Banking Question....
Incorporating a llc in delaware, where should I open up a bank? I reside in california. Do I need to open up an account in delaware? I spoke to several large banks in california, they stated they do not have the capability of doing business in delaware. What does that mean? Any suggestions are greatly appreciated.
Your bank can be anywhere.
It is nothing more than an institution for holding money.
Be aware that under many juristictions you will still have to pay a fee to the state you are operating to allow your foreign LLC to operate in that state. LLC's in california are high priced if I recall so a deleware corporation would only increase that cost in that you will have to pay money to two states.
I am not an attorney so please seek competent professional advice.
In regards to a bank.....he will pay a fee for having a bank account in cali?
I understand the foreign fees but your telling me there is a fee for a bank account?
And doll,
What I think "capability of doing business" means is that they don't have branches out there and couldn't service your needs. However, if checks and things were being sent to you in cali, you could handle all the money in cali and bank there.
Thank you all for your advice. I originally spoke to the customer service rep. and did not understand nor did I agree with what she was saying. I then went to see my business analyst and he had explained what was involved in opening a business account in delaware when residing in california. Basicly, I am opening an account in california and doing business in delaware. Reason for account being open in california is because of partners primary residence. There will be no taxation issues. However, I do have a major issue. The bank does require a physical office in the name of the company. How does that work when you only have a registered agent there?
Wow, you guys are way over-complicating this.
When you register your Delaware Corp., do it through a company that has Registered Agent services. The company I use charges me $175/year for that. They then give me an address in Delaware for all of my legal correspondence, and forward it to me. They also make sure my annual fees are paid to DE.
if you are doing business in Cali, you will need to register as an entity doing business in Cali, probably in your county. There will be a nominal annual fee for this. Which is based upon your structure type.
You then file for the appropriate tax id's in Cali and Federal. Take all of this to any local bank and they will set up an account for you and you can use any PO box, or home address or whatever you want.
The last poster has it right.
With all that said, unless you are involved in realestate transactions in DE, why in the world would you go through all that trouble and extra expense starting up, and each year to have your corporation established in DE?
I challange anyone to show me a single advantage for a small company to have a Nevada or Delaware corporation.
Rehab,
I'm not sure what you mean by extra expense, it's actually cheaper for me to have a Delaware corp than a Virginia corp. But you asked for one reason, i'll give you plenty.
Delaware has many advantages, including low incorporation fees, low annual franchise taxes, and no state corporate income tax for corporations that operate outside of Delaware. Furthermore, Delaware maintains a separate court system for business, called the "Court of Chancery." This Court is known for its well-established record of decisions and speed at which it handles disputes. So instead of spending your valuable time in court, you can spend it running your business.
Nevada has become increasingly friendly to corporations with its privacy and liability protection status as well as certain tax advantages. Nevada has no state tax on corporate profits, no state annual franchise tax, or no state personal income tax. Stockholders of a Nevada corporation are not public record, allowing complete anonymity.
mcl8190 - Delaware has an excellent body of corporate case law spanning 110 years regarding such matters as management/shareholder issues and mergers/acquisitions. However, unless you are a fortune 500 company you are going to receive no benefit from this. You will never, ever be able to benefit from all the fortune 500 companies who have gone before you and created this case law, because your business transactions will have nothing to do with the tranasactions of Enron, IBM or GE. The chances of you being involved in a hostile take over are probably pretty unlikely. Not being a real PUBLIC company 99% of the case law doesn't apply.<IMG SRC="images/forum/smilies/icon_biggrin.gif">
Regardless of your state of incorporation, you will be subject to the tax and other laws of each state in which you conduct business. You will have to be qualified as a foreign entity in your own state and the cost of doing this is usually equal to the cost of just incorporating in your state in the first place. Then you have to pay for a corporate agent in Deleware or Nevada ($175 a year). Which you would NOT have to do if you just incorporated in your own state.
And since you will be registered with your home state anyways, any thing you do to make you vulnerable to a lawsuit will mean you will be defending yourself in the state that it occured subject to that states laws anyways.
Nevada's lack of a corporate tax only applies to C-corps. Since you will be forming an s-corp there are no tax benefits to receive from Nevada's lack of corporate tax. Since you have to pay taxes in all states you are doing business in, you will still end up paying taxes in your home state and this time at the higher rates that states usually charge out of state companies.
Nevada does have a history of non-disclosure of corporate information, however, that has changed a bit since 911 and there are other methods you can employee that are just as effective, yet won't cost you the expenses and hassles of having to incorporate outside your state of business.
Also, in order to protect your Nevada corporation you will also need to make sure you are creating and maintaining a very solid and protected business entity, this requires very diligent paperwork (now doubled or trippled) as well as you need a separate tax return for each state, fees, licenses, checks and checking accounts. It does you no good if someone can pierce the corporate veil. 99% of most people conducting businesses of our size are going to have a very hard time really keeping their corporation protected when push comes to shove.
The only people really benefiting from the Nevada or Delaware incorporation myth is the scammers and lawyers making lots of money creating these things for people who don't need them, and the states themselves collecting extra fees and taxes that they normally wouldn't be receiving.
I have never met a CPA yet who would recommend a Nevada or Delaware corporation.
[ Edited by The-Rehabinator on Date 11/25/2003 ]
Rehabinator-
I'm not going to get into a a grudge match with you, but you should really talk to some professionals about this.
1. Over 50% of companies on the NYSE are registered in DE. Not by accident, and not because they do business there.
2. A DE corporation gets sued in DE.
3. I'm not sure who the CPA's you are talking to are, but go talk to a Tax Lawyer. They will set you straight.
4. A C corp is an outstanding vehicle, and it's what I own. It's a matter of when you want your money and/or tax write-offs. If you leave your profit in the c corp, it is taxed at a corporate rate of 15%. If you take it out or have it in an llc it is taxed at your rate. I'd rather pay the 15% now, and save the money until when I need to pull it out in my later years, at my much lower tax rate. It also is much easier from a paper standpoint to take on partners, private financing, etc
5. I said it earlier, but I'll say it again. It was MUCH cheaper for me to incorporate in DE than in VA. Even after paying both jurisdictions. DE gets filing fees, that's it, no income tax, payroll, property tax, etc
1- You aren't operating on the level of a public company not even 1 one millionth of it. See my above post.
2 - disagree.
3- My wife is a CPA, I have a CPA for my companies. I know at least 25 others personally, not one recommends it.
4- You are an acception to the rule. Very, very few people have c-corps. They don't want to be double taxed as you do.
5- In your case this could be the case, but for the majority of people it isn't.
I'm not making this stuff up. There is a large amount of information that has been written about the Delaware and Nevada incorporation myth. It is pretty standard stuff included in most self-incorporation material, incorporation books, and is easily found now online.
Do a simple search on any search engine for "Nevada incorporation myth" or "Deleware incorporation myth"
Like I said, in your situation you may be right, but you are the exception to the rule, the vast majority of people in this business are creating more work, wasting hard earned money and time chasing after a myth.