Yes, I’ve incorporated myself and it reminds me of the Woody Allen joke where he says he made his mother President, his grandmother treasurer, his uncle CEO and then they all got together and voted Woody out in a hostile takeover.
Anyway, I am incorporated in Delaware and I need to set up a bank account, but my bank, Norwest, does not bank in Delaware and won’t set up an account for my corporation. Neither does Citibank. Neither does Chase Manhattan. Does this make sense? Surely, I can set up a corporate bank account using one of the biggest banks in the world, can’t I? I mean, just because my corporate address is in Delaware, why does the bank need to operate in Delaware? Hell, I get credit card offers from banks in Alaska and I’ve never even been there. Is the US banking system that archaic?
I’ve only done a little research and my tax accountant is on vacation and I am just wondering if a doper has any ideas. If it is only my income, not that much, can I be a “small business” or does the fact that I am a “corporation” mean that I am not a small business?
I’ve started a few corporations (all in Delaware), and I’ve never worried about the bank having an office there. The current bank I’m with is tiny and I’m certain they don’t have an office there.
Are you qualified to do business in your own state? That’s probably what you need to do. How did you incorporate? If you used a service like The Company Corporation, they can walk you through the process.
Some other things to think about:
You need a presense in Delaware. Again, if you used a service they can set you up with someone there for pretty cheap, $25/year I think. It’s a legal formality.
You need an EIN from the IRS.
You may want to consider being an S corp for tax reasons.
Okay, here’s the deal. I’m working as a freelance writing consultant and was advised to set up a corporation for billing. The “Company” that set me up has a presence in Delaware and that address has become my Headquarters so to speak. I have an EIN. I have a date of incorporation.
Now, for a bank account, I could give my permanent address in a different state (Minnesota) and get an account with Norwest - can I do that or do I need to have the same address on my checks as my corporation has in Delaware?
OR, in order to use a Minnesota address, do I have to file another form saying that I have a different office?
From what you say, Bill, I guess I should just not worry about it and just fill out the forms using my Minnesota address.
Forget the address in Delaware. That’s just a legal formality. You’re incorporated in Delaware, and you have a presence there, so you could do business there if you wanted to. But that’s not your headquarters (not unless you want it to be, which you don’t.) Use the Minnesota address for everything, including your checks.
You need to get qualified to do business in Minnesota. Legally, you have to do this anyway, regardless of the banking thing. It’s not too tough or expensive. You contact the Delaware government, they send you some paper, you send it (or physically take it if time is critical) to the Minnesota government along with money of course, and the Minnesota government approves you. The company you used to incorporate should be able to help with both the details and the legwork. If they are useless, you need to talk to someone in the Secretary of States office in both states.
Oh, and the bank will probably want to see the Minnesota Qualification before they’ll let you open an account.
Good luck on your business! Oh, and look in to that S corp thing; depending on your situation, it may be a good tax advantage.
I think the corporate taxes here (Minnesota) are higher than Delaware. Wouldn’t it make sense for him to find a state that has the lowest taxes and incorporate there?
Well, I’m no expert on the incorporation laws in all states. I’m not a lawyer, just a business guy who’s had a few experiences in the incorporation process.
Everybody incorporates in Delaware. I’ve been told that 2/3 of the companies on the NYSE are incorporated in Delaware. What’s magical about Delaware? Well, they are friendly to corporations in several ways. The taxes are low. The incorporation costs are low. The requirements to incorporate are minimal. But most importantly, the laws defining rights of shareholders are minimal. That is, it’s tougher for unhappy shareholders to sue corporations in Delaware.
