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Colorado officials are increasing awareness about a new law that could cost a lot of money Colorado Companies a hefty fine from 2025.
The law, formally the Business Transparency Actwas passed by Congress in 2021 to curb illegal financing. This law requires almost all corporations, partnerships, and LLCs doing business in the U.S. to do so report information about who ultimately owns or controls them in the form of a beneficial ownership information report submitted to the Treasury Department’s Financial Crimes Enforcement Network.
The federal law took effect in January 2024. Companies incorporated this year had 90 days to file, while existing companies had to report ownership information by January 1, 2025.
Small businesses in Colorado are not exempt from this law and could face unexpected fines if they fail to report the correct information or provide fraudulent information by the end of 2024. Federal penalties for failure to comply with the rules could be up to $500 per day, in addition to civil and criminal penalties, according to the department.
There are nearly 690,000 small businesses in Colorado as of 2023, according to the U.S. Small Business Administration, which makes up about 99.5% of all businesses in the state. Small businesses are responsible for hiring 47.3% of all workers in Colorado, which equates to approximately 1.2 million people.
Colorado saw the most growth in new business applications in 2023, with an increase of 115% from 2022, meaning more companies will fall under the relatively new requirement. Other entities, such as non-profit organizations and publicly traded companies, are exempt from the obligation to submit beneficial ownership information.
Reporting is free and not required annually. Unless a company needs to update information, a report only needs to be submitted once.
To electronically report beneficial ownership information, visit the Treasury Department’s Financial Crimes Enforcement Network website: FinCEN.gov/boi. Any company registered on or after January 1, 2025 must submit the information within 30 calendar days after the registration becomes effective.
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