Despite these benefits, in most states, it’s not mandatory to submit corporate filings online and many states do not offer a lower fee for online filing. In some cases, the timeframe to process filings submitted online will be quicker but generally, there is no guaranteed reduction in processing time either as a person is still required to review and accept the information provided. The process to file online can vary greatly from state to state, so let’s take a closer look.
Several states mandate the use of their online filing system for some or all corporate filing submissions. Colorado was one of the first states to require online filing of documents where online filing is possible – which currently covers nearly all commonly filed documents.
Colorado has since been joined by Louisiana, Mississippi, Montana and North Dakota in requiring that most filings be made using their online system. (Excepting Louisiana, these states also require electronic UCC filings at the state level.)
Louisiana and North Dakota have taken rather unique approaches.
We are all familiar with individual identity theft, and it’s a risk for business entities as well. With the advent of online filing systems, states noticed an uptick in filings that were not authorized or intended by the company. Some were accidental – like a filer choosing a similarly‑named company in error – but others deliberate, where the filing was submitted as an act of revenge on the company.
A few states have instituted online corporate filing policies to prevent this. In Massachusetts and Rhode Island, for example, filers must provide a unique customer identification number and PIN which was assigned to the entity via a mailed notice from the Secretary of State in order to submit an online filing.
In Montana, entities that you have filed are added to your account. If you wish to submit a filing for an entity that has not been added to your account, you must submit a letter authorizing you to file on the company’s behalf, and the Secretary of State’s office will add the entity in question.
One of the drawbacks of online filing is that the signer of the document is either required to input the information into the state’s website themself or rely on the accuracy of another party’s input. Some states, including Arizona, Nebraska and North Carolina allow the upload of a PDF instead. This means the document can be drafted, reviewed and signed as you would if submitting by mail or in person.
Several other states including Louisiana, Mississippi and New York – plus Washington D.C. – allow a draft of the input information to be saved, giving another party the opportunity to easily review and approve what was entered before submission.
The honest truth is that online filing often does not always save time or cost less. In many states, filing fees remain the same whether you file online or by traditional means. Online interfaces can offer less flexibility than paper filings, limiting the contents of the submitted document to standard or default provisions that may not be what is desired. In states that don’t allow a draft to be saved or uploaded, there is increased risk of an inadvertent error.
Despite these drawbacks, there are also advantages to online filing. There is the decreased risk of rejection, as it‘s usually impossible to submit the filing without all the required information and ensuring the name is available for use is often an inherent part of the process. Online filing can also be used to help a filer to obtain a particular file date, in cases where the date of submission is the date of filing.
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This content is provided for informational purposes only and should not be considered, or relied upon, as legal advice.