The introduction 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 be subject to fines of $10,000. These reports must contain details about each beneficial owner and the company applicants of every reporting company.
While this can be a major burden to the smallest U.S. businesses, it is an advantage for law firms and accounting firms that are working to support the filings. A majority of these firms require the assistance of professional accounting or law firms however, preparing 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 steps that take a long time to submit a FinCEN report for a client.
1. First, companies must invest 30 or more minutes informing clients on this new legislation.
2. Attorneys or accountants will have to gather the necessary ownership information for their clientele. If they do not have streamlined software, it could be a long and tedious process that can result in a multitude of questions from each client. It will take an additional 30 minutes to an hour between sending PDFs, transferring information supplied, and answering any questions.
3. Staff at the company must obtain an ID card of each responsible owner to be included in the FinCEN report using the secure file-sharing software.
4. Staff members must transfer documents and information to a file management system.
5. Firms will then have to spend time putting the report in FinCEN’s system. This could take up to 20 minutes with no automation software.
6. Finally, companies require equipment to handle 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 improve this process in those working in the field of filing. 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 flow within 10 to 15 minutes.
Since Corporate Transparency Act filings are an unadjusted filing market for accounting and attorneys it is essential to automate the process. Without efficient processes in place $600 in filing revenues for the initial report will require three hours of time from staff which results in a revenue in the range of 200 dollars per hour.
A rise in the hourly revenue to the filing services industry can help more companies in the filing services sector comply with the new regulations by attracting experts to process reports. With software capable of processing up to six reports an hour means that junior employees working in an accounting or law firm could earn up to $3,600 an hour to assist clients to achieve CTA compliance.
Furthermore to that, 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 completed within only a few minutes. This creates goodwill and leads to recommendations for businesses using the simple CTA file tools.
Software companies have already formed partnerships with a variety of companies throughout the U.S. With the estimated 35 million companies that must file reports priced at 600 dollars on average and a 21 billion-dollar filing market will require custom CTA filing tools that can aid companies transition to the new requirements for compliance.