Corporate Transparency Act: What NYC Small Businesses Need to Know in 2026

The Corporate Transparency Act represents one of the most significant federal regulatory changes to affect small businesses in recent years. Enacted as part of the Anti-Money Laundering Act of 2020, the CTA requires millions of companies across the United States to report information about their beneficial owners to the Financial Crimes Enforcement Network, a bureau of the U.S. Department of the Treasury. For the hundreds of thousands of small businesses operating in New York City, including LLCs, corporations, and other entities, understanding and complying with the CTA's requirements is now an essential part of business ownership.

The CTA's Beneficial Ownership Information reporting requirements have generated significant confusion and uncertainty among business owners, particularly regarding who must file, what information must be reported, the applicable deadlines, and the consequences of non-compliance. This guide provides clear, practical guidance for NYC small business owners navigating this new federal regulatory obligation.

What Is the Corporate Transparency Act?

The Corporate Transparency Act was enacted by Congress in January 2021 to combat the use of anonymous shell companies for money laundering, terrorism financing, tax fraud, and other illicit financial activities. Prior to the CTA, it was relatively easy to form a company in the United States, including in New York, without disclosing the identities of the individuals who ultimately owned or controlled that entity. Criminal organizations exploited this anonymity to move money, evade sanctions, and conceal the proceeds of illegal activity behind layers of anonymous corporate structures.

The CTA addresses this gap by requiring certain companies, referred to as reporting companies, to file reports with FinCEN identifying their beneficial owners. FinCEN maintains the reported information in a secure, non-public database known as the Beneficial Ownership Secure System, or BOSS. Access to the database is restricted to authorized users including federal, state, and local law enforcement agencies investigating financial crimes, financial institutions conducting customer due diligence under the Bank Secrecy Act, and certain federal agencies for national security and intelligence purposes. The beneficial ownership information is not publicly available and is subject to strict confidentiality protections, access controls, and penalties for unauthorized disclosure.

Who Must File a BOI Report?

The CTA applies broadly to reporting companies, which are defined as any corporation, limited liability company, or other entity that is created by filing a document with a secretary of state or similar office under the law of a state or Indian tribe. This includes virtually every LLC formed by filing Articles of Organization with the New York Department of State (which also triggers the LLC publication requirement) and every corporation formed by filing a Certificate of Incorporation. The definition also includes foreign entities, meaning entities formed under the laws of a foreign country that have registered to do business in New York or any other state by filing a registration document.

The practical scope of this definition is enormous. If you formed your business by filing any organizing document with the New York Department of State, your company is almost certainly a reporting company under the CTA unless it qualifies for one of the statutory exemptions.

Key Exemptions

The CTA provides twenty-three categories of entities that are exempt from the BOI reporting requirement. The exemptions most relevant to NYC businesses include the following.

The large operating company exemption applies to entities that satisfy all three of the following criteria: the company employs more than twenty full-time employees in the United States, the company filed a federal income tax return for the previous year reporting more than five million dollars in gross receipts or sales, and the company has an operating presence at a physical office within the United States. All three conditions must be met simultaneously. A company with fifty employees but only three million dollars in revenue would not qualify.

Entities already subject to substantial federal or state regulation and reporting are also exempt, including banks, credit unions, money services businesses registered with FinCEN, securities broker-dealers registered with the SEC, registered investment advisers, insurance companies licensed by a state, and accounting firms registered with the PCAOB, among others. Tax-exempt entities recognized under Section 501(c) of the Internal Revenue Code are exempt, as are certain inactive entities that were in existence before January 1, 2020, are not engaged in active business, have no foreign ownership, have not changed ownership in the past twelve months, have not sent or received more than one thousand dollars in the past twelve months, and hold no assets.

For most small and medium-sized businesses in New York City, including restaurants, retail shops, professional practices, consulting firms (see our guide to starting a business in NYC), real estate holding companies, technology startups, and service businesses, no exemption will apply and a BOI report must be filed with FinCEN.

What Information Must Be Reported?

Company Information

The BOI report must include the company's full legal name as registered with the state, any trade names or doing-business-as names, the current street address of the company's principal place of business in the United States, the state or tribal jurisdiction of formation or registration, and the company's Taxpayer Identification Number, which is typically the Employer Identification Number assigned by the IRS.

Beneficial Owner Information

For each beneficial owner of the reporting company, the report must include the individual's full legal name, date of birth, complete current residential street address (not a P.O. Box), and an identifying number from one of the following acceptable documents: a valid U.S. passport, a state-issued driver's license, a state-issued identification card, or for individuals without any of these, a valid foreign passport. An image of the identifying document must be uploaded with the report.

A beneficial owner is defined as any individual who directly or indirectly exercises substantial control over the reporting company, or who directly or indirectly owns or controls at least twenty-five percent of the ownership interests of the company. Substantial control is defined broadly and includes any individual who serves as a senior officer of the company, including the president, CEO, CFO, COO, general counsel, or any other officer who performs a similar function. It also includes any individual who has the authority to appoint or remove any senior officer or a majority of the board of directors, any individual who directs, determines, or has substantial influence over important decisions made by the company, and any individual who has any other form of substantial control over the company. Important decisions include the nature and scope of the business, the selection of major business lines, amendments to governance documents, significant contracts, compensation of senior officers, and similar matters.

