Raising Awareness about New Compliance Requirements for Small Businesses with Carl Brown

In this episode, Frank Tumminello sits down with Carl E. Brown Jr., the state director for the DC Small Business Development Center, and discusses the services and resources provided by the center to small businesses in Washington, D.C. These include free confidential counseling, industry research, loan package review, workshops, and a marketplace called Shop DC. Carl emphasizes the importance of research and compliance in running a successful business, including keeping up with taxes, licenses, and annual reports. He also highlights the challenges faced by small businesses during the pandemic and the need for awareness about the new compliance requirements, such as the Corporate Transparency Act and BOI reporting.

Carl is also the host of The Small Business Report on Sirius XM Channel 141. Check it out here.

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Transcript

Frank Tumminello (00:00.294)
Welcome to another episode of the Fileforms Business Compliance Podcast. It's another interesting week in business compliance and we're very honored to have Carl Brown from Washington DC's Small Business Development Centers here today. Carl, feel free to introduce yourself to the listeners out there.

Carl Brown (00:21.662)
Hey Frank, hey audience. My name is Carl Brown. I'm the state director for the DC Small Business Development Center. And we're located on the campus of Howard University. I'm actually a proud graduate of Howard University. And the center itself was established in 1979. And the good thing about that was that was my freshman year at Howard University. So, yeah, very interesting.

Frank Tumminello (00:48.614)
interesting.

Carl Brown (00:51.454)
We, I mean, there's two things that coexist with my life at Howard. The center started in 1979 when I became a freshman and Howard was founded on March 2nd, 1867, way before me, but I was born on March 2nd. So yeah, yeah, we celebrate birthdays, man. So destiny, absolutely, absolutely destiny.

Frank Tumminello (01:12.518)
No way.

It was destiny.

They're proud to have you both as an alumni and I'm sure as a student and now as a leader.

Carl Brown (01:24.446)
Yeah, yeah, I mean, that's a blessing in itself. And, you know, we work well together, the whole team in the School of Business. I mean, we just work well together, you know, helping the students, number one, that's, you know, first and foremost, and then, you know, the entrepreneurial community itself at large in Washington, D .C. So, I mean, I don't know if you want me to just go into a little bit about what we do, Frank.

Frank Tumminello (01:53.51)
Yeah, you know, that'd be great. You know, we've really enjoyed partnering with America's Small Business Development Centers across the nation and DC specifically. We're looking to serve on, you know, this new compliance requirements. So we'd love to learn a little bit more or help our listeners learn a little bit more about, you know, what the centers are all about and the type of resources that you're able to provide in a very eloquent way to small businesses.

Carl Brown (02:20.03)
yeah, well, you know, I love talking about what we do. First thing on the list is confidential counseling. We provide free confidential counseling and it's not, you know, like a lot of people ask me, is it free the first time? No, it's free. You can come back as often as you want. We've had customers five, 10 years. I mean...

Frank Tumminello (02:23.718)
Excellent.

Carl Brown (02:46.622)
So if you want to refresh your business, come on back. You're just starting out and you take a little bit and then you run with it and then you come back, that's fine. We love to have you, but it's free confidential counseling. And I always say it's confidential because there's nobody else's business but your own. Then we provide industry research. Well, you know, large businesses live on industry research and business intelligence.

And so we're trying to teach small businesses that they need to do the same thing. Make your decisions based on research, demographic information, all of that. I mean, you don't know what's going to go on in your community 10, 20, 30 years from now, and it could impact your business. And I say, well, look at the master plan. What are they going to build in that community? A lot of people overlook that, but that's very important.

What are the industry trends? You know, like you're doing coffee, you know, so now they got a new way to, to, to, you know, manufacture the coffee, roast the beans and all that. But you're not doing that. You're doing it the old way. And then you're wondering why your customers are dwindling. Well, they get a better taste down the street, you know, because they, you know, put in the new, the new formula that you're not doing. So, I mean, we, we provide that industry research and again, it's free.

Frank Tumminello (04:04.038)
Sure.

