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Editorial 9 MIN READ

Secretary of State modernization, eight months on

Louisiana cleared the backlog, New York announced a pilot it has not launched, Alabama added counties one probate judge at a time, and Delaware quietly extended its Friday

The Editors
Staff, Incorporator.org
9 min read Updated
Contents 6 sections
  1. Louisiana: geauxBIZ is now a competent portal
  2. New York: a pilot announced, a pilot not launched
  3. Alabama: county by county, probate judge by probate judge
  4. Delaware: a small extension, a big operational signal
  5. What the gap between the top and bottom looks like now
  6. Sources

ight months after Incorporator.org benchmarked fifty state filing portals, the four states doing the most interesting work are the ones that were most visibly broken in June. Louisiana finished rebuilding geauxBIZ over the winter. Alabama added five more probate counties to its online suite. Delaware extended its Friday evening cutoff. New York announced a pilot and has not launched it.

The interesting question in February 2020 is not which state tops the benchmark. Delaware, California, Texas, Wyoming, Florida, and Colorado were already running mature portals last summer and they still are. The interesting question is whether the bottom of the league table is closing the gap on the top. The answer this quarter is mostly yes, with one loud exception.

Louisiana: geauxBIZ is now a competent portal

When we benchmarked last June, geauxBIZ was the state portal other states were quietly grateful they were not. The initial implementation required users to draft filings through a template the system generated, which did not accommodate ordinary Louisiana LLC drafting choices and created a documented friction point for practitioners. The legislature responded with Act No. 19, signed by Governor John Bel Edwards on May 29, 2019, authorizing the Secretary of State to "prescribe and furnish" standard forms and, more importantly, to accept executed PDFs of the filer's own drafting through the portal.

By January 2020, the portal upgrade contemplated by Act 19 is live across all entity types. A Louisiana LLC can be formed by uploading an executed Articles of Organization PDF through geauxBIZ, paying by card, and receiving a filed copy back electronically. Annual reports, amendments, mergers, and dissolutions move through the same flow. The Commercial Division's public-facing guidance now treats online filing as the default and paper as the exception. That was not true a year ago.

The state fee for a domestic LLC in Louisiana remains $100, with a separate $30 annual report. The portal adds a small credit-card convenience charge on top. Turnaround during business hours is same-day for the standard tier and within a few business hours for expedited filings. Louisiana is not a top-tier portal the way Delaware is, but it is no longer a cautionary tale, and it crossed that line quietly enough that most practitioners outside the state have not noticed.

For readers comparing Louisiana to the rest of the country, our June 2019 state-by-state benchmark covers the comparison methodology and the rest of the field.

New York: a pilot announced, a pilot not launched

New York's Department of State has, for almost a decade, been the single largest business-filing agency in the country without an end-to-end online LLC formation tool. The department handles biennial statements through its e-Statement Filing Service (the $9 fee every two years). It accepts a handful of post-formation filings electronically. But for Articles of Organization for a domestic LLC, the department has continued to take mail, fax, and in-person delivery at One Commerce Plaza in Albany. A New York LLC formation in February 2020 is still essentially the same administrative experience it was in February 2010.

The Department of State has publicly stated an intention to modernize. The Division of Corporations, State Records, and Uniform Commercial Code has for some time been describing a staged build-out of its electronic filing capability. In practical terms, the pilot for domestic business corporation and LLC filings has been described as "in development" for more than a full fiscal year. It is not live at the time of this writing.

The wait has a cost the state does not absorb. The $200 state filing fee for a New York LLC is not expensive; the publication requirement under N.Y. LLC § 206, which requires notice in two newspapers for six consecutive weeks, is the dominant cost of formation and frequently exceeds four figures in Manhattan or Nassau County. A web portal would not solve the publication requirement. But the slow, paper-centric front end compounds the cost by adding weeks to the calendar for an LLC that has to begin its publication clock within 120 days of formation. A founder in Manhattan who could form a Delaware LLC from a browser tab in an hour waits ten business days or more to receive a paper filing receipt from Albany.

The gap is notable because New York is not short of resources. The Department of State runs on a substantial budget, and its sibling agencies (Taxation and Finance, for instance) operate mature, modern online systems. The delay is organizational, not financial. The practical advice in February 2020 is unchanged from June: if same-day matters, a New York LLC is the wrong product, and a Delaware or California entity qualified into New York as a foreign LLC is typically faster overall, at the cost of an additional qualification fee and a duplicative ongoing compliance calendar.

