As of March 2025, most U.S.-formed startups, including New York LLCs and corporations, are no longer required to report beneficial ownership information under the Corporate Transparency Act. Whether you’re exempt depends on how your company is formed, who owns it, and how your structure evolves over time.
The Corporate Transparency Act (CTA) has introduced a new era of corporate disclosure in the United States, and if you’re running a startup, it’s worth understanding what it means for your business, especially in light of the significant changes that took effect in March 2025 and the December 2025 court ruling that confirmed the law is here to stay.
Navigating new regulations can feel overwhelming on top of everything else that comes with building a company. The business attorneys at Chidatma Law Group are here to break down what the CTA is, what changed, and what your startup needs to do right now.
What Exactly Is the Corporate Transparency Act?
The Corporate Transparency Act is a U.S. federal law that went into effect on January 1, 2024. Its primary goal is to enhance transparency in the ownership of certain legal business entities, primarily corporations, limited liability companies (LLCs), and other similar entities created or registered to do business in the United States.
The aim is to help combat money laundering, terrorism financing, and other illicit activities by making it more difficult for bad actors to hide their identities behind shell companies.
Think of it as a way for the government to know who the real people are behind the companies operating within its borders. This increased transparency is intended to make the financial system more secure and less susceptible to abuse.
Important 2025 Update: What Changed?
On March 21, 2025, FinCEN issued an interim final rule that significantly changed the scope of the CTA. As of its official publication in the Federal Register, the following changes are now in effect:
- U.S.-formed companies, such as New York LLCs and corporations, are no longer required to report beneficial ownership information to FinCEN.
- The definition of a “reporting company” has been narrowed to include only foreign entities that are formed under foreign laws and registered to do business in the U.S.
- U.S. persons are no longer considered reportable beneficial owners.
- Companies that previously submitted Beneficial Ownership Information (BOI) reports but are no longer considered reporting companies do not need to file updates or corrections.
This major update significantly reduces the number of companies subject to the CTA, relieving an estimated 32 million domestic entities from reporting obligations.
It’s worth noting that this remains an interim final rule. FinCEN has not yet issued a permanent final rule, which means the regulatory landscape could still shift. Staying informed is important, and having legal counsel monitor these developments on your behalf is the most reliable way to stay ahead of any changes.
Who Needs to Comply? Understanding “Reporting Companies”
Previously, the CTA applied to what are termed “reporting companies.” This included most corporations, LLCs, and other entities created by filing a document with a secretary of state or similar office, meaning the vast majority of startups formed in New York were expected to comply.
Now, domestic entities, including startups formed in the U.S., are exempt from the CTA’s BOI reporting requirements, but some companies are still required to file. These include entities formed under foreign laws and registered to do business in the United States.
If your company falls into this category, the filing deadline has already passed, which means if you haven’t filed, you may already be out of compliance. Contact our team to understand your obligations and next steps.
What If Your Company Qualifies for a Full Exemption?
There are also exemptions from the CTA altogether. Certain types of entities may not be required to report, such as publicly traded companies, regulated financial institutions, and large operating companies with more than 20 full-time U.S. employees, a physical office presence, and over $5 million in U.S. revenue.
Knowing whether your startup is fully exempt or still has obligations is a critical first step. Misclassifying your company could lead to penalties down the line. A review of your company structure with an experienced business attorney can give you clarity and confidence in your compliance posture.
What About Beneficial Ownership Information?
For the companies that still qualify as reporting companies (primarily foreign entities), there are ongoing BOI disclosure requirements. A beneficial owner is any individual who, directly or indirectly, either:
- Exercises substantial control over the reporting company (such as senior officers or individuals with decision-making power).
- Owns or controls at least 25% of the ownership interests of the company.
For each beneficial owner, the company must report:
- Full legal name
- Date of birth
- Current residential street address
- A unique identifying number from a government-issued ID, plus an image of the ID
Additionally, companies created on or after January 1, 2024, must report information about their “company applicants” (the person or persons who filed or directed the filing of the company formation documents).
Although most U.S.-based startups are now exempt from these requirements, keeping your internal ownership records organized and up to date remains a smart practice, particularly if your ownership structure changes or you expand internationally down the road. That’s exactly the kind of ongoing legal housekeeping that protects you when regulations shift.
Have Questions About the CTA and Your Startup? Let’s Talk.
The CTA may no longer apply to most U.S. startups, but that doesn’t mean compliance questions are off the table. The law itself was upheld as constitutional, which means it isn’t going away and will continue to evolve. What exempts your startup today may not exempt it tomorrow, especially as you grow, bring on investors, or expand internationally.
Contact Chidatma Law Group today to learn how we can help you navigate evolving regulations and keep your startup compliant, focused, and set up for long-term success right here in New York.
Frequently Asked Questions About The Corporate Transparency Act & Startups
1. What is the Corporate Transparency Act, and does it apply to my startup?
The Corporate Transparency Act (CTA) is a federal law designed to increase transparency around who owns and controls U.S. business entities, to prevent money laundering and other financial crimes. As of March 2025, most U.S.-formed startups, including New York LLCs and corporations, are no longer required to report. If you’re unsure whether your company qualifies for an exemption, the business attorneys at Chidatma Law Group can review your structure and give you a clear answer.
2. What changed with the CTA in March 2025?
On March 21, 2025, FinCEN issued an interim final rule that removed U.S.-formed companies from the CTA’s reporting requirements. This means domestic entities, including most startups formed in New York, no longer need to file Beneficial Ownership Information (BOI) reports with FinCEN. Only foreign entities registered to do business in the U.S. are now considered reporting companies. Contact our team if you have questions about how this affects your specific situation.
3. Does my New York LLC or corporation still need to file a BOI report?
No, U.S.-formed entities like New York LLCs and corporations are exempt from BOI reporting under the updated CTA rules. If you previously filed a BOI report and your company is no longer considered a reporting company, you do not need to file updates or corrections. That said, regulations can change, and it’s worth having legal counsel monitor your obligations as your business grows.
4. Which companies still have to comply with the CTA?
Foreign entities (companies formed under foreign laws that are registered to do business in the United States) are still required to file BOI reports. Certain large operating companies, publicly traded companies, and regulated financial institutions may also be exempt.
5. What is Beneficial Ownership Information and what does it include?
Beneficial Ownership Information (BOI) refers to details about the real individuals who own or control a company, specifically anyone who owns 25% or more of the company or exercises substantial control over it. For each beneficial owner, companies must report their full legal name, date of birth, residential address, and a government-issued ID number. While most U.S. startups are now exempt, keeping accurate internal ownership records is still good practice as your company scales.
6. Could the CTA rules change again in the future?
Yes, federal regulations can and do evolve. The March 2025 update was a significant shift, but FinCEN has the authority to revise these rules again. That’s exactly why having ongoing legal counsel is valuable: so your startup stays informed and compliant as the regulatory landscape changes, without it falling on you to track every update.
7. How can Chidatma Law Group help my startup with CTA compliance?
Even though most U.S. startups are now exempt, your obligations can change as your business grows, especially if you bring on foreign investors, expand internationally, or restructure your ownership. The team at Chidatma Law Group can review your company structure, keep your internal records organized, and flag any compliance issues before they become problems. Reach out today to schedule a consultation.