Carl Brown (04:13.246)
You know, these are your tax dollars at work. Then we do the loan package review. You know, every small business comes in and they say, hey Carl, I need some money. Okay, so we look at the, we work with them on their loan package to make sure that they answer all the questions, provide all of the documents that are necessary and needed in that application. So they give you two years of tax returns and says three, we remind them.

Okay, hey guys, we gotta get that last one in here. And they go, okay, okay, okay. We thought we can get away with two. No, if they ask for three, they want three. I don't care if they don't even look at it. They ask for it, they wanna check it off, okay? And if you're not doing that, guess what? Then you just gonna have to start back all over again. So we try to be as complete as possible so that when they go, and not only that, Frank, here's the other thing. We take it to the next level.

We don't just look at your loan package, but we have already talked to a bunch of CDFIs, banks, credit unions, and et cetera, to determine where you are financially and who would be the best choice for you to get the money you need. And sometimes they come in, I want 50 ,000, but when we're looking at their profile,

And we talked to the bank, you know, and the bank said, well, you know, maybe 30. You know, 30 is better than nothing.

Frank Tumminello (05:43.942)
Sure. Yeah. So I'm sure that guidance is super helpful. You know, just setting the expectation and letting people realize the type of time they need to invest in what the outcome might be. Having a sounding board versus going off on their own and, you know, potentially getting left at the altar with a lender or another form of growing their business. I can certainly relate to that.

I'm curious, are most of the small businesses that you work with, are they first time entrepreneurs kind of starting out from the get go or are they kind of previous business owners with maybe a little bit of experience entering maybe a new chapter in their life through a new venture?

Carl Brown (06:27.198)
We go the full gamut from the ideation stage to the mature stage. So we deal with all of them. All phases of business, business development. Which is a good thing, because everybody needs something different. Those that have been around for five to 10, 15 years, they may want to pivot, or there's new things that come in on.

to the marketplace. I mean, AI, AI wasn't something that was around 10 years ago. I would say five years ago, you know, that we knew of it was around, but we didn't know what it was, you know? And so they're coming in to say, well, hey, what is this thing? I keep hearing about it and, you know, we provide, you know, workshops. So that was like number four on the list, you know, after.

Frank Tumminello (07:02.374)
Right.

Carl Brown (07:23.55)
Loan package review, we do conferences, webinars, and workshops. So we do workshops with, you know, on AI. We provide subject matter experts. We have people like yourself come in and talk to our clientele. yeah, me too. I mean, it was phenomenal, man. It was phenomenal. So we do these things, conferences, webinars, and workshops to expose.

Frank Tumminello (07:38.086)
I really enjoyed the radio show the other week. That was a lot of fun.

Carl Brown (07:53.278)
you know, our clientele and potential clients to this information. I mean, we have a database of, you know, like folks from the U .S. Patent and Trademark Office. So if you want to get a patent or a trademark or a copyright or something like that, we have the experts that do it. And on the campus of Howard University, we have a Patent and Trademark Resource Center, right in the School of Business Library.

So we take folks over there and they can do the initial research for free. I mean, you can't beat that. You can't beat that. I mean.

Frank Tumminello (08:27.75)
Very interesting. You can't beat that. Free education, free guidance. Sometimes that's all people need. They just need a little bit of support and then they're on their way. Are you meeting with these business owners more than once? Is it kind of frequent? Are they calling you up consistently or is it kind of a one time?

Carl Brown (08:33.054)
Mm -hmm.

Carl Brown (08:49.054)
no, no, no. Well, I'm going to tell you the tire kickers and the window shoppers is probably more than likely a one time thing. You know, they come in, gun hole. yeah, I want to start a business and you give them some homework and you never see them again. And then I just want to finish out the last thing that we do right now is we have what is called Shop DC. Shop DC. We have a marketplace like an Etsy or Amazon.

Frank Tumminello (09:05.19)
Mm -hmm.

Carl Brown (09:18.622)
And I'm using this as a training tool for the students. So we're not charging for this. We don't charge a percentage. If you sell something for $100, you get the whole $100. We don't charge you a penny. We don't charge you any fees. There's no money coming from you to us because we're using this as a training tool. So we have a certain amount of spots set aside just for our students, but then...

our clients, faculty, staff, and alumni at Howard University, and small business owners in Washington, D .C. And we don't charge anyone anything, because again, we're using this as a training tool for e -commerce.