Alabama: county by county, probate judge by probate judge

Alabama's filing mechanic is unique among the large states and worth restating. Under Title 10A of the Code of Alabama, a Certificate of Formation must be delivered to the Judge of Probate in the county of the LLC's registered office, recorded locally, and then transmitted to the Secretary of State in Montgomery. The state fee is $100; the probate judge collects a separate fee of at least $50, which varies by county. Most counties still accept that probate-level step only on paper, which means an Alabama LLC formation begins with a trip to the courthouse for much of the state.

In our June 2019 benchmark, Baldwin, Elmore, Jackson, Montgomery, Morgan, and Tuscaloosa were the counties where online filing reached through to the probate step, with Madison County announced but not yet live. Madison and Colbert went live between mid-2019 and year-end, for a working count of eight counties at the start of 2020.

January and February moved the number further. On January 9, 2020, Secretary of State John Merrill announced DeKalb and Geneva counties, bringing the count to ten and naming Probate Judges Ronnie Osborn and Toby Seay as the local partners. On January 27, 2020, Alabama Interactive (the third-party contractor that operates the state's online services under a Department of Finance contract) extended the suite to Houston County as well. That brings the working count to eleven of Alabama's sixty-seven counties with online filing through to the probate step.

Secretary Merrill has publicly described a target of reaching all sixty-seven counties by 2022. That is a roughly two-year runway from the current pace, and the pace has been approximately one to three counties per quarter. The math works if the remaining counties follow the current cadence, but it is worth observing that the counties which have adopted first are the ones whose probate judges had the clearest technical appetite and the biggest filing volumes. The back half of the list will be smaller counties with fewer filings per year, and the economics of a bespoke integration per county are less compelling when the annual filing count is in the double digits.

For a founder registering an Alabama LLC in February 2020, the practical question is still which county the registered office will sit in. Pick Baldwin, Colbert, DeKalb, Elmore, Geneva, Houston, Jackson, Madison, Montgomery, Morgan, or Tuscaloosa and the formation is a browser tab. Pick one of the other fifty-six and the first hour of the process is a drive to the probate judge.

Delaware: a small extension, a big operational signal

Delaware did not announce a modernization initiative this quarter, and the state does not need one. What Delaware did do was extend the operating envelope of its filing desk slightly, and the small move says something about how the state thinks about its position.

As of the current schedule published by the Division of Corporations, the document-filing service window is Monday through Thursday from 7:45 a.m. to 11:59 p.m. Eastern, and Fridays from 7:45 a.m. to 10:30 p.m. Eastern, with the office closed on state holidays. The Friday tail was previously shorter; the state has since quietly brought Friday into parity with the weeknight schedule, at least for acceptance of expedited filings up to the later cutoff. The effect is operationally small and consequentially large: a 10:30 p.m. Friday cutoff covers closing calls that run past the standard 5:00 p.m. mark on the East Coast, and it covers West Coast deals that begin their final push at 5:00 p.m. Pacific. The one-hour tier ($1,000) still holds its cutoff at 9:00 p.m. Eastern and the two-hour tier ($500) still holds at 7:00 p.m. Eastern, but the envelope for later-evening business is meaningfully larger than it used to be.

The reason this matters is that Delaware's market position rests on reliable speed, not on innovation. The state does not need to build a chatbot (California did that) or reduce a fee (Wyoming effectively did). It needs to make sure the deal that closes at 8:45 p.m. Eastern on the last Friday of a quarter gets filed. The quiet expansion of the Friday window is the operational equivalent of adding a late shift at a port: invisible to almost everyone, load-bearing for the customers who need it.

What the gap between the top and bottom looks like now

The broad shape of the online-filing landscape in February 2020 is the same as it was in June. Delaware, California, Texas, Wyoming, Florida, Colorado, and Ohio run mature end-to-end portals. Washington, Michigan, New Jersey, and Arizona run competent portals with specific limitations the states are honest about. Massachusetts runs a functioning portal priced to discourage its own use (the online certificate of organization is $520 against $500 by mail).

What has changed is the middle. Louisiana's rebuild closes a gap that was embarrassing a year ago and is now essentially closed. Alabama's county-by-county expansion is closing a structural gap that will be mostly closed by 2022 if the current cadence holds. The laggard list has effectively shrunk to one state that matters: New York, where the absence of an online LLC formation tool in February 2020 is a pure function of administrative timeline, not of statutory or budget constraint.

The second-order consequence shows up in lawyer behavior. Corporate lawyers in New York who historically formed Delaware holding companies out of habit now routinely form them out of necessity: the state portal is not there for a same-day formation, and clients who need same-day formation do not wait on New York to ship its pilot. That pattern reinforces the formation market's center of gravity in Delaware regardless of where the operating business is, and the longer New York's pilot stays "in development," the harder that pattern becomes to dislodge. At some point a pilot that has not launched is a decision, not a schedule.

Sources

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