CPA Firm Ownership Rules and Non-CPA Principal Restrictions

CPA firm ownership runs on one load-bearing rule: at least 51% of a firm, measured both by financial interest and by voting rights, must sit with licensed CPAs. Non-CPA owners can hold up to 49%, but not a share more, and not through a workaround that gets them there in substance. Most people who structure these deals check equity and stop there, which is exactly backwards. A non-CPA owner can hold 40% of the equity and still blow up the arrangement if a shareholder agreement hands them outsized voting power or veto rights over firm decisions. Equity and control are separate tests, and a firm that clears one while ignoring the other isn't compliant, it's just undiscovered.

Firms did not adopt this norm voluntarily. It's codified in state statute, and most states build their version from the Uniform Accountancy Act, the model framework the AICPA and NASBA developed jointly. States adapt the UAA's language to their own regulatory code, which is why the phrasing varies even as the 51% threshold stays constant.

North Carolina's rule offers a concrete read of what that language actually demands. Under 21 NCAC 08N.0302, a firm must be owned at least 51% and "controlled in law and fact" by holders of valid CPA certificates carrying unrestricted privilege to use the CPA title, and at least one of those owners must be licensed by the North Carolina Board specifically. That phrase, "controlled in law and fact," does the real work here. A firm can't satisfy the rule on paper while quietly ceding control through a side letter, a disproportionate voting agreement, or a governance structure that lets a 49% owner steer the firm anyway. Regulators look past the cap table, and they're right to.

North Carolina also requires every office to maintain active, local supervision by a designated, actively licensed North Carolina CPA. Being licensed in another state doesn't substitute. And the firm itself, separate from any individual CPA's license, has to hold its own registration. Firm-level licensure and individual licensure are two different obligations, and satisfying one says nothing about the other.

What non-CPA principals must satisfy to hold any ownership stake

Holding up to 49% of a CPA firm is not a passive investment position. Treating it like one is the fastest way to lose the stake entirely. A list of conditions attaches to it, and failing any single one disqualifies the ownership, regardless of how the equity is papered.

Active participation comes first, and it is the requirement firms let slide. A non-CPA owner has to be genuinely engaged in providing services to the firm's clients, and that work has to be their principal occupation. Someone who writes a check and shows up to an annual meeting doesn't qualify. This is the most common tripwire years after formation, not at formation itself, because roles shift, people take on outside ventures, and nobody revisits whether the original justification for the stake still holds.

There's an education floor too. Under the AICPA resolution framework, a non-CPA who became an owner after the resolution's adoption needs at least a baccalaureate degree. For anyone who became an owner after 2010, the bar rises to 150 semester hours, the same threshold that applies to CPA licensure candidates in most states.

A felony conviction, or a guilty plea or nolo contendere plea to one, disqualifies a person from ownership outright. Good moral character is a separate, ongoing standard: conduct that would trigger disciplinary action against a licensed CPA triggers dismissal and disqualification for a non-CPA owner too. The bar doesn't drop just because the person isn't licensed.

Non-CPA owners are bound by the AICPA Code of Professional Conduct, the same rulebook that governs licensed CPAs, and they generally owe the same CPE hours as their CPA co-owners. Texas is a notable exception, addressed below. What these owners cannot do, under any circumstance, is call themselves a CPA. Acceptable titles include principal, owner, officer, member, or shareholder, depending on what the state permits. And while they can't join the AICPA as regular members no matter how large their stake or how clean their compliance record, they can join as Non-CPA Affiliate members.

Where CPA responsibility cannot be delegated to non-CPA owners

Ownership percentage and professional responsibility sit on different axes entirely. Conflating them is where firms get into real trouble.

Attest work belongs to CPAs, full stop. Financial statement attestation, compilation engagements, anything governed by Statements on Auditing Standards or SSARS, a CPA has to hold ultimate responsibility for it. A non-CPA owner cannot be the person accountable for that work, no matter what percentage of the firm they own. There's no equity threshold high enough to buy your way into signing an audit opinion.

The same logic applies at the office level. Every office of a firm registered in North Carolina needs a licensed CPA actively and locally supervising it, someone with primary responsibility and a real, corresponding share of their time devoted to the work happening in that location. The person running the whole show, the principal executive officer, has to be a licensed CPA as well.

Here's the distinction that actually matters in practice. A non-CPA who owns 49% of a firm and runs its tax or advisory practice is on solid ground. A non-CPA who ends up supervising or controlling the audit function is not, and no ownership percentage rescues that arrangement. Partnership agreements and operating agreements need to name, explicitly, which licensed CPAs hold attest supervision responsibility. A firm can have a perfectly clean 51/49 equity split and still fail the audit, because its governance documents never nailed down who's actually accountable for the work.