Frank Tumminello (10:04.806)
Makes sense, so anyone can just bring their product and hopefully grab one of those slots and distribute on your platform. That's really interesting. That's a great benefit.

Carl Brown (10:11.39)
yeah, yeah, and we got a lot of people on there already, so, and folks are already shopping up there, so I'm loving it, you know? We're just opening doors of opportunity and we're training and teaching people at the same time.

Frank Tumminello (10:21.478)
Yes.

Frank Tumminello (10:25.19)
Great resume builder for the students, obviously. Yep, that makes a lot of sense.

Carl Brown (10:28.446)
Yes, because we have a lot of student entrepreneurs. I mean, and you know, to be able to train them, teach them on the proper way to product placement and all these things is just a wonderful thing because if you're going to be an entrepreneur, we want you to make sure we want to make sure that you are the best that you can possibly be. And all of these things matter. You know how your product looks online.

You don't want a wrinkled up t -shirt. You're selling t -shirts all wrinkled up. I mean, who's going to buy it? So, I mean, all of it makes a difference. The marketing, the branding, now incorporating AI into this whole thing, understanding your intellectual property rights and whether or not you need a patent or trademark. And these young folks out here, man, they are really...

going after being entrepreneurs, which I love because, you know, I've talked about this a lot. When I was going to undergrad, it was like, you know, get a job, work there 30 years, retire, and hopefully get a gold watch or you get a gold -plated watch. You know, it's like, nah. The young people of today, they're not going to stick around 30 years, number one.

you know, three to five, and that's if you're challenging them. If you're just giving them routine, you know, regular work, then they're not even gonna stick around a year. Yeah, side hustling. And Frank, and you know this? You know this, man. People are walking dogs. I mean, people are doing stuff like charging all the, I don't know about where you at, but on.

Frank Tumminello (11:57.67)
Sure.

Frank Tumminello (12:06.598)
They're gonna start side hustling.

Carl Brown (12:21.15)
college campus, we got all these bikes, you know, and you got it, they got to be charged up all these scooters and everything. They got to be charged up. People are snapping them up, charging them up in their house and you know, making money. You know, I mean, there's so many people are Ubering and you know, I mean, driving, delivering food and all this. I mean, you know, during, yeah, it's the gig economy, you know.

Frank Tumminello (12:43.014)
It's a gig economy. Yeah. That's exactly right.

Carl Brown (12:46.878)
And people are not looking at IBM and all these other major corporations as a place to go for 30 years. They're like, no, I'm okay. They prefer their freedom.

Frank Tumminello (13:00.838)
Definitely. It's a super valuable thing. Time is a scarce commodity and freedom is a big part about maximizing your time for sure. How's the tax season in the SBDCs? Is it a crazy time? A lot of these entrepreneurs, do they have good resources or good head on their shoulders when it comes to taxes and other compliance forms that are due this time of the year?

Carl Brown (13:29.086)
Man, Frank, I'm so glad you asked that question, man. Because when I was talking about the loan package review, part of what I have to talk about now since the pandemic and the idle in the PPP loans, the idle, which is the economic injury disaster loan that was let out by the SBA during the pandemic and the PPP that was partnering with the banking community through the SBA.

through Congress to fund those things, we found that a lot of our businesses were not meeting the mark or not even qualifying because they weren't paying their taxes. They weren't in compliance with the business licensing, okay? Didn't have a financial infrastructure, no QuickBooks, no NetSuite, not even an Excel spreadsheet.

didn't have a lot of banking relationships, had one bank account and it was personal, not a business bank account. So when you talk about tax season, that's part of the minutiae right there. I mean, these folks are missing the boat. And so we have to, you know, do a whole financial literacy thing with our small businesses. And that's just not in Washington, D .C. It's across the country.

Frank Tumminello (14:43.206)
Sure.

