The introduction of Corporate Transparency Act (CTA) means 35 million U.S. companies will need to submit beneficial ownership information reports to FinCEN beginning in January 2024 or face a $10,000 fine. The reports must contain information on every beneficial owner and the company applicants of every reporting company.
Although it is a hassle for the smallest U.S. businesses, it can be a blessing for law and accounting firms who are preparing for the filings. A majority of these businesses require the assistance of professional accounting or law firms however, collecting and filing the required information can be a lengthy 3-hour procedure for companies.
Accounting and law firms have to go through the following six lengthy steps in order to prepare a client’s FinCEN reports.
1. First, companies must devote 30 minutes to one hour teaching clients on this new legislation.
2. Lawyers or accountants then require the beneficial ownership information of their customers. Without the right software, it could be a long and tedious process that can result in a multitude of questions from each client. It will take 30 to 60 minutes between sending PDFs, copying the information supplied, and responding to queries.
3. Staff at the company must obtain an ID form for each owner which is a beneficial one in order to get the FinCEN report using the secure file-sharing software.
4. Staff members must transfer documents and information into a file management software.
5. Companies then need to invest time in putting the report into FinCEN’s system. It could take 20 minutes with 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, sending reminders, and confirming filing. Without the right software, this could take up an additional 30 minutes for each report.
Automated options are currently being developed to streamline this process in the filing industry. FincenFetch is an 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 accountants and attorneys it is essential to automate the process. If there aren’t streamlined processes in place filing revenue of $600 for a first report would require three hours of staff time which results in a revenue that are $200/hour.
A rise in the hourly revenue to the filing service industry can help more companies in the filing services sector become compliant with the new rules by attracting professionals to handle reports. The availability of software that can process up to six reports per hour means that junior employees working in an accounting or law firm could earn up to $3,600 per hour to help clients to achieve CTA compliance.
Furthermore, the corporate Transparency Act file platforms such as FincenFetch simplify the process of filing for customers changing a complicated filing process that takes 3 hours to an easy online experience that can be completed in just a few minutes. This helps build goodwill and generate referrals for companies using simple CTA file tools.
Software companies have already formed partnerships with numerous companies throughout the U.S. With around 35 million businesses that must file reports priced at 600 dollars on average and a 21 billion-dollar filing market requires custom CTA filing tools that can aid companies transition to an upcoming compliance requirement.