The launch of the Corporate Transparency Act (CTA) means 35 million U.S. companies will need to file beneficial ownership information reports to FinCEN starting in January 2024 or face $10,000 fines. These reports include mandatory information about every beneficial owner and company applicant of each reporting company.
Although this is a burden for small U.S. businesses, it is a boon for accounting and law firms preparing to support these filings. An estimated 40% of these companies will seek professional help from law or accounting firms, but collecting and filing this information is a complex 3-hour process for firms.
Law and accounting firms need to complete the following six time-consuming steps to file a client's FinCEN report, which is made much easier with Corporate Transparency Act filing software.
First, firms need to spend thirty minutes to an hour educating each client about the new law.
Accountants or attorneys will then need to collect the beneficial ownership report information from their clients. Without streamlined software, this could be an arduous PDF process that results in many questions from every client. This will require an additional thirty minutes to an hour between sharing PDFs, copying information submitted, and answering questions.
Next, staff at the firm need to obtain an ID document from each beneficial owner for the FinCEN report via a secure file-sharing tool.
Staff needs to transfer the information and documents into a file management system.
Firms then need to spend time filing the report into FinCEN's system. This will likely require 20 minutes without software automation.
Lastly, firms need tools to manage volumes of hundreds or thousands of clients to save time tracking reports, emailing reminders, or providing verification of filing. Without software, this can drain an extra thirty minutes per report.
Automation options are already emerging to optimize this process for the filing industry. FincenFetch is an example of Corporate Transparency Act filing software designed to simplify the above process and complete the entire 3-hour filing flow in 10 to 15 minutes.
Because Corporate Transparency Act filings are a flat-rate filing market for attorneys and accounting, automation is critical. Without streamlined processes in place, the $600 in filing revenue for an initial report requires 3 hours of staff time, leading to revenues of $200 per hour.
Increasing revenue per hour to the filing services sector will help more reporting companies comply with the new regulation by attracting professionals to process reports. Having software to process up to 6 reports per hour means junior staff at a law or accounting firm can generate up to $3,600 per hour for helping clients with CTA compliance.
In addition, Corporate Transparency Act filing platforms like FincenFetch simplify the filing flow for clients as well, transforming a confusing filing taking 3 hours to a simple online experience complete in minutes. This builds goodwill and referrals for firms using easy CTA filing tools.
Summing Up
Software providers have already partnered with dozens of firms across the U.S. With an estimated 35 million companies needing to file reports priced at an average of $600, this 21 billion dollar filing market needs customized CTA filing tools to help companies ease into a new compliance requirement.