Carl Brown (14:58.494)
Because we all know that a lot of small businesses didn't qualify for the funding during the idle loan when it was let out. So that's why Senator Cardin out of Maryland put back in the bill that he wanted small businesses with nine or less employees to be like at the top of the list to get the second round of funding. But that wasn't even going to hit the mark anyway, because those were the ones that were...

not in compliance anyway. So, but those that are in compliance rank, we have the Center for Accounting Education at Howard University. And they were working with our small businesses to help them along with their taxes.

Frank Tumminello (15:46.054)
That's fantastic. Yeah, I'm sure that's a huge help. I mean, when you're running a business, trying to grow, trying to hire employees, I mean, keeping up with the record certainly is probably not the most exciting part of any entrepreneur's day. I personally am a numbers guy, but I'm not sure that everyone is. Some folks are the exact opposite. So if you are, I suspect the last thing you want to do is go download QuickBooks perhaps and...

navigate that on your own without ever taking an accounting course. It could be a quite daunting situation. Yes, certainly.

Carl Brown (16:20.158)
Intimidating, intimidating. But you know, you hit on a point there about record keeping. So I invited the IRS and they actually reached out to me because they wanted to, you know, talk about and do a couple of workshops on record keeping for small businesses. So we did, we partnered with them because it was so important to them.

to get the word out that these small businesses have to really keep records if they want to write this stuff off. You got to be able to show that you have the record or the receipt, as they say, that can prove that you spent the money where you say you spent it or that you donated the money where you said you donated. So at the end of the day, you got all these receipts that...

that can help you with your taxes, okay? And they gave you secrets on how to keep the receipts and all this other stuff. So we're gonna have them come back and do some more webinars. And I'm gonna do like I did with you, have them on the radio show because it's just not in Washington, D .C., but it's all over the country. We gotta get the word out. You know the...

Frank Tumminello (17:41.03)
Certainly. There's a lot of tools out there that I think business owners don't have the time to investigate. A lot of vendors have similar looking websites and you know you're looking for something, but you're not sure you're looking exactly what you're looking for, what you should be paying for it. So having strategic guidance for folks who've kind of been there, done that with many, many businesses like you and your centers have, that makes a ton of sense. I guess that brings us to our next topic, which is kind of a little bit more...

Carl Brown (17:46.558)
Mm -hmm.

Frank Tumminello (18:11.078)
on on queue with file forms is just kind of compliance services. I mean, can you just kind of speak to outside of taxes themselves in your centers when someone's coming to, you know, form a business or get started or even just care for their their businesses compliance with the annual reports and the registered agent disclosures? Can you can you kind of speak to how, you know, your your centers help cater to that for for entrepreneurs?

Carl Brown (18:36.382)
absolutely. We, in addition to the IRS, we have another partnership with the Department of Licensing and Consumer Protection in Washington, D .C. And they are responsible for every corporation. If you go to file to get incorporated, you have to go through them. Then you get what is called a basic business license. All right.

and that thing has to be renewed annually. And we found that a lot again, a lot of these folks were not doing it. And that's why we have a strategic partnership with them because you have to file all of your reports through them. You have to keep your certificates up to date and your licenses. So if you're in a barbershop, you know, there's a certain license for that. If you...

You know, if you have a restaurant, there's a certain license for that. I mean, there's licenses for almost every and anything, and they have the complete comprehensive list of licensing and the fees that go along with it. Okay. So, and it's not free. This is not services provided by the DCSBDC. So you got to pay for all this stuff. And then if you are a government contractor,

you have to get from the Department of Licensing and Consumer Protection what is called a clean hand certificate. And that means that you are up to date on your taxes, that you are in compliance with the Department of Licensing. So in this combination, because obviously the Department of Taxation is a whole other department, so they work in tandem to ensure that, you know, what...

that you qualify for this clean hands. So if you're trying to do any kind of business in the district and you win a contract, before it's awarded, you gotta provide your clean hands certificate.

Frank Tumminello (20:43.686)
Sounds like quite a few boxes to check in order to kind of operate in DC. And I think, you know, I'm not sure if every business owner knows that when they're signing up for these opportunities.

