Wolters Kluwer Survey Uncovers Misconceptions Among Small Businesses Regarding Beneficial Ownership Reporting Requirements

Date – 01-Aug-2024

A third of respondents mistakenly believe that the Corporate Transparency Act rule does not apply to their businesses.

As the year-end filing deadline looms, confusion persists among small businesses required to report beneficial ownership under the Corporate Transparency Act (CTA). A recent Wolters Kluwer survey found that 33% of respondents from small businesses that meet the reporting criteria mistakenly believe that beneficial ownership information (BOI) reporting does not apply to their organizations.

“A notable number of respondents incorrectly assume that their organizations’ annual revenue or employee count exempts them from eligibility. We urge all businesses to review the BOI reporting requirements and the specific exemptions outlined by the Corporate Transparency Act (CTA) and the Financial Crimes Enforcement Network (FinCEN).”

While 39% of respondents recognize that the rule applies to their organizations, 23% admitted uncertainty about its relevance. When questioned about their BOI filing status, 16% indicated they have no plans to submit beneficial ownership details—a figure that rises to 36% among businesses with annual revenues below $500,000. A detailed summary of the survey findings is available online.

“One of the most notable insights from our survey is the disconnect many small businesses have regarding their eligibility status and intent to file BOI details by year-end,” said Rupak Venugopal, Vice President of Beneficial Ownership at Wolters Kluwer Financial & Corporate Compliance. “A significant number of respondents mistakenly believe their organizations are too small to qualify based on annual revenue or employee count. We strongly encourage all businesses to familiarize themselves with BOI reporting requirements and the specific exemptions outlined by the CTA and FinCEN.”

Venugopal highlights Wolters Kluwer’s BizFilings Beneficial Ownership Eligibility Quiz as a tool to help small businesses quickly determine if they need to file.

The survey, conducted from June 21 to July 1, gathered responses from 302 U.S. small businesses with less than $5 million in annual revenues and fewer than 20 employees.

It also examined the resources small businesses use for BOI compliance, finding that law firms are consulted three times more often than CPA/accounting firms. Law firms were the top source of awareness about the reporting rule (32%), followed by websites (27%) and word-of-mouth (22%).

Wolters Kluwer’s BizFilings Beneficial Ownership Information Report solution helps small businesses grasp basic reporting requirements, file with confidence, and avoid non-compliance penalties.