Beneficial ownership requirements vary by state, with specific regulations in New York, D.C., Massachusetts, California, Maryland, and South Dakota. These are intended to help ensure transparency and compliance in disclosing individuals with significant control or ownership in businesses.
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Note: As of December 3, 2024, a federal court temporarily paused enforcement of the Corporate Transparency Act, which requires businesses to report their beneficial ownership information to FinCEN. Although not mandatory, FinCEN is still accepting beneficial ownership filings. You can learn more about the current status of the beneficial ownership information (BOI) report on our BOI Report Requirements Timeline.
Understanding beneficial ownership reporting requirements is crucial for businesses looking to comply with federal and state transparency laws. The beneficial ownership information reporting rule established by the Financial Crimes Enforcement Network (FinCEN) mandates that companies provide detailed reporting of the company’s beneficial ownership information to enhance transparency and prevent misuse of corporate structures in financial dealings. Enforcement of beneficial ownership reporting is currently blocked at the federal level, but this ruling doesn’t apply to individual states’ beneficial owner reporting.
These regulations, introduced by the Corporate Transparency Act (CTA), are part of a broader effort to curb illegal activities like money laundering by requiring businesses to disclose key information about those with significant control or ownership stakes.
While federal regulations cover most of the basics, a number of states have their own state-specific requirements, making it essential for businesses to stay informed and compliant with these variations.
In addition to the federal requirements under the Corporate Transparency Act, several states have introduced their own legislation mandating the reporting of beneficial ownership information to state business entity filing offices. Currently, New York, the District of Columbia, Massachusetts, South Dakota, California, and Maryland have all introduced or passed legislation for BOI reporting at the state level.
New York’s LLC Transparency Law requires businesses to disclose beneficial ownership information, specifically for individuals with significant control or financial interests. This law is designed to promote transparency within corporate structures, making it harder for anonymous entities to operate within the state.
For New York LLCs, this law means periodic updates to report any changes in beneficial ownership. As with the federal requirement, businesses need to update information when there are changes in ownership or control. This ongoing reporting helps the state maintain an accurate record of who is involved in each LLC. To remain compliant, New York businesses should familiarize themselves with the NY LLC Transparency Act and the state’s beneficial ownership reporting requirements. Staying current with filings minimizes the risk of penalties or missed deadlines. The requirements are nearly identical to the federal ones, including due dates.
In Washington, D.C., beneficial ownership reporting requirements are outlined under the District of Columbia Code Sections 29–102.01 and 29–102.11. These sections require LLCs and corporations to report individuals who hold ownership stakes or control interests in the business, setting ownership thresholds that trigger reporting obligations.
The exact specifics of what constitutes a beneficial owner vary a bit from the federal definition, though. In D.C., a beneficial owner is someone who holds more than 10% of the company’s ownership interest or has substantial control over the business’s finances or day-to-day operations. This information needs to be filed in your company formation documents and in your D.C. biennial report. If the required beneficial ownership information for D.C. LLCs or corporations changes between filing periods, you’ll need to file Articles of Amendment to stay compliant.
Massachusetts introduced its own version of beneficial ownership reporting through House Bill 3566. This bill, if passed into law, would mandate that business entities disclose detailed information about individuals with ownership or control interests in the business, aligning state requirements with federal transparency goals. In fact, Massachusetts would allow you to file a copy of your federal beneficial ownership information form to satisfy the state requirement.
Currently, the beneficial ownership information report requirements in Massachusetts match federal ones, but business owners should keep an eye on state-specific guidelines to ensure that they remain compliant.
Under recent amendments brought on by South Dakota House Bill 1189, certain South Dakota businesses need to make disclosures about their owners. These rules apply specifically to business entities that own agricultural land; these businesses have to disclose any foreign beneficial owners that they have.
State statutes also make provisions that allow filing entities to include disclosure about their beneficial owners in their annual reports if they wish. This state disclosure is voluntary. Keep in mind that voluntary disclosures about your beneficial owners — if you choose to make them — don’t excuse you from federal BOI reporting obligations. Please make sure you uphold those requirements.
In early 2024, California introduced Senate Bill 1201, a new set of rules expanding BOI reporting requirements at the state level. If Bill 1201 is passed into law, the state beneficial ownership law would go into effect starting on January 1, 2026; until then, only the federal BOI reporting requirements apply.
Under the new law, California would require LLCs and corporations to file an initial report that includes the name and business or residential address of each beneficial owner. Businesses would also need to provide this information annually.
California’s definition of a beneficial owner matches the federal one: a beneficial owner is anyone who holds 25% or more of the ownership interest or exercises substantial control over the business. These definitions are, of course, subject to change, so if the bill went into effect, you’d need to keep an eye on California’s business resources to ensure that you don’t overlook filing requirements.