How state registration requirements differ beyond the shared baseline

The 51% rule is the floor everywhere, but states layer very different registration and disclosure requirements on top of it. A firm operating across state lines can't assume compliance in one state covers another, and treating the rule as a single national standard is how firms end up delinquent somewhere without knowing it.

Washington requires non-licensee owners to pass a course and exam covering the full AICPA Code of Professional Conduct, with a minimum score of 90%, under WAC 4-30-110(3)(b). Oklahoma sets a similar ethics exam requirement for resident non-CPA owners, also at 90% or better, plus a bachelor's degree minimum and ongoing continuing education. Ohio asks nonlicensee owners to meet board-set continuing education standards and follow the AICPA Code of Professional Conduct or an equivalent board-adopted code.

Some states lean harder on paperwork than exams. Alabama requires all nonlicensee owners to register annually, pay a fee, and report their CPE completion. Minnesota requires annual registration by December 31, along with a signed statement confirming active participation and disclosing any professional licenses or disciplinary history from the prior five years. New Hampshire wants a complete roster: names, home and business addresses, and ownership percentages for every partner, shareholder, and owner, licensed or not. North Carolina's disclosure goes further still, requiring non-CPA owners to report their Social Security number and Federal Tax ID number on the firm's registration.

Texas breaks from the CPE consensus entirely. The Texas State Board of Public Accountancy proposed repealing Board Rule 523.121 in July 2020, and the repeal took effect October 7, 2020. Texas no longer requires CPE completion for non-CPA firm owners, a genuine outlier among states that otherwise hold non-CPA owners to the same continuing education standard as CPAs.

For a firm with non-CPA owners spread across several states, these are central requirements. Alabama's annual fee, Minnesota's December 31 deadline, and New Hampshire's ownership disclosure are three separate obligations on three separate timelines, and missing one doesn't get forgiven because the firm handled the other two.

New York's June 2024 amendments as a case study in how states update their frameworks

New York's most recent overhaul, effective June 8, 2024, shows how a state legislature can rewrite the ownership rulebook substantially, not tweak it at the margins. The amendments touched the Business Corporation Law, the Limited Liability Company Law, and the Partnership Law. The headline change: non-licensee owners can now hold minority stakes in CPA firms registered with the New York Education Department, provided they clear a specific set of conditions.

The math New York now requires goes well beyond a simple 51% equity test. A simple majority of ownership, both financial interest and voting rights, must belong to individuals licensed to practice public accountancy somewhere in the country. A simple majority of directors must be CPAs. A simple majority of officers must be CPAs. And three specific roles, the president, the chairperson of the board of directors, and the chief executive officer, must each be a CPA. That's a denser governance requirement than the UAA model alone would suggest, layering board composition and named-executive rules on top of the baseline split.

New York also defines "actively participate" with some precision: a non-licensed owner has to be a natural person providing services to clients or individually taking part in day-to-day business or management, either of the firm itself or an "affiliated entity," meaning any entity that controls, is controlled by, or shares common control with the firm.

There's a cost attached, too. New York charges $900 per non-licensed owner whose principal place of business sits in the state, collected at initial incorporation, whenever an amendment adds a non-licensee owner, and again at triennial registration. Naming matters as well: a firm can't carry "certified public accountant," "certified public accountants," "CPA," or "CPAs" in its name if it has non-licensed owners. Firms have to change their name first if they want to add one.

The administrative machinery reflects all this. Form 6R covers initial registration or amendments that add non-licensee owners. Form 6T handles the triennial registration cycle. Form 6C covers ownership updates in any year ownership changes outside the regular cycle, and it carries no fee. New York's overhaul matters less for its specific mechanics than for what it demonstrates: state legislatures, not just accounting boards, are actively rewriting these frameworks, and the revisions can introduce entirely new categories of requirement, director majorities, officer majorities, per-owner fees, that a firm relying solely on the UAA's baseline model would never see coming.

How alternative practice structures let private equity invest without violating the majority-CPA rule

Private equity wants into accounting firms, and the 51% rule stands directly in the way of a straightforward buyout, since institutional investors obviously can't be licensed CPAs. The industry's answer is the alternative practice structure, or APS, and it works by splitting one firm into two legal entities. This isn't a loophole so much as a load-bearing wall: the whole PE wave in accounting depends on this split holding.

