The Corporate Transparency Act (CTA), effective January 1, 2024, mandates that many U.S. small businesses report their beneficial ownership information to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) by January 1, 2025. Failure to comply can lead to significant penalties, including fines and imprisonment. Filing is straightforward – businesses will not incur a fee for submitting their reports, and electronic forms are available on FinCEN’s website.
The expiration of Subchapter V, a type of bankruptcy protection that eased the process for small businesses with less than $3 million in debt, means that small businesses will now face more complex and costly bankruptcy procedures. Initially enacted in 2020 and expanded to cover up to $7.5 million in debt during the pandemic, this provision saw higher success rates for reorganization plans but failed to become permanent, leading to a reversion of the debt limit on June 21. To read more, see this article in AP News.
America’s small businesses face unprecedented opportunities and challenges, particularly in combating a potential 40% increase in “friendly fraud” and “first-party fraud,” where customers dispute legitimate charges despite having received the goods or services. Friendly fraud involves genuine customers falsely claiming disputes on their legitimate purchases, posing a significant financial threat to merchants. To mitigate these risks while ensuring a smooth purchasing experience, businesses must balance effective fraud prevention with customer-friendly policies, emphasizing customer education, robust support, and clear communication about transactions.
To read more about this issue, see this post on PYMNTS, a site that provides data, news and insights on innovation in payments and the platforms powering the connected economy.
In this brief segment on ASBN.com (America’s Small Business Network), intellectual Property Attorney, Ana Juneja shares that small businesses, especially those producing digital content, artworks, and photographs, need to utilize copyright laws to safeguard their creations, particularly in the digital and e-commerce spaces.
Recent legal adjustments, including simplification of the copyright process and removal of the mandatory use of the copyright symbol (©), indicate a shift towards making it easier for small businesses to claim protection, ensuring legal advantage and potential financial compensation in case of infringement, while also discussing the significance of the Digital Millennium Copyright Act (DMCA) in protecting online and digital content. See this link to learn more.
This article from CNET discusses common mistakes that attract IRS scrutiny and offers tips to avoid them, such as completing your return accurately and reporting income correctly, as failing to do so can lead to audits or delays. It also emphasizes the importance of meticulous record-keeping, especially for self-employed individuals claiming deductions, and being cautious with charitable deductions to avoid raising red flags with the IRS.
Get ready, small business owners! In 2024, there will be some new rules to follow:
The Corporate Transparency Act means small businesses will need to register with the Financial Crimes Enforcement Network to tackle money laundering.
Good news for now: the IRS delayed a requirement that payments of over $600 via third-party providers like payment apps such as Venmo and Zelle have to be reported.
The Consumer Financial Protection Bureau wants more transparency in small business lending, asking banks to spill details on applicants. This will hopefully highlight potential signs of banks discriminating against borrowers.
The National Labor Relations Board’s joint-employer rule got pushed to Feb 26, 2024, expanding liability for unfair labor practices.
Also, minimum wage hikes in over 20 states and a Department of Labor proposal might extend overtime pay eligibility.
To read more about these changes, see this article in Inc.
Faculty at Cornell University and attorneys at law firm Wilmer Hale collaborated to publish this free resource for entrepreneurs (PDF is also loaded below). The purpose of this booklet is to help startup founders to think early about key items that will set them off on the right legal track.
The booklet covers basics like entity formation, founders agreements, equity incentive plans, tax issues, bank setup, accounting and financial statement basics, HR issues, intellectual property concerns and insurance. The booklet was launched in November 2023 and will be updated over time.
According to this recent article in Inc., while most small business have websites, many small business owners don’t realize that business websites need to comply with the Americans with Disabilities Act. With a rise in lawsuits against companies for failure to comply, it is in every small business owner’s best interest to understand the rules. Read the article to learn more!
This post from LegalZoom which was recently updated in September 2023 highlights the top ten mistakes made by new business owners. The list includes:
Check out the link to read more detail about what to do if you think you are falling short in that area as the post goes into depth on each item in the list.
According to this piece in Fast Company, during 2021 alone, over 5 million new companies were registered in the US alone which is an increase of 23% over the previous year. While some of this increase can be attributed to the impact of the global pandemic, research is suggesting that education is playing a role as well.
While some experts have felt that continuing education is more about “signaling rather than skill development”, this new research is providing evidence that additional years of post-high school education can boost self-employment in high-growth industries. Research goes on to point out that, “for women, education may have an even greater impact on encouraging them to jump into entrepreneurship by increasing their confidence in addition to their skills.”
Education is certainly something we believe in at the Institute! If you (or someone you know) would benefit from our free 12-week entrepreneurship certificate program, go to this page and click the “Join the Waitlist” button. We enroll on a quarterly basis and reach out to those on the notification list in the order that they are there.