Proposals in both chambers of Congress would limit the use of anonymous shell companies, impacting small businesses in the U.S.
Last month, the House passed a bill that would require most limited-liability companies (also known as shell companies) with 20 employees or fewer and no physical office to inform the Treasury Department about who holds at least a 25 percent stake or has primary control in the firm. A companion measure has been introduced in the Senate. While the House bill requires annual submissions, the Senate legislation allows businesses 90 days to report ownership changes and a year to report other personal information changes.
The new requirements would not include nonprofits, investment advisers and other financial-services firms.
Still, it’s not surprising that some are unhappy with the new requirements. Anne Zimmerman, an accountant in Cincinnati who focuses on SMBs, expressed surprise that the Trump administration supports these new rules. “It’s only the small businesses that are going to get hit with it,” she told The Wall Street Journal, adding that those companies would have to hire accountants or lawyers to ensure compliance.
And the National Federation of Independent Business points to privacy concerns and loss of time as their primary reasons for opposing the bills. In fact, the organization estimates that complying with the proposed rules would take companies 30 minutes a year on average.
There are some business owners that aren’t too worried about the changes. Daniel Turner, owner and president of TCG Inc., a federal technology contractor in Washington, said he has opened several limited-liability companies to invest in real estate. He doesn’t think that submitting ownership information for these firms would be overly time-consuming, but he isn’t convinced the measures would stop illegal activity.
“There’s an old term: ‘Life finds a way,’” he said. “And criminality also finds a way.”