Overlooking this new legislation could cost Colorado business owners $500 per day

Colorado officials are raising awareness about a new law that could cost Colorado businesses a hefty penalty starting in 2025.

The law, formally called the Corporate Transparency Act, was enacted by Congress in 2021 to curb illicit finance. This law requires nearly all corporations, partnerships and LLCs doing business in the U.S. to report information about who ultimately owns or controls them in the form of a Beneficial Ownership Information report, which is filed with the Department of Treasury’s Financial Crimes Enforcement Network.

The federal law went into effect in January 2024. Businesses formed this year had 90 days to file, while existing businesses must report ownership information by Jan. 1, 2025. 

Colorado small businesses are not exempt from this law and could face unexpected penalties if they fail to report the proper information by the end of 2024 or provide fraudulent information. Federal penalties for not complying could reach as much as $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 roughly 99.5% of all businesses in the state. The small businesses are responsible for employing 47.3% of all Colorado employees, equaling roughly 1.2 million people.

Colorado had the most growth in new business applications in 2023, with a 115% increase from 2022, meaning more businesses that fall under the relatively new requirement. Other entities, such as nonprofits and publicly traded companies, are exempt from having to file beneficial ownership information.

Reporting is free and isn’t required annually. Unless a company needs to update information, a report only needs to be submitted once.

To report beneficial ownership information electronically, visit the Department of Treasury’s Financial Crimes Enforcement Network’s website: FinCEN.gov/boi. Any company registered on or after Jan. 1, 2025, must file the information within 30 calendar days after registration is effective.