Beneficial Ownership Reporting: What Each State Requires
Stay ahead of these requirements and ensure your business complies with the varying requirements in each state.
FinCEN has mandated the filing of Beneficial Ownership Information (BOI) at the federal level. Many states have begun implementing their own BOI reporting requirements tailored to their specific regulations. As these state-level requirements continue to evolve, businesses should stay informed about the changes and ensure compliance. This blog provides a heads-up on the ongoing changes. For more details, you can explore each state’s specific BOI requirements.
District of Columbia
Since January 1, 2020, the District of Columbia has required beneficial ownership reporting for all entities formed or registered to do business in the District. With the passing of the Federal Corporate Transparency Act, certain types of entities will now also need to report beneficial ownership information to FinCEN.
In DC, the collection of beneficial ownership information is integrated into both the initial formation/registration process and the biennial reporting process, which all entities must file periodically to maintain active status in the District. If an entity’s beneficial ownership changes between biennial reports, the entity should file an amendment to update this information.
The District of Columbia defines a beneficial owner as a person whose aggregate share of direct or indirect, legal, or beneficial ownership of governance or total distributional interest of the entity:
- Exceeds 10%; or
- Does not exceed 10%, provided that the person:
- Controls the financial or operational decisions of the entity, or
- Has the ability to direct the entity’s day-to-day operations.
FinCEN defines a beneficial owner as an individual who either directly or indirectly:
- Exercises substantial control over the reporting company, or
- Owns or controls at least 25% of the reporting company’s ownership interests.
California
The bill, introduced on February 15, 2024, establishes new requirements and authorizations related to beneficial ownership reporting and associated fees for corporations and limited liability companies (LLCs) in California.
By January 1, 2026, domestic and foreign corporations and LLCs will need to include the names and addresses of any beneficial owners in their annual or biennial statements filed with the Secretary of State. The bill also lets the Secretary of State raise filing fees to cover the costs of these new reporting rules. Any amount over $1 million from these fees will be allocated to the state’s General Fund.
New York
On March 1, 2024, New York’s Governor signed Senate Bill 8059, mandating that all LLCs formed under New York law or formed elsewhere and registered to do business in New York to file either a beneficial ownership disclosure or an attestation of exemption with the New York Department of State. Under the NY LLCTA, an exempt LLC must submit an attestation of exemption within 30 days of its formation or qualification to do business in New York.
Due dates for filings:
Initial reports — LLCs formed or qualified to do business in New York on or after January 1, 2026, must comply with the new reporting requirements within 30 days. For LLCs formed or qualified before January 1, 2026, the deadline to comply is one year (January 1, 2027).
Annual reports — Reporting companies must submit an annual statement after filing the initial beneficial ownership disclosure to confirm or update their beneficial ownership information, the street address of their principal office, their status as an exempt company (if applicable), and any other information specified by the New York Department of State.
Corrected reports — Corrected reports can be filed within 90 days of the original beneficial ownership submission.
To learn more, visit New York LLC Transparency Law (NY LLCTA)
Maryland
The bill was introduced on February 2, 2024, and mandates that certain business entities must submit a report to the State Department of Assessments and Taxation, including detailed information about beneficial owners. It also prohibits the public inspection of these reports and requires entities to file an amended report with the department within 30 days of any changes.
Wrapping Up
The environment of Beneficial Ownership Information (BOI) reporting is rapidly evolving, with both federal and state-level requirements coming into play. As FinCEN’s federal mandate takes hold, states like the District of Columbia, California, New York, and Maryland are introducing their own specific BOI reporting obligations. It’s important for businesses to stay ahead of these changes and ensure they comply with the varying requirements in each state.
