Small businesses are often the most affected by regulations, and the latest federal legislation is no different. The Corporate Transparency Act (CTA), enacted in 2021, is aimed at reducing money laundering and assigns the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) with identifying shell companies used for illegal transactions.
The CTA requires the creation of a registry for businesses with less than $5 million in annual sales and fewer than 20 employees, which could have a significant impact on millions of small businesses. These businesses may not have the resources to comply with the new reporting requirements or the financial means to pay the fines for noncompliance.
It is important for small business owners to stay informed about these new regulations and their potential impact. This broad effort to tighten money-laundering laws could have far-reaching consequences for small businesses if they are not prepared. To avoid potential fines and penalties, small business owners must closely monitor any changes and ensure that they are in compliance with the CTA.
This is just another example of how small businesses can be disproportionately affected by federal regulation. It’s essential that policymakers consider the implications of new regulations on small businesses when crafting legislation to ensure that they can remain competitive while also complying with the law.