Dear Governor Brown: I must humbly call your attention to the fact that forming a corporation or LLC in California has become a third world process.

When I was a new lawyer nearly twenty years ago, the process of forming a corporation in California took a couple of days; and we could file our Articles in a number of California’s great cities.

Since I started forming corporations, California’s entrepreneurial spirit has given birth to countless technology companies and ushered in an era of unprecedented speed and efficiency.  Yet the time required to file Articles in California is an embarrassment to our state.  As a lawyer who has formed thousands of corporations and LLCs, I have courtside seats to this problem.

Despite California’s extraordinary Internet resources and entrepreneurial spirit, the process of filing Articles now takes three to four weeks.  That means that an entrepreneur who wants to open a bank account, raise money, hire employees and explode with entrepreneurial energy must sit around and twiddle his or her thumbs for nearly a month while the Articles are processed in Sacramento.

The extraordinary staff of the Secretary of State is not the problem.  It’s the utter lack of any sort of technology.  By contrast, Delaware and Nevada have harnessed technology to process Articles in only a few hours. LLCs must file their Articles BY HAND in Sacramento, but forming a new company in Nevada or Delaware is handled entirely ONLINE!

Technology sounds expensive, and California is focused on its budget; but Delaware and Nevada have found it feasible to utilize technology, and so can we.  Here’s an idea to pay for it:  charge California LLCs the $20 Statement of Information fee annually, rather than every other year.  No one would mind if the proceeds are invested in systems to get California business formation kick-started, and to breathe life into our archaic process.

One clear way to give a boost to the economy is to make it easier for entrepreneurs to form businesses in California.  Start with the processing time for Articles.

Sincerely,

Jeff Unger