In practice, this means that for a typical NYC small business structured as an LLC with one or two managing members, the managing members are beneficial owners. For a corporation, the CEO, CFO, and any shareholder owning twenty-five percent or more are beneficial owners. For a multi-layered ownership structure, the analysis must trace through each entity to identify the ultimate individual beneficial owners.

Company Applicant Information

For reporting companies created on or after January 1, 2024, the BOI report must also include information about the company applicant. The company applicant is the individual who directly files the formation document with the state and, if different, the individual who is primarily responsible for directing or controlling the filing. This typically means the attorney, paralegal, or formation service agent who prepared and submitted the Articles of Organization or Certificate of Incorporation. The same personal information required for beneficial owners must be provided for each company applicant.

Filing Deadlines and Enforcement Status

The CTA's implementation has been subject to legal challenges that have affected the enforcement timeline. The original deadlines established by FinCEN required existing companies formed before January 1, 2024, to file their initial BOI report by January 1, 2025. Companies formed during 2024 were required to file within ninety days of formation. Companies formed on or after January 1, 2025, are required to file within thirty days of receiving notice of formation.

Ongoing Reporting Obligations

The CTA is not a one-time filing requirement. Reporting companies have an ongoing obligation to keep their beneficial ownership information current with FinCEN. If any previously reported information changes, the company must file an updated BOI report within thirty days of the change. Events that trigger an update obligation include a change in beneficial ownership due to the sale or transfer of ownership interests, admission of a new member or partner, appointment or departure of a senior officer, a change in a beneficial owner's name, residential address, or identifying document, and a change in the company's legal name, address, or other reported company information.

If the company discovers that a previously filed report contained inaccurate information, a corrected report must be filed within thirty days of becoming aware of the inaccuracy. For NYC businesses that experience frequent ownership changes, officer appointments, or address changes, maintaining a system to track these events and ensure timely updated filings is essential.

Penalties for Non-Compliance

The penalties for CTA non-compliance are substantial and include both civil and criminal sanctions. Civil penalties of up to five hundred dollars per day may be imposed for willful failure to file a required BOI report, willful filing of false or fraudulent beneficial ownership information, and willful failure to file required updates or corrections. Criminal penalties include fines of up to ten thousand dollars and imprisonment for up to two years for knowing violations. Senior officers of a reporting company may be held personally liable for the company's failure to comply with the reporting requirements.

Additionally, any person who knowingly discloses or uses beneficial ownership information obtained from FinCEN for unauthorized purposes faces penalties of up to five hundred dollars per day and up to five years of imprisonment. These penalties apply to government officials, financial institution employees, and any other person who gains access to the secure database.

Practical Compliance Steps for NYC Business Owners

If you own or manage a small business in New York City, the following practical steps will help you navigate CTA compliance efficiently. First, determine whether your company is a reporting company under the CTA and evaluate whether any of the twenty-three statutory exemptions applies to your entity. For most small NYC businesses, no exemption will be available. Second, identify all beneficial owners of the company by applying both the substantial control test and the twenty-five percent ownership test described above. Remember that individuals can qualify as beneficial owners through substantial control alone, even if they own no equity in the company.

Third, collect the required information from each beneficial owner, including their full legal name, date of birth, current residential address, and a clear image of an acceptable identification document such as a passport or driver's license. Beneficial owners can simplify this process by obtaining a FinCEN Identifier, which is a unique identifying number issued by FinCEN that can be used in place of the individual's personal information on the BOI report. Fourth, file the BOI report through FinCEN's online filing portal at boiefiling.fincen.gov. There is no filing fee. The system guides you through the report step by step and allows you to save a draft before final submission. Fifth, establish an internal process for monitoring any changes to beneficial ownership or company information and for filing updated reports with FinCEN within the required thirty-day window.

Impact on Common NYC Business Structures

Single-Member LLCs

If you are the sole owner and manager of an LLC, you are the beneficial owner based on both the ownership percentage test and the substantial control test. Your BOI report will list you as the sole beneficial owner.

Multi-Member LLCs and Partnerships

Each member who owns twenty-five percent or more of the LLC is a beneficial owner under the ownership test. Any managing member or manager who exercises substantial control is a beneficial owner regardless of their ownership percentage. In a two-member LLC with equal fifty-fifty ownership, both members are beneficial owners.

Real Estate Holding Companies

LLCs and corporations used to hold real estate in NYC are reporting companies and must file BOI reports. This is particularly significant given the widespread use of LLCs for real estate ownership in New York. The analysis must trace through any layered ownership structures to identify the ultimate individual beneficial owners.

Professional Corporations and PLLCs

Professional corporations and professional limited liability companies formed by attorneys, physicians, accountants, architects, and other licensed professionals are reporting companies. The licensed professionals who own and control these entities are beneficial owners and must be identified in the BOI report.

Frequently Asked Questions

How Agarunov Law Firm Can Help

Agarunov Law Firm assists NYC businesses with Corporate Transparency Act compliance, including determining whether your company is a reporting company, identifying all beneficial owners, preparing and filing your initial BOI report, establishing systems for ongoing compliance and timely updated filings, and providing guidance on the interaction between the CTA and your other business compliance obligations. We also assist with LLC formation, corporate governance, and general business counsel for companies throughout New York City and New Jersey. Contact us for a free consultation to discuss your CTA compliance needs or any other business law matter.