If your business is a registered LLC (limited liability company) in New York, you may soon need to update your business records or even change your business structure. New legislation requires LLCs to disclose their beneficial owners to the New York State Department.
Here are some of the implications of this new law:
Regulatory compliance
The new law increases disclosure requirements. LLCs must disclose the names of their beneficial owners and may also need to report additional information about their financial statements and business activities. This applies to new and existing LLCs formed before January 1, 2026, and must be complied with by January 1, 2027. LLCs formed after January 1, 2026, must comply within 30 days of formation.
Impact on foreign-owned LLCs
The new rules also affect foreign-owned LLCs, which must disclose their beneficial owners. This will impact their international tax compliance and reporting under the Foreign Account Tax Compliance Act (FATCA). Multinational corporations or businesses with global operations must consider cross-border tax implications if they change their business structure or ownership. This can be a tough decision, especially since LLCs provide tax benefits for owners.
Reassessing your business
Whether you continue operating as an LLC or change your business classification, you need to reassess your business considering this new law. LLCs still provide liability protection, making them a viable business structure.
If you are concerned about privacy, it may reassure you that all information reported to the New York Department of State (NYDOS) will not be accessible to the public. However, it will be accessible to federal, state and local agencies under certain circumstances, such as a written request or consent by the owner, through a court order or for a valid law enforcement purpose.