Despite Massachusetts' reputation as a haven for liberals, the commonwealth installed an online filing and payment system this year to make the business of doing business easier for corporations, trusts and limited liability companies and partnerships.

With Massachusetts' new corporate annual reports e-filing system, which was launched in January 2001, corporations can now file required annual reports and pay the accompanying filing fees via the Internet. Previously, corporations completed paper copies of annual reports and delivered them to the Secretary of the Commonwealth's office, where the information was manually entered into a state database.

"We had problems with staffing as far as keeping up with the paper that came through this office," said Dan Wandell, assistant office manager for the Corporations Division of the Secretary of the Commonwealth and project manager for the e-filing system.

With the new online system, Wandell said, "Data entry is cut out of the loop. Anything that's filed electronically now is entered by the individuals filing the documents."

The secretary's office will review all of the submitted documents to ensure that they comply with the law, but the laborious retyping process will become a thing of the past. Even better, corporations and the state will have online access to the electronically filed documents within a day.

In addition to filing annual reports online, corporations will also have access to Massachusetts' new Uniform Commercial Code (UCC) lien filing system. This system will enable property owners to identify liens against their property and file information about rights and collateral online.

Years in the Making

Massachusetts started researching the possibility of an online filing system in 1997. By the end of 1999, the commonwealth had contracted with EDS to develop the filing and UCC systems. To help make the online payment process possible, EDS, which started work on the systems in April 2000, turned to EzGov.

Massachusetts paid $2.5 million to EDS and EzGov for development of the two systems and an additional $180,000 to EzGov for five years of hosting services, although that figure isn't set in stone. "The contract is based on transactions, and depending on the number of transactions, the state may or may not have to pay anything after the first year," said Wandell.

Corporations must add $8.50 to the $85 annual filing fee when they use the online filing service, but that's a small price to pay for the ease of online filing. In addition to fast, online access to their records, the corporation can print their business certificates remotely and eliminate the cost of shipping documents or traveling into Boston.

"The advantage for corporations is the real-time, anytime access to their records and immediate confirmation that the transaction has been processed," said Ed Trimble, president and CEO of EzGov. "Small business owners won't have to interrupt their regular schedule to file."

A Return on Investment

Thanks to the filing fee, Wandell expects that Massachusetts will easily recover the cost of the two systems from the 175,000 corporations and estimated 25,000 to 75,000 trusts, LLCs and LLPs within its borders. As an added benefit, the commonwealth should be handling a smaller number of bad checks in the future since corporations use credit cards for online payments.

Reduced labor costs are another benefit. EzGov wasn't involved in estimating cost-savings for Massachusetts, but Trimble said, "As a rule of thumb, governments save anywhere from $3 to $8 per transaction by providing these services over the Internet."

Wandell said his department has already shrunk the size of their phone room staff by not replacing employees who have gone elsewhere. "We anticipate that more people will be utilizing the Web to look up this information for themselves," he said.

He's also excited about the possibility of getting more out of employees who currently do nothing more than fold documents to be mailed. "Anyone who includes an e-mail address will now be able to get these contracts by e-mail," he said. "This will free up our staff and make them more efficient so we can get information back to the public more quickly."

As if all that weren't enough to ensure a strong return on investment, Massachusetts owns its systems, so it plans to market them to other governments. The corporation filing requirements and workflow patterns vary among the states, but the UCC is close to uniform across the nation, making Massachusetts' system an attractive option. "I've been talking with other states about selling them the systems at a reduced rate," said Wandell. "That works all the way around: They don't have to find a vendor and start from scratch, and we recoup some of our costs. As Secretary Galvin said, "Imitation is the sincerest form of flattery. We hope to be imitated, at least for a fee."