Maryland’s Senate Bill 954 was proposed in early 2024, but it’s still in committee (as of this writing), so it hasn’t become a law yet. If Bill 954 is passed into law, Maryland will be requiring reporting companies to disclose information about their beneficial owners at the state level as well as the federal level.
The state bill mirrors a lot of the federal BOI filing requirements. In Maryland, a beneficial owner is anyone who exerts substantial control or holds at least 25% of the ownership interest in a reporting company. For each beneficial owner, a reporting company will be asked to provide a name, address, and identifying document.
That said, this Maryland law would require all registered entities to file this information within 30 days of receiving notice that your business registration was accepted. If any of your beneficial ownership information changes, you’d need to file an amended report within 30 days as well.
Managing compliance with state-specific BOI rules and regulations can be challenging, especially for businesses operating across multiple states. Here are practical tips to help keep up with these evolving requirements:
Beneficial ownership reporting is a growing focus for states across the U.S., and complying with these requirements can seem daunting. By following state-specific guidelines, setting reminders, and using compliance tools, businesses can meet BOI filing requirements and stay compliant with both state and federal regulations.
Filing your BOI report is currently optional. We’re here to help you file securely and accurately if you choose to file.
Beneficial ownership information reporting is a crucial component of the Corporate Transparency Act, designed to enhance transparency in business ownership and prevent the misuse of anonymous shell companies for illegal activities. Under this act, FinCEN mandates that reporting companies file beneficial ownership information reports. These reports must include personally identifiable information of beneficial owners, such as names, addresses, an acceptable photo ID, and an ID number matching that ID.
The BOI requirement applies to a large number of small businesses in the U.S., especially LLCs, corporations, and other businesses that were created or registered with a Secretary of State or similar office. These businesses are required to report beneficial ownership information electronically via a secure filing system on FinCEN’s website.
There are some businesses that are exempt, such as publicly traded corporations, which have to register with the U.S. Securities and Exchange Commission (SEC). By requiring the accurate reporting of beneficial ownership information, the CTA aims to reduce financial crimes.
The beneficial ownership information reporting rule established by FinCEN mandates that certain business entities report the company’s beneficial ownership information, identifying individuals who have significant control or ownership in the company. This rule is part of broader efforts to enhance transparency, combat money laundering, and reduce financial crimes by making it harder for illegal actors to use shell corporations to hide illicit activities. Companies that fall within these guidelines must submit beneficial ownership details to maintain compliance with federal and state regulations.
Certain entities are exempt from the requirement to report beneficial ownership information to FinCEN, often because they are already subject to similar transparency rules with other regulator agencies. For example, exemptions often apply to larger entities like publicly traded companies, regulated financial institutions, and other federally regulated organizations. These exemptions typically recognize that these entities are already required to provide ownership and operational details under other regulatory frameworks.
To determine if you need to file a BOI report, consider your business’s structure, location, and ownership. Generally, if you run an LLC or corporation or another business type that requires registration with a Secretary of State (or similar office), then you’ll need to file a BOI report. The Financial Crimes Enforcement Network does allow for some exemptions under the terms of the Corporate Transparency Act, so if you think you might be exempt, consult the FinCEN website.
Keep in mind that state-specific BOI regulations don’t always match federal BOI requirements. If your state requires a BOI report, please consult with your state business resources for complete guidance. And remember that a state BOI filing doesn’t exempt you from a federal one, or vice versa.
The beneficial ownership report was introduced on the federal level, going into effect on January 1, 2024. This report includes detailed information on anyone with significant control or ownership within the business, including names, addresses, and identification details. Updated regulations emphasize the importance of accurate, up-to-date reporting to support both federal and state transparency goals.
At the federal level, your BOI report due date depends on when you started your business. Reporting companies created prior to January 1, 2024, have until January 1, 2025, to file. Businesses started during 2024 have 90 days after they receive actual or public notice that their business formation documents have been accepted. Finally, a reporting company created on or after January 1, 2025, will have 30 days after their company’s creation to file their reports.
If your state requires limited liability companies or corporations to file a BOI report at the state level, the due dates will vary. Consult your state government for the most up-to-date guidelines.
Despite the deadlines listed in the CTA, filing your BOI report is currently optional. We’re here to help you file securely and accurately if you choose to file.
Recommended: Corporate Transparency Act deadlines
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
Written by Team ZenBusiness
ZenBusiness has helped people start, run, and grow over 700,000 dream companies. The editorial team at ZenBusiness has over 20 years of collective small business publishing experience and is composed of business formation experts who are dedicated to empowering and educating entrepreneurs about owning a company.
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