BOI compliance restructuring for founders who pivot

Key consolidated findings (what a founder who is pivoting or restructuring needs to know)1) Fundamental change in who must report (Interim Final Rule, Mar 2025)- FinCEN issued an interim final rule (March 2025) that revised the definition of “reporting company” so it applies only to entities formed under the law of a foreign country that have registered to do business in a U.S. State or Tribal jurisdiction. The practical effect: entities formed in the United States (previously “domestic reporting companies”) and their beneficial owners are exempt from BOI reporting under the CTA per the IFR. Foreign reporting companies still must report if not exempt.2) Deadlines and transitional rules for foreign reporting companies- FinCEN set filing deadlines for foreign reporting companies (e.g., entities registered to do business in the U.S. prior to the IFR had a short deadline to file BOI reports). (See FinCEN IFR release for specific deadlines applicable to different cohorts.)3) When restructurings, pivots and ownership changes trigger filings or updates- Conversions, mergers, and other changes may create a new reporting company in certain state law contexts; if a new reporting company is created, an initial BOI report is required. Even where a conversion does not create a new entity under state law, a reporting company must update its BOI report to reflect changes in legal name, jurisdiction of formation, or other reported information within the regulatory 30-day update window.- Registrations to do business in new states generally do not by themselves create a new BOI filing requirement if the reporting company already listed its jurisdiction of formation in its BOI report.- Changes in ownership or in qualifying for/losing an exemption require action: when a reporting company becomes exempt it should file a “newly exempt entity” BOI report; if it ceases to meet exemption criteria it must file an updated BOI report within 30 calendar days of the change; inaccuracies must be corrected within 30 days of becoming aware.4) Exemptions & nuance- The rule and subsequent guidance clarify multiple exemptions (e.g., subsidiary exemption, large operating company exemption, pooled investment vehicle exemptions). Whether a restructured entity qualifies for an exemption depends on the facts after the transaction (ownership, operational thresholds, etc.).5) Practical steps for founders pivoting (actionable checklist)- Step 1: Determine whether your entity is within the current FinCEN definition of a reporting company (post-IFR: foreign entities registered in the US) or if it still faces BOI obligations because of facts (e.g., foreign formation).- Step 2: Inventory corporate actions tied to your pivot: conversions (LLC->Corp or vice versa), mergers, transfers of equity or assets, issuing new membership interests, adding/removing members, material changes to company name, or change in jurisdiction of formation.- Step 3: For each action, evaluate whether state law treats the change as creating a new entity. If state law creates a new reporting company, file an initial BOI report; otherwise update existing BOI report for changes to reported fields (name, jurisdiction, BOs) within 30 days.- Step 4: If ownership percentages or control change, re-evaluate who qualifies as a beneficial owner and whether the entity gains or loses an exemption; file updated or newly exempt reports as required.- Step 5: Preserve documentation: contemporaneous board resolutions, membership consents, purchase/sale agreements, conversion/merger documents, state filing receipts, and calculations supporting exemptions or BO determinations.- Step 6: File through the FinCEN BOI e-filing system; use counsel or professional help if facts are complex (foreign-owned entities, pooled investment vehicles, series LLCs, or layered ownership structures).6) State-specific considerations- Most state 'register to do business' filings do not themselves trigger additional BOI filings if jurisdiction of formation was already reported; however, conversions under state statutes might create a new entity and thus an initial BOI filing. State treatment of series LLCs varies—FinCEN guidance and state law should both be checked to determine whether each series is treated as a separate reporting company or treated as part of a single entity. Founders should consult the relevant Secretary of State rules and the specific state statute governing conversions/series LLCs.7) Timing and penalties- FinCEN’s BOI regulations require corrections/updates within 30 days of becoming aware of inaccuracies or of a triggering change. Willful failure to report accurate BOI or to timely update filings can expose responsible persons to significant civil and criminal penalties under the CTA and implementing regulations.Overall recommendation summary for founders pivoting- Immediately triage: identify entity formation jurisdiction (foreign vs domestic per IFR), list pending or recent transactions that could change ownership, formation, or reported fields; consult qualified counsel or compliance vendor if any foreign-formation, conversions, mergers, or series-LLC questions exist; maintain a compliance calendar for 30-day update windows; and retain supporting documentation for any exemption determinations.