Small biz director: ‘Fines can be awfully painful’ under new compliance

Maricopa businesses have a few months to report who owns their companies to the feds — or face dire consequences.  

That’s why the Maricopa Chamber of Commerce invited small business expert Kevin Connors to tell local business owners how to avoid a costly mistake at a Thursday luncheon. 

Connors, the director of Central Arizona College’s Small Business Development Center, discussed the new Beneficial Ownership Information reporting and answered questions from local business owners.  

Chamber Executive Director Kelly Anderson said she wanted to get the word out in fear the Biden Administration isn’t doing enough to educate the public about its new compliance requirements. 

“It’s very important our local business owners understand this requirement and not be taken advantage of,” she said.  

What is Beneficial Ownership Information reporting? 

Starting this year, owners of most companies will need to complete a one-time report about the beneficial owner — the person or people who directly or indirectly own a business — to the U.S. Department of Treasury’s Financial Crimes Enforcement Network bureau.  

It is part of the Corporate Transparency Act of 2021 that requires businesses operating in the U.S. to report its owner to help prevent illicit activities, like money laundering and tax fraud.  

Connors said it applies to most businesses, like corporations and LLCs. Sole proprietors and owners of nonprofits need not report.  

How to report 

Reporting to FinCEN is a painless process, according to Connors.  

“People should know it’s only going to take 10 to 15 minutes of their time and it doesn’t cost a penny,” he said. 

Forms can be completed as PDF files or directly on the BOI website.  

Each beneficial owner will need to provide their legal name, date of birth, address and a license or identification number with an image of that ID. Owners will also need to create a FinCEN ID.  

Owners of existing companies have until Jan. 1 to report. Those who created or registered a company this year must file within 90 days of receiving notice of their company’s creation.  

The consequences for not reporting 

While it only takes a few minutes, the consequences for not reporting are extreme.  

“It’s not hard, but it’s something that has to happen otherwise the fines can be awfully painful,” he said. “The fines are $500 per day.” 

Failing to report can even result in civil or criminal penalties of up to two years in prison.  

Where to get assistance 

Looking for more information about how or why you need to report, or if you have more specific questions?  

Connors said CAC’s Small Business Development Center will host a few more workshops and it helps Pinal County business owners at no cost. However, he said he believes the best place to find information is on FinCEN’s website.  

“It’s a very good website,” he said. “It’s detailed and will actually help.”