Posted on: Tuesday, September 2, 2003

Business online filings increase

By Sean Hao
Advertiser Staff Writer

Businesses are increasingly skipping the traffic and lines and turning to the Internet when it comes to filing articles of incorporation and other required paperwork with the state.

Through Thursday, 11,471 businesses renewed their state business registrations via the Internet, which eclipses total online renewals of 9,982 for all of last year. Another 6,330 businesses made initial business registrations over the Internet, compared with 4,720 businesses for all of last year, according to the Hawaii Infrastructure Consortium, which runs the state's Internet portal at www.ehawaii.gov.

Helping drive electronic filing are fee cuts made by the state Department of Commerce and Consumer Affairs in April, which saved businesses an estimated $100,000 so far this year.

The move to encourage online filing is part of an effort to lower the cost to the state of manually processing forms, while making it easier for businesses to keep their paperwork up to date, said Ryan Ushijima, the state's commissioner of securities.

It's also a means of improving the state's business climate, he said. Hawai'i consistently ranks low in nationwide surveys on being a friendly place to do business, because of its regulations and high taxes, healthcare and other costs.

"Anything that we can do to make business formation easier and make it happen more quickly," the better, Ushijima said. "The more that we can do that, the more that lowers the cost of starting up."

The growth in online traffic comes in part because of a 25 percent cut in fees for businesses that use a credit card to file forms online. Businesses that subscribe to the portal get a 50 percent cut. For example, the typical fee of $100 for filing articles of incorporation is cut to $75 for electronic filers, $50 for subscribers that pay a separate $75 annual fee.

The main beneficiaries of the effort to cut red tape are expected to be small businesses, which represent 97 percent of all businesses in Hawai'i. Those businesses are responsible for creating 83 percent of new jobs, according to a report released last week by the Small Business Association's Office of Advocacy.

In addition to business registrations, 48 different occupational licenses now can be renewed online. In an effort to get more of the state's approximately 55,000 potential business filers to use the online service, plans are to add more features next year, including the ability to register online with the state departments of commerce and consumer affairs, taxation, and labor and industrial relations.

The state also wants to make it possible to file city and county paperwork online as well as find information about obtaining financing advice and other information to help businesses expand.

"This is just the first phase of this project," Ushijima said. The goal is "to basically bring everything together in one place in cyberspace."

The increase in online filings could help Hawaii Infrastructure Consortium post an operating profit this year, which would be about four years after the company landed the contract to operate the state government's Internet portal, said Dan Morrison, the company's general manager.

The consortium is a subsidiary of NIC Inc., an Olathe, Kan.,-based company that operates Web portals for 18 states. The consortium, which has seven employees in Hawai'i, has spent more than $2 million building the www.ehawaii.gov Web site. The plan is to recoup that investment and more through a fee on business transactions.

"We realize it was a little bit risky, but we've been successful everywhere else," Morrison said. "We hope to start becoming profitable this year. It's taken a little bit longer than in some other states, but Hawai'i is a small state."

Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.