In case you personal a contract enterprise that was shaped in New York State, you are actually formally required to report details about what you are promoting possession and extra at each the state and the federal level. It’s because as of January 1, 2024, the federal authorities has enacted the Company Transparency Act (CTA). and starting January 1, 2026, New York State is introducing its personal model of the Act.
As a refresher on the federal CTA, which was simply launched late final 12 months, efficient January 1, 2024, all firms, S-Corps, LLCs or another entity created by paperwork filed with a Secretary of State workplace should file a report of their useful possession data. This can be a enterprise submitting that’s not associated to tax filings in any means and just some states have chosen to introduce their very own model of the Act along with the federal one.
Being one of many states that’s enacting its personal CTA, as of January 1, 2026 (The earliest reporting date together with entities shaped on or after that date, and January 1, 2027, for entities shaped or certified previous to January 1, 2026.), all New York State companies (shaped in New York State or doing enterprise in it) which might be Restricted Legal responsibility Corporations should adjust to the New York Restricted Legal responsibility Company Transparency Act (NY LLCTA) and its Useful Possession Info Reporting Rule (Reporting Rule).
The Reporting Rule below the federal CTA requires that you simply add your data to a federal database. This database will change into a compilation of the data of the homeowners of the overwhelming majority of small companies and different organizations in america. The Reporting Rule is separate from tax return filings with draconian penalties for non-compliance. You possibly can learn extra concerning the particulars of the federal CTA in our earlier publish.
The New York State Restricted Legal responsibility Company Transparency Act vs. the Federal Company Transparency Act
New York State freelance enterprise homeowners whose companies have been shaped or do enterprise in NYS should confidentially report their particular person useful proprietor data to the New York Division of State (NYDOS). The earliest reporting date might be January 1, 2026, for entities shaped on or after that date, and January 1, 2027, for entities shaped or certified previous to January 1, 2026.
Info reported to the New York State Division of State is not going to be accessible to the general public. It will likely be saved in a personal database accessible solely to federal and state legislation enforcement businesses. The New York LLC Transparency Act (NY LLCTA) will change into efficient as of January 1, 2026, and would require restricted legal responsibility corporations (LLCs) shaped, or certified to do enterprise, within the state of New York to reveal particular person useful proprietor data to the New York Division of State (NYDOS).
Not like the federal CTA which applies to nearly each enterprise kind, the NY LLCTA regulation solely applies to LLCs shaped, or certified to do enterprise, in New York.
Due Dates and Deadlines for New York State Restricted Legal responsibility Company Transparency Act Filings
Below the NY LLCTA, LLCs shaped, or certified to do enterprise, in New York on or after January 1, 2026, could have 30 days to adjust to the brand new reporting necessities. LLCs shaped or certified previous to January 1, 2026, could have till January 1, 2027, to conform.
Annual statements are additionally required below the NY LLCTA that requires that after an preliminary useful possession disclosure has been filed, all reporting corporations should file an annual assertion to substantiate or replace the useful possession disclosure data, in addition to the road deal with of the primary workplace location and its standing as an exempt firm. , if relevant, and such different data as could also be designated by the New York Division of State. In distinction, below the federal CTA up to date reviews for modifications to firm data should be filed inside 30 days.
If a report filed below the NY LLCTA wants correction, it should be filed inside 90 days of the submission of useful possession data. The federal CTA requires corrections be filed inside 30 days of the error being found.
There may be additionally an exemption process for the NY LLCTA if an LLC meets any of the exemptions for reporting below the federal CTA. Nonetheless, not like the federal CTA, an exempt entity is just not routinely alleviated of the reporting necessities for the NY LLCTA. As an alternative, the LLC should file an attestation of exemption with the New York State Division of State (NY DOS).
Failure to file the attestation is taken into account below penalty of perjury, inside 30 days of the LLC’s formation or qualification to do enterprise in New York.
In case you have got privateness issues, all data regarding useful homeowners who’re pure individuals collected by the NY DOS might be maintained in a safe database and is confidential, topic to restricted exceptions by written request of, or by voluntary written consent of the useful proprietor. (As initially proposed, the data would have been accessible to the general public.) The data within the database is accessible to federal, state and native governmental businesses below sure circumstances.
Particulars on the New York State Restricted Legal responsibility Company Transparency Disclosure Necessities
Below the NY LLCTA, an LLC is required to file a useful possession disclosure with the New York State Division of Justice, figuring out every applicant and useful proprietor by the individual’s full authorized identify, date of start, present house or enterprise road deal with and a novel figuring out quantity from a legitimate identification doc.
The NY LLCTA 1) requires firm applicant disclosure for LLCs shaped or certified previous to the January 1, 2026. That is in distinction to the federal CTA, which specifies:
- Firm applicant disclosure just for entities shaped or registered as of the January 1, 2024, efficient date and going ahead.
- Candidates and useful homeowners might present a house or enterprise deal with (moderately than requiring a enterprise deal with be given).
- A duplicate of a legitimate identification doc be included with the disclosure submitting.
Penalties Assessed Below the NY LLCTA
The potential penalties for non-filing of a New York Restricted Legal responsibility Firm Transparency Act are important and will even shut down your freelance enterprise! A reporting firm in New York State that fails to file its useful possession disclosure or proof of exemption eligibility (that’s granted) could also be suspended from doing enterprise in New York till the state’s Useful Possession Info is submitted.
Get Skilled Recommendation to Keep away from Hefty Penalties for Your Freelance Business Below the NY LLCTA
The fines for a reporting firm that fails to file its useful possession disclosure or attestation of exemption, or annual assertion 1) for greater than 30 days is proven to be late on the NY DOS data and a pair of) for greater than two years is proven to be delinquent on the NY DOS data. The New York Lawyer Normal might assess a high quality of as much as $500 per day for every day that the corporate has been late or delinquent. Late or delinquent standing will be resolved by making the submitting, cost of a $250 high quality and verification from the Lawyer Normal that any penalties imposed have been paid.
The NY LLCTA and the CTA and Useful Possession submitting are necessary for many freelance LLC companies and non-compliance might end in important fines of $500 per day (as much as a maximum of $10,000 per violation) and as much as two years imprisonment on the federal level and The New York Lawyer Normal might institute a high quality of as much as $500 per day for every day that the corporate has been late or delinquent in submitting their report on the state level.
The easiest way to find out and care for your reporting necessities for the CTA is to talk with a New York State tax skilled. You possibly can assessment extra data right here. Please bear in mind that one of these advisory engagement is a separate submitting along with any tax submitting or preparation charges.