Carl Brown (20:53.584)
yeah, yeah, they do because guess what? When I say strategic partnership, we have a presence in their office and they have a presence in mine. So we work well together. We actually, before the pandemic, we were doing monthly webinar, well, not webinars, but actual in -person workshops in their offices. And they set aside two,

computers in their offices just for us so that everyone who registered their business could go on their computers that they set aside for us and register for services with us right there in their offices. So that's what I'm, when I'm talking about strategic partnership, it's not a name only and maybe a MOU and a handshake and all that. I'm talking about resource development and all that.

Frank Tumminello (21:40.102)
Interesting.

Carl Brown (21:52.574)
I mean, if you really wanna work with these small businesses, help them out, get them to the next level, it's gotta be more than just on paper. It has to be real. And the other thing that I pride our office on is this. We get the word out to the other SBDCs around the country that these are some of the best practices right here.

Frank Tumminello (22:03.462)
Yep. Yep.

Carl Brown (22:21.566)
When you have a partnership, a strategic partnership with an agency like that, if you're sharing resources, and I mean, they have two computers, they give us office space, two ways. They give us their conference room to do the workshops, and they give us office space to do confidential counseling. Because sitting at a Starbucks is not confidential counseling, I'm sorry. Or sitting in their conference room is not confidential counseling, because anybody could walk in and again,

We pride ourselves on confidential counseling because like I said, it's nobody else's business but your own. You know, so.

Frank Tumminello (22:57.574)
Yeah, a lot of sensitive information around businesses, especially at kind of significant milestones, whether it's getting started or raising raising funding. So certainly makes sense to to kind of keep all that stuff confidential and get good guidance along the way. On the topic of compliance, BOI reporting is obviously something we talked about on your radio show, the Corporate Transparency Act. Was this something on your radar?

you know, previous to 2024? Or was this something that was relatively new as of this year?

Carl Brown (23:34.654)
no, no, no. This was on my radar two ways, because again, I would say early 23, because I actually had some folks come on and do a webinar for us on what we call Financial Fridays. And they did a webinar for us to do a brief discussion.

on it early on. But then we, you know, and then America's SBDC, we've been talking about it, you know, for the past two years. So it's been on my radar. And but I'm going to take some, Frank, you opened my eyes when you said those that filed after January one twenty four, they're on the hook. Ninety days later.

I didn't know that. I mean, I really didn't because I was focused on everything before 2024. And so I told everybody, hey, you got to, well, I was saying December 31st, 24, but you know, really, I was saying to everybody, look, you got to get this thing in. Don't wait, you know, don't, don't wait, don't hesitate. So, and then when you...

when you opened my eyes about it, we've been, my social media is like flooded now with BOI reporting requirements, you know, because we have to get the word out. And, you know, I'm like the little guy in the forest screaming, you know, hey, you gotta get this report done or else it's 591 a day and there's no forgiving.

And they're not going to forget about you either. And I don't know about you, but I read the headline. I'm going to read the article later on tonight, but I read a headline today that said the IRS is letting people know that a lot of people are going to be sued in this year. I'm like, whoa. And that was just the headline. So I can't wait to dive deep into that and find out what's going on. What is this all about? But you know, it's...

Carl Brown (26:03.39)
Right. Right.

Carl Brown (26:28.382)
yeah.

Carl Brown (26:45.374)
No, they don't. They don't.

Carl Brown (26:59.774)
Frank, you know how they get, they're gonna start paying attention when people are fine.

Yeah, me too. I swear to God. I mean, that's why, you know, that's why I'm gonna have you on the show again. I talked about it, you know, I just did a show a little while ago. I did another 15 minutes just on that. And, you know, I was like, look, folks, you gotta pay attention because if you incorporated, you formed your business.

since January of 24, you're already on the hook for the 591 a day. Already on the hook, because it's past 90 days. So, and you know, small businesses are not paying attention. And it's like, I'm looking for other folks to get on the train to say, hey, don't forget that this is due.

And there's very little information on various government websites that I thought it would be on. You know?

Carl Brown (28:57.758)
Frank, that's when people gonna find out. When they start handing down these fines, and that's gonna be like shortly. For the 2024 people, that's gonna be shortly. And so maybe by the summertime, folks will start paying attention because they're gonna hear about these BOI fines or not reporting.

