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Small Business Owners Support Legislation Requiring Transparency in Business Formation

Publisher: 
Small Business Majority
Date: 
Wednesday, 4 April, 2018

Under current law, business owners are not required to list their identity when they establish a business, which has encouraged some to establish anonymous shell companies to engage in illicit behavior. However, Congress is currently considering bipartisan legislation that would require businesses to list the true identity of their owners when forming to address issues of fraud and abuse. The legislation provides that owners’ names would be kept private and would only be made available to law enforcement with a proper subpoena or summons. Some have argued that this increased transparency could boost accountability and confidence in the system, while others have raised concerns that it could hinder business formation. New scientific opinion polling shows small business owners decidedly support this legislation.

The survey, conducted by Chesapeake Beach Consulting for Small Business Majority, revealed that 77% of small business owners agree Congress should pass legislation that would require businesses to list the true identity of their owners when forming, with roughly half (49%) in strong agreement. The poll was an online survey of 500 small business owners nationwide conducted between March 5 and 11, 2018.

Additionally, the survey found a vast 84% of small business owners say the use of shell companies to win contracts or obtain government set-asides reserved for small businesses is a problem. What’s more, the survey results indicate that small business owners do not believe this disclosure would place a burden on their business. Indeed, 76% of small business owners feel legislation requiring small businesses to list the true identities of their owners would benefit them by protecting them from contract fraud and giving them fair access to government set asides. Importantly, nearly all small business owners disclose their true identities when establishing their business. A mere 3% of respondents say they did not disclose their identity when setting up their small business.

As these results show, small business owners are broadly supportive of legislation that would further improve accountability in rules regarding business ownership transparency.  

Key Findings

Small business owners support legislation requiring disclosure of business owners: 77% of small business owners agree Congress should pass legislation that would require businesses to list the true identity of their owners when forming. Under the bill, the owners’ names would be kept private and would only be made available to law enforcement with a proper subpoena or summons. Roughly half (49%) strongly agree we need this disclosure in place.

Small business owners believe use of shell companies to fraudulently win contracts is a problem: A vast 84% of small business owners say the use of shell companies to win contracts or obtain government set-asides reserved for small businesses is a problem. Nearly 6 in 10 (58%) believe this is a major problem.

Small business owners believe legislation requiring small businesses to list the true identities of their owners would benefit rather than burden their businesses: More than 3 in 4 small business owners (76%) think legislation requiring a small business to list the true identities of their owners would benefit small businesses by protecting them from contract fraud and giving them fair access to government set-asides. Just 9% of small business owners think such legislation would be a burden on businesses and would stifle business creation.

Nearly all small business owners disclose their true identities when establishing their business: A mere 3% of respondents say they did not disclose their identity when setting up their small business.

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