The enactment of Corporate Transparency Act (CTA) means 35 million U.S. companies will need to submit beneficial ownership reports to FinCEN beginning in January 2024, or risk a fine of up to $10,000. The reports contain mandatory information on every beneficial owner and the company applicants of every company that is a reporting entity.
Although it is a hassle to smaller U.S. businesses, it is an advantage for law and accounting firms who are preparing for the filings. A majority of these firms are likely to seek help from accounting or law firms, however, preparing and filing the required information can be a lengthy 3 hour process for businesses.
Accounting and law firms have to follow the six steps that take a long time to prepare a FinCEN client report.
1. First, companies must invest 30 or more minutes informing clients on how to comply with the law.
2. Lawyers or accountants then require the beneficial ownership report of their customers. If they do not have streamlined software, it could be a long and tedious procedure that leads to a lot of inquiries from each client. This could take 30 to 60 minutes between sending PDFs, copying the information supplied, and responding to queries.
3. Then, the employees of the company will need to get an ID form for each owner who 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 an electronic document management software.
5. Companies then have to invest time putting the report into FinCEN’s system. This could take up to 20 minutes if there is no software automation.
6. Finally, companies require tools to handle the volume of thousands or hundreds of clients in order to cut down on managing reports, sending reminders via email or providing proof of filing. Without the right software, this could consume an additional thirty minutes for each report.
Automated options are currently being developed to improve this process in this industry. FincenFetch is an illustration of Corporate Transparency Act filing software created to make the above procedure and complete the entire three-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 it is essential to automate the process. If there aren’t streamlined procedures in place, the $600 in filing revenues for the initial report will require three hours of staff time and generates revenues that are $200/hour.
The increase in revenue per hour for the filing services industry can help more companies in the filing services sector become compliant with the new regulations by attracting experts to process reports. The availability of software that can process up to six reports per hour, junior employees in a accounting or law firm could earn up to $3,600 per hour to help clients in CTA compliance.
Additionally to that, in addition, Corporate Transparency Act-related filing systems such as FincenFetch make filing easier for clients by transforming a complex filing that took 3 hours into an easy online experience completed in just a few minutes. This creates goodwill and leads to recommendations for businesses using the simple CTA tool for filing.
Software companies have already formed partnerships with a variety of companies throughout the U.S. With the estimated 35 million businesses required to file reports at a median of 600 dollars the 21 billion dollar market for filing will require specific CTA filing tools that can assist companies in adjusting to an upcoming compliance requirement.