Carl Brown (29:44.926)
Right.

Carl Brown (29:58.462)
That's a day -long process right there, man.

Carl Brown (30:54.974)
Well, you know, I can tell you this, man.

send me some, send me a flyer and I'll send it out to all of my database because we have got to get the word out. Small businesses really can't take another hit. I'm talking to small business owners that haven't recovered from the pandemic. And I don't know about, you know, New York. I mean, well, I do know about New York. I'm gonna tell you.

The amount of retail space available in New York City is just unimaginable. Because as a little, you know, growing up in New York City, I mean, it was, there was every kind of store on every block. I mean, it was, I don't think there was any retail space really open and available. And now you can go blocks and see like the corner store is open and the next five are vacant. And it's...

Two reasons, you know, a lot of people are not coming back into the city. They're working from home wherever their home is, whether it's Long Island or Jersey or whatever, Connecticut or whatever. They're not coming into the city like they used to. And then the rents were killing people as well. I mean, we got, I talked to a buddy of mine today, I talked to him on Monday. And,

His restaurant was, he used to just celebrate 22 years, but the rent is proposed to go up more than double. So he's closing his doors. He can't afford the rent that they're trying to charge. Couple that with the fact that the people that used to visit his restaurant on a regular basis, no longer work in the city. They work out of their homes.

Carl Brown (32:57.95)
So retail has taken a hit. Small businesses have taken a hit. Restaurants have taken a hit. So we're in a bubble right now and we can't afford to be paying these large fines that are about to come up. And I'm saying that from a small business perspective. And the word is not getting out. So if you're making the donuts,

you're not really paying attention to somebody talking about a report that you know nothing about. You know about your taxes, but this new report, you don't understand it, you don't know what it means, you don't know why. But as you pointed out, Frank, very eloquently, why it's needed, and that word isn't getting out there.

So I'm gonna do as much as I can and all that I can to help our small businesses be notified.

Carl Brown (35:01.47)
Yeah, Frank, you just gave me a hell of an idea, man. We're going to put on our landing page the information about BOI. But I would also say and suggest that, you know, maybe you talked to T about getting the word out to all of the other SBDCs because we collectively have hundreds of thousands of clients and about putting the information on their landing pages as well. I mean, that to me is...

When you hit our page, the first thing you should see is, are you prepared or have you filed your BOI report? And then, you know, we can start that conversation. But again, I'm gonna have you come back on my show because we got to get the word out. And I can tell you, man, it was a hell of a show. I was listening to it yesterday and it was a hell of a show. So, yeah, I'm gonna send you a copy of that, man, because...

And you, you know, edit it, do whatever you need to do, but get it out there. Cause it was a hell of a show and I really, really appreciate you coming on. And you know, I'm a guy that's about it. You know, I'm not one of these guys that talks. And when I met you, I said, hey man, I'm gonna have you on my show. And I meant it and we were on the show, we did the show. The show is out in the public domain now. You know, so we...

You know, we got a partnership, man. I really appreciate you, Frank, and I really, really appreciate T for introducing us. And, you know, because you bring a lot to the table, you know, file forms, you know, you guys are doing your thing, and we need you. And small businesses need you. Because we're not good at doing these form things. You know, as a small business owner myself, I'm telling you.

You know, I'm not good at receipts and all that, but I got it, you know, and I got inside information. So the people that don't have that, man, they lost in the wilderness. I'm the guy talking to the IRS. I'm talking to you. And I'm not good at it, you know? So, and I'm not making donuts every day, you know? I'm not running a five -star restaurant, you know, that these people are, you know?

Carl Brown (37:17.854)
So it's a little different for me, but yeah, it's only 24 hours in a day too. So when I get a receipt, I got a little bag and I stick them all in the bag. And at the end of the year, me and my accountant go through it. And I mean, he is one hard cookie. Because he's not putting his name on nothing that he can't stand behind. And I've had this guy since 1988, okay? So yeah, so we...

We're partners at this point in time, so yeah.

Carl Brown (38:25.95)
Thank you, Frank. Bye bye.