does it impact small businesses? And what are people doing about it? Let’s dive in.

Why The CTA Exists

The Corporate Transparency Act is our lawmakers’ attempt to combat money laundering, corruption, tax fraud and other illegal financial activities. According to the Department of Treasury, the law, “will equip law enforcement and other partners with the information they need to disrupt financial anonymity that enables crimes such as corruption, drug trafficking, and terrorism.”

We won’t sugarcoat it – unfortunately, there is an abundance of malpractice and fraud in the world of digital business. While we applaud the effort to right these wrongs, the implementation of the CTA has given fraudsters new ammunition to continue rather than hindering them. Scammers are currently taking advantage of the lack of knowledge about this new compliance and fraudulently soliciting information from small businesses.

The State of Michigan says scammers have been sending fraudulent letters and emails to small business owners with a title like ‘Important Compliance Notice’, asking them to click on a URL or to scan a QR code.

We can’t repeat this enough: do NOT do that. It’s a scam.

In order to comply with the CTA, you’ll need to fill out a Beneficial Ownership Information report and send it to the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). You can do so directly through the FinCEN website by using their BOI E-Filing System.

Cost of Compliance

Due to their limited resources, small businesses may find it difficult to keep up with the cost of compliance, making mandates like the CTA detrimental to their operations and growth. The National Small Business Association surveyed small business owners before the law took effect and found that half of those surveyed didn’t even know what CTA was. Another quarter said they didn’t know if they’re required to report and that compliance with the law would cost businesses about $8,000 on average. There is no means of escape from this financial burden however, as failing to comply–whether intentional or not–could invoke up to a $10,000 fine.

We feel that mitigating fraud shouldn’t require punishing our small businesses with thousands in extra overhead or non-compliance fees. With many small businesses finally finding a post-COVID foothold in our ever-inflating economy, laws like these that are concerning for the future of our small business base. Mandates like these quietly taking shape and going into effect is also why it is so important to stay informed, speak out and take action.

a close up of a man signing a document with a pen

Legal Challenges

Action is exactly what business owners and business groups across the country have taken. There have now been four lawsuits challenging the constitutionality of the CTA.

The National Small Business Association (SBA) and a small business owner sued the Treasury Department in November 2022, arguing that the law violates privacy protections and is a burden on reporting companies. In March of this year, the federal district court in Alabama ruled in their favor, finding the law unconstitutional. There have also been legal challenges moving through courts in Maine, Michigan and Texas.

Ultimately, the CTA has raised concerns among small businesses due to its compliance burdens and potential fines. The outcome of these legal battles will impact the future of small businesses and the regulatory environment they operate in. Not only that, but it could force our lawmakers to come together to create a solution to the issue of fraud that doesn’t hurt what they call “the backbone of America.”

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If you ever need proof that personal brand matters...Kim got to see the @nasaartemis II launch in person as a direct result of her Big Deal Energy™.

You need to work hard, show up authentically, and provide value. That was her message to a room full of students and young professionals at @western_michigan_pmi`s theProject Collegiate Competition.

The Big Deal Energy™ Workshop is on June 23. Register at the link in bio.

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Open post by 8thirtyfour with ID 18045223601588457
If you ever need proof that personal brand matters...Kim got to see the @nasaartemis II launch in person as a direct result of her Big Deal Energy™. You need to work hard, show up authentically, and provide value. That was her message to a room full of students and young professionals at @western_michigan_pmi's theProject Collegiate Competition. The Big Deal Energy™ Workshop is on June 23. Register at the link in bio.

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The good news is, you can flip the script, but it will take some serious work and a personal brand, or as Kim Bode refers to it: Big Deal Energy™.

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Open post by 8thirtyfour with ID 18012680507839574
Employers think Gen Z is lazy, entitled, and will quit the second things get hard. That perception is keeping you out of the room before you ever get a chance to prove otherwise. The good news is, you can flip the script, but it will take some serious work and a personal brand, or as Kim Bode refers to it: Big Deal Energy™. Kim is speaking at theProject™ Collegiate Event, hosted by the Project Management Institute Western Michigan Chapter on April 14. She'll cover how to build a personal brand that actually sounds like you (not ChatGPT) and how you can show your value through social, content and networking. Link in bio to learn more.

No one talks about how lonely it is to own a business. The tough decisions land on you, the business doesn`t pause when you need a break, and nobody - not your employees or your spouse - really gets it.

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Open post by 8thirtyfour with ID 18115092436709128
No one talks about how lonely it is to own a business. The tough decisions land on you, the business doesn't pause when you need a break, and nobody - not your employees or your spouse - really gets it. If you know a business owner, tell them they're doing a good job. It matters more than you know.

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Meanwhile, when a woman CEO needs growth capital, she compiles three years of tax returns before a bank will schedule a meeting, while her male competitor closes the same deal over drinks.

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Open post by 8thirtyfour with ID 18078804740143427
The growth stage is the hardest part of building a business. Kim was recently quoted in @corpmagazine on what she sees running the Women's Entrepreneurial Fellowship: women who have built something, survived the hardest part, and are still doing everything themselves. The natural tendency to be humble and attached to their work creates unique business challenges for women; they put up walls because they can't be vulnerable. Meanwhile, when a woman CEO needs growth capital, she compiles three years of tax returns before a bank will schedule a meeting, while her male competitor closes the same deal over drinks. When women have access to the right resources, they grow and invest back. Full article at the link in bio.