The introduction of Corporate Transparency Act (CTA) means 35 million U.S. companies will need to file beneficial ownership reports to FinCEN beginning in January 2024 or be subject to fines of $10,000. These reports must contain information on every beneficial owner and the company applicants of each company that is a reporting entity.
While this may be a problem for smaller U.S. businesses, it is an advantage for law firms and accounting firms who are preparing for the filings. A majority of these firms require the assistance of professional accounting or law firms but assembling and filing the required data is a complicated three-hour process for businesses.
Accounting and law firms must follow the six steps that take a long time to submit a FinCEN report for a client.
1. First, companies must devote 30 or more minutes to informing clients on how to comply with the law.
2. Attorneys or accountants will require the beneficial ownership report for their clientele. If they do not have streamlined software, this can be a lengthy procedure that leads to many inquiries from each client. It will take 30 to 60 minutes between sending PDFs, copying the information supplied, and answering any questions.
3. Then, the employees of the firm must request an ID card of each responsible owner in order to get the FinCEN report through the secure file-sharing software.
4. Staff members must transfer documents and other information to a file management system.
5. Firms will then have to spend time putting the report into FinCEN’s system. It could take 20 minutes if there is no software automation.
6. Additionally, businesses require equipment to manage the volumes of thousands or hundreds of customers to reduce time keeping track of reports, emailing reminders, and confirming filing. Without the right software, this could consume an extra 30 minutes for each report.
Automated solutions are already being introduced to streamline this process in the filing industry. FincenFetch is a prime illustration of Corporate Transparency Act filing software created to make the process described above and finish the entire 3-hour filing process in between 10 and 15 minutes.
Since Corporate Transparency Act filings are the only filing market that is flat-rate for accounting and attorneys and accounting professionals, the need for automation is crucial. If you don’t have streamlined processes for filing, the $600 of filing revenues for a single report would require three hours of employee time, which translates to revenue that is $200/hour.
The increase in revenue per hour for the filing services industry can help more companies in the filing services sector comply with the new rules by attracting professionals to handle reports. With software capable of processing up to 6 reports an hour means that junior employees in an accounting or law firm can earn as much as $3,600 an hour to assist clients in CTA compliance.
Furthermore, in addition, Corporate Transparency Act file platforms such as FincenFetch simplify the process of filing for customers by transforming a complex filing that took 3 hours into an easy online experience that can be completed within only a few minutes. This helps build goodwill and generate recommendations for businesses using the simple CTA file tools.
Software companies have already formed partnerships with numerous companies all over the U.S. With the estimated 35 million companies that must file reports priced at around $600 on average the 21 billion-dollar filing market will require custom CTA filing tools that can aid companies transition to an upcoming compliance requirement.