One entity keeps the attest work: audits, attestation engagements, majority ownership by licensed professionals, independent governance, and controls that keep the other entity from interfering with professional judgment on that side. The second entity holds everything else, the tax work, the advisory services, the nonattest business assets, and this is the entity that can take on outside investment without tripping the ownership rule, because the rule never applied to it in the first place.

EisnerAmper proved the structure could work at scale. Its August 2021 partnership with private equity, the first major PE investment in a top-20 accounting firm, split the business into EisnerAmper LLP, the licensed entity majority-owned by licensed professionals and handling attest services, and Eisner Advisory Group LLC, the APS entity handling advisory and non-attest work. All partners voted unanimously to approve it. A second liquidity event followed in March 2026, with the two-entity structure still intact.

What followed has reshaped the profession's ownership landscape faster than almost anyone predicted. Per a Wall Street Journal report, roughly two dozen of the nation's 100 largest accounting firms have either sold a stake to private equity or been acquired by a firm that already had. As of February 2025, at least 11 of the top 30 firms by revenue carried private equity backing. Blackstone's 2025 secondary investment in Citrin Cooperman and New Mountain Capital's 2024 deal for Grant Thornton rank among the larger transactions in that wave.

The APS model solves the ownership math cleanly. It does not solve the harder question the money raises, and anyone treating it as settled is getting ahead of the facts. Independence and conflict-of-interest concerns, particularly when a PE-backed advisory entity serves clients whose financial statements the affiliated CPA firm attests, remain open at the regulatory level, not resolved by clever entity design.

Why regulators are scrutinizing ownership compliance more closely in 2025 and 2026

For years, ownership compliance was something firms handled once, at formation, and rarely revisited. That was always the wrong way to run it. As of May 2026, state boards of accountancy have signaled that era is ending, and the shift traces directly to the private equity wave.

The sheer number of non-CPA principals now embedded across dozens of large firms, and the pace at which these deals have closed, put a spotlight on whether ownership compliance gets maintained continuously or just satisfied at the moment a deal closes. A structure can be compliant on day one and drift out of compliance eighteen months later without anyone noticing, because nobody built a process to keep checking. That drift, not any single bad actor, is what regulators are actually hunting for.

The vulnerabilities they tend to find aren't exotic. Non-CPA owners who no longer meet the principal-occupation test, because their role shifted or their involvement thinned out, show up repeatedly. So do CPE gaps in states that still require continuing education from non-CPA owners. So do stale ownership disclosures, particularly in states like Minnesota, with its annual December 31 filing deadline, or Alabama, with its annual registration and fee. Governance documents that never named which licensed CPA holds attest supervision responsibility remain a recurring finding, easy to fix on paper and easy to overlook in practice.

The dismissal standard adds urgency. Under the applicable frameworks, conduct that would trigger disciplinary action against a licensed CPA is treated as a disqualifying standard for non-CPA owners as well. Good moral character is described as an ongoing standard, not merely a condition evaluated at the point of acquisition.

Firms managing non-CPA ownership well have accepted that this is recurring administrative work: document management, periodic re-verification of every owner's qualifications, CPE tracking, and a calendar that accounts for multiple states' filing deadlines. Treating it as a one-and-done exercise at formation is exactly the posture that's going to get firms caught.

What practitioners and prospective firm owners should audit in their current ownership structure

Start with the equity and voting split itself. Confirm the 51% CPA threshold holds on both dimensions, financial interest and voting rights, and check the governance documents for anything that might undercut it in substance: preferred returns, drag-along provisions, side agreements, any mechanism that could shift real control toward a non-CPA owner even while the cap table looks clean.

Then work through each non-CPA owner individually. Is active participation still their principal occupation, or has that changed since they became an owner? Are their education credentials on file? Is there anything in their history that would disqualify them, a felony conviction, conduct that would trigger disciplinary action against a licensee? Is their CPE current, assuming the firm operates in a state that still requires it? Texas does not; most other states do. And where a state requires an ethics exam score on file, Washington and Oklahoma both set the bar at 90%, is that documentation actually sitting somewhere findable?

Finally, map every state where the firm operates or where a non-CPA owner is based, because each one likely carries its own registration calendar, its own fee, and its own disclosure requirements. A firm compliant in its home state can still be delinquent in a second state simply because nobody built the filing calendar to track both. The rules have moved from full CPA ownership, to a two-thirds supermajority, to today's 51% threshold, and the private equity wave is pressing on that threshold harder than it has in decades. The firms in the best position won't be the ones that got compliant once. They'll be the ones still checking, quarter after quarter, long after the deal that prompted the first audit has closed.