As many of our clients (licensed attorneys, CPAs and financial professionals) are aware, the turnaround time to start a new business in California can be seemingly interminable. In fact, due to a high number of filings and short staffing at the CA Secretary of State, the backlog within the Business division is greater than usual. Current processing time for filings for new business formation is 40 – 60 days. These forms much be processed prior to a business hiring employees, which means that many new businesses and entrepreneurs are being forced to put things on hold.

While Attorneys Corporation Service, Inc. does speed up the business formation process in California (all documents are filed within 24 hours), we can only do so much. However, the California legislature recently got involved and is bringing us good news.  On Monday, the Assembly approved $2 million to eliminate the lengthy backlog of business paperwork in the Secretary of State’s office.

According to KCRA news, ‘the additional money, approved unanimously, will allow the secretary of state to hire temporary staffers and pay for overtime to process tens of thousands of applications delayed by recent budget cuts.’ If California wants to be a business-friendly state, these steps appear necessary. According to John Kabateck, executive director of the state’s chapter of the National Federation of Independent Business, “this has been an unnecessary brick wall to business startups and job creation for way too long.”

There appears to be accountability at all levels, as the secretary of state must report to the Legislature each month on the progress made regarding processing times. In addition, future legislation is expected to require business forms to be processed within five days, making California among the fastest states in the country.

Also mentioned in the KCRA article is the amount of money required to keep up with the filings. ‘Perez, D-Los Angeles, said lawmakers are reviewing the amount of money needed to prevent future backlogs. They estimate that the Secretary of State’s office will need an additional $6 million to $9 million next year to keep pace with applications. The Assembly transferred $1.2 million out of its operating budget last year to reduce a backlog that led to wait times of more than 80 days.’

The bill, AB113, now goes to the Senate.

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