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New Corporate Transparency Act for New York State Requires Freelance Business Owners to File Additional Information

If you own a freelance business that was formed in New York State, you are now officially required to report information about your business ownership and more at both the state and the federal level. This is because as of January 1, 2024, the federal government has enacted the Corporate Transparency Act (CTA). and beginning January 1, 2026, New York State is introducing its own version of the Act.

As a refresher on the federal CTA, which was just introduced late last year, effective January 1, 2024, all corporations, S-Corps, LLCs or any other entity created by paperwork filed with a Secretary of State office must file a report of their beneficial ownership information. This is a business filing that is not related to tax filings in any way and only some states have chosen to introduce their own version of the Act in addition to the federal one.

Being one of the states that is enacting its own CTA, as of January 1, 2026 (The earliest reporting date including entities formed on or after that date, and January 1, 2027, for entities formed or qualified prior to January 1, 2026.), all New York State businesses (formed in New York State or doing business in it)  that are Limited Liability Companies must comply with the New York Limited Liability Corporate Transparency Act (NY LLCTA) and its Beneficial Ownership Information Reporting Rule (Reporting Rule).

The Reporting Rule under the federal CTA requires that you add your information to a federal database. This database will become a compilation of the information of the owners of the vast majority of small businesses and other organizations in the United States. The Reporting Rule is separate from tax return filings with draconian penalties for non-compliance. You can read more about the details of the federal CTA in our previous post. 

The New York State Limited Liability Corporate Transparency Act vs. the Federal Corporate Transparency Act 

New York State freelance business owners whose businesses were formed or do business in NYS must confidentially report their individual beneficial owner information to the New York Department of State (NYDOS). The earliest reporting date will be January 1, 2026, for entities formed on or after that date, and January 1, 2027, for entities formed or qualified prior to January 1, 2026.

Information reported to the New York State Department of State will not be accessible to the public. It will be stored in a private database available only to federal and state law enforcement agencies. The New York LLC Transparency Act (NY LLCTA) will become effective as of January 1, 2026, and will require limited liability companies (LLCs) formed, or qualified to do business, in the state of New York to disclose individual beneficial owner information to the New York Department of State (NYDOS). 

Unlike the federal CTA which applies to virtually every business type, the NY LLCTA regulation only applies to LLCs formed, or qualified to do business, in New York.

Due Dates and Deadlines for New York State Limited Liability Corporate Transparency Act Filings

Under the NY LLCTA, LLCs formed, or qualified to do business, in New York on or after January 1, 2026, will have 30 days to comply with the new reporting requirements. LLCs formed or qualified prior to January 1, 2026, will have until January 1, 2027, to comply.

Annual statements are also required under the NY LLCTA that requires that once an initial beneficial ownership disclosure has been filed, all reporting companies must file an annual statement to confirm or update the beneficial ownership disclosure information, as well as the street address of the main office location and its status as an exempt company. , if applicable, and such other information as may be designated by the New York Department of State. In contrast, under the federal CTA updated reports for changes to company information must be filed within 30 days.

If a report filed under the NY LLCTA needs correction, it must be filed within 90 days of the submission of beneficial ownership information. The federal CTA requires corrections be filed within 30 days of the error being discovered. 

There is also an exemption procedure for the NY LLCTA if an LLC meets any of the exemptions for reporting under the federal CTA. However, unlike the federal CTA, an exempt entity is not automatically alleviated of the reporting requirements for the NY LLCTA. Instead, the LLC must file an attestation of exemption with the New York State Department of State (NY DOS). 

Failure to file the attestation is considered under penalty of perjury, within 30 days of the LLC's formation or qualification to do business in New York.  

In case you have privacy concerns, all information relating to beneficial owners who are natural persons collected by the NY DOS will be maintained in a secure database and is confidential, subject to limited exceptions by written request of, or by voluntary written consent of the beneficial owner. (As initially proposed, the information would have been accessible to the public.) The information in the database is accessible to federal, state and local governmental agencies under certain circumstances.

Details on the New York State Limited Liability Corporate Transparency Disclosure Requirements

Under the NY LLCTA, an LLC is required to file a beneficial ownership disclosure with the New York State Department of Justice, identifying each applicant and beneficial owner by the person's full legal name, date of birth, current home or business street address and a unique identifying number from a valid identification document.

The NY LLCTA 1) requires company applicant disclosure for LLCs formed or qualified prior to the January 1, 2026. This is in contrast to the federal CTA, which specifies:

  1. Company applicant disclosure only for entities formed or registered as of the January 1, 2024, effective date and going forward.
  2. Applicants and beneficial owners may provide a home or business address (rather than requiring a business address be given).
  3. A copy of a valid identification document be included with the disclosure filing. 

Penalties Assessed Under the NY LLCTA

The potential penalties for non-filing of a New York Limited Liability Company Transparency Act are significant and could even shut down your freelance business!    A reporting company in New York State that fails to file its beneficial ownership disclosure or proof of exemption eligibility (that is granted) may be suspended from doing business in New York until the state‚Äôs Beneficial Ownership Information is submitted.

Get Professional Advice to Avoid Hefty Penalties for Your Freelance Business Under the NY LLCTA

The fines for a reporting company that fails to file its beneficial ownership disclosure or attestation of exemption, or annual statement 1) for more than 30 days is shown to be past due on the NY DOS records and 2) for more than two years is shown to be delinquent on the NY DOS records. The New York Attorney General may assess a fine of up to $500 per day for each day that the company has been past due or delinquent. Past due or delinquent status can be resolved by making the filing, payment of a $250 fine and verification from the Attorney General that any penalties imposed have been paid.

The NY LLCTA and the CTA and Beneficial Ownership filing are mandatory for most freelance LLC businesses and non-compliance may result in significant fines of $500 per day (up to a maximum of $10,000 per violation) and up to two years imprisonment at the federal level and The New York Attorney General may institute a fine of up to $500 per day for each day that the company has been past due or delinquent in filing their report at the state level. 

The best way to determine and take care of your reporting requirements for the CTA is to speak with a New York State tax professional. You can review additional information here. Please be aware that this type of advisory engagement is a separate filing in addition to any tax filing or preparation fees.

Jonathan Medows Jonathan Medows is a NYC-based CPA who specializes in taxes for consultants across the country. His website has a resource section with how-to articles and information for freelancers.

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