CPA Firm Ownership Compliance Is Under the Microscope

State boards of accountancy have long maintained rules governing who can own a CPA firm — but many firms have treated ownership compliance as a background concern, something handled once during formation and rarely revisited. That’s starting to change. State boards have signaled a renewed focus on firm ownership, with regulators indicating they intend to scrutinize ownership structures more closely than they have in recent years. For firm administrators, that means now is the time to make sure your ownership records are accurate, current, and defensible.

The 51% Rule

The foundational requirement across U.S. jurisdictions is straightforward: a majority of a CPA firm’s ownership — typically defined as at least 51% of financial interest and voting rights — must be held by licensed CPAs. 

When non-CPA ownership creeps past the threshold — whether through equity transfers, new investors, or ownership restructuring — the firm may be operating out of compliance without anyone having flagged it.

Nonlicensee Owners: Welcome, With Conditions

States do permit non-CPA ownership up to the minority threshold, but they don’t allow it without strings attached. The requirements for nonlicensee owners vary meaningfully by state, and a number of them go well beyond simply capping the percentage. Here’s a look at what several states require:

Active Participation — The Near-Universal Condition

The most common requirement across states is that nonlicensee owners must be active individual participants in the firm or its affiliated entities. Passive investors are explicitly excluded. 

• Louisiana’s statute provides one of the more detailed definitions: active participation requires the provision of personal services in the nature of management, performance of client services, or activities that assist licensees — and expressly states that making or holding a passive investment for the purposes of receiving income does not qualify.
• Minnesota takes this further, defining “actively participates” as regular, continuous, and substantial involvement in management and professional activities for more than 1,800 hours per year — the equivalent of full-time engagement.

Prior Licensure Can Be a Disqualifier

Not every non-CPA is eligible for ownership. Several states explicitly prohibit individuals who previously held a CPA license from serving as nonlicensee owners. 

• Alabama bars any individual from nonlicensee ownership if they have previously held a license. 
• Oregon goes further, prohibiting inactive, lapsed, suspended, and retired licensees from holding any ownership interest in a registered firm. 
• Massachusetts disqualifies anyone whose professional license was revoked, suspended, or voluntarily surrendered in connection with disciplinary proceedings — unless it has since been reinstated. 

For firms considering adding a non-CPA owner who has any accounting licensure history, this is a threshold question that needs to be answered before any ownership transfer takes place.

Registration and Reporting Requirements

Several states require nonlicensee owners to register directly with the state board. 

• Alabama requires all nonlicensee owners to register annually, pay a registration fee, and report continuing education completion. 
• Minnesota requires annual registration with the board before December 31, along with a signed statement confirming active participation and disclosing any professional licenses and disciplinary history from the prior five years. 
• New Hampshire requires firms to provide the board with a list of all partners, shareholders, and owners — including non-licensees — with names, home and business addresses, and a description of each person’s ownership percentage.

Education and Ethics Requirements

Many states also have specific education and ethics requirements for nonlicensee owners.

• Oklahoma requires non-CPA owners who are Oklahoma residents to complete the AICPA Ethics Examination with a score of 90% or better prior to initial registration, hold at least a bachelor’s degree, and maintain continuing education requirements. 
• Ohio requires nonlicensee owners to meet continuing education standards set by the board and to abide by the AICPA Code of Professional Conduct or a comparable code adopted by the board.

Why Boards Are Paying Closer Attention

As accounting firms have grown, merged, and attracted outside capital — including from private equity — the ownership landscape has become more complex. State boards have taken notice. Regulators have signaled that they will be looking more carefully at whether firms are accurately reporting their ownership structures and whether nonlicensee owners meet the requirements their state imposes.

For many firms, the practical challenge isn’t bad intent — it’s a lack of visibility. Ownership percentages can shift. Non-CPA owners change roles or reduce their involvement. Individuals who once met the active participation standard may no longer do so. And there’s a dimension that’s easy to overlook entirely: if a CPA owner falls out of compliance with their own license — through a lapsed renewal, unmet CPE requirements, or a disciplinary action — they may no longer count toward the firm’s majority CPA ownership threshold. A firm that appears compliant on paper can quietly slip out of compliance if the licensure status of its CPA owners isn’t being actively monitored. Without a systematic way to track both ownership structure and the underlying license status of those owners, compliance gaps can develop without anyone realizing it.

How CPA QualityPro Can Help

CPA QualityPro is launching a firm ownership tracking feature designed specifically for this compliance challenge. Firm administrators will be able to record and monitor the ownership structure of their firm so that the 51% CPA majority requirement is visible and verifiable at all times.

For multi-state firms and those with non-CPA ownership, this kind of ongoing visibility isn’t just operationally useful — it’s increasingly essential. As state boards sharpen their focus on ownership, firms that can demonstrate accurate, well-documented ownership records will be in a far stronger position than those relying on spreadsheets, institutional memory, or assumptions that haven’t been revisited in years.

Ownership compliance is an ongoing obligation — and the firms that treat it that way will be better prepared for whatever increased scrutiny comes next.