Ask HN: Business bank account for a Delaware Corp

4 points by jhubert 15 years ago | 5 comments

I can't be the first person who has had to deal with this. :)

My business partner and I have a Delaware registered corporation. It is an internet based business that provides tools for fundraising. We are making money, and it's currently sitting in a Paypal account. We need to setup a bank account to get it out and to get a merchant account. Where and how do we do it?

a) I am in California. I can register as a foreign entity in California and pay the $800 / year filing fee + any business income taxes and then go through HSBC (which seems to have really good virtual banking rates.) California, however, doesn't seem that friendly to corporations and since I have no use for actually doing business in California, this seems like a high price to pay on a margin business.

b) My business partner lives in NYC. We could register there as a foreign entity and pay the $125 / year filing fee + applicable foreign entity fees and annual taxes. Then go through HSBC as well. This seems at least a little more reasonable.

c) ? I don't know. What are the other options? What have other people done? Anyone know of banks in Delaware that would deal with us?

Also, if we are registered as a foreign entity in California and we make money online, can California tax that income even if it's from all over the world?

This seems like such a simple thing, but it's very clearly not. I would love any input or advice the HN community has to offer.

Thanks so much, Jeremy

dusanbab 15 years ago |

I'm in a slightly similar situation; Delaware C-corp, but we don't do business there. Our bank account is in NYC with Citibank, merchant account with First Data. We are an online SaaS business.

IANAL etc but I thought it was best not to do any business in Delaware directly, so not sure why/if it matters which banks in Delaware would deal with you. In any event, I think you really just need an EIN to open a bank account.

The whole subject of where an Internet business has "nexus" is apparently quite a complicated one.

Not sure if the above is of any help, hopefully it is.

jhubert 15 years ago | |

Thanks. It was a bit helpful. I'm mostly curious what other people do because it feels like something that has been done over and over again.

dusanbab 15 years ago | | |

I found it a frustrating experience too...happy to share more insights directly at dusanb [at] devicemagic dot com.

vessenes 15 years ago |

Yep, you need to register as a foreign entity in the state, because you need a state tax id to get a bank account. Gotta pay the state, baby!

Re: California tax, I have no idea; I'd talk to a CPA about that. Many states don't tax online software sales, though.

vessenes 15 years ago | |

p.s. I recommend you both be signatories on the bank account with equal privileges.