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Hey Folks,

I am currently live in California but my LLC is registered in Delaware with a Delaware address. My company does not have any branch in California. Basically, it's an online marketing consulting service.

I would like open a business checking account. Based on my case, Could any of you recommend any bank with which I could open a business checking online? or any banks in Los Angels area that will accept a Delaware based company to open a business checking account, although which might need to be done in person.

Thank you very much!

J.

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You need to consider this from a different angle. It is very unlikely that a California Bank will open a checking account for a Delaware LLC with a California address if you have not qualified your out of state entity with the California Secretary of State and paid the associated fees and franchise tax (in the area of $1k, to start). Running an out of state LLC in California can open up a whole lot of legal and tax problems.

You need to consult a California lawyer who knows this area.

It's a Delaware LLC with Delaware address. I am thinking about open a business checking account for my DE LLC (with DE address)but I am currently living in Cali at the moment.

What MrKlick said and this is correct to my understanding as well, you're not legally allowed to run your business in CA at this time. The DE LLC gives you the right to run your business in DE. In most other states you have to register your LLC as a foreign corporation and pay appropriate fees.
You're effectively trying to get out of paying taxes and fees in CA but since you're a full-time resident of CA, this is not going to work. It is especially a hard case with CA, where the Department of Revenue is very stingy.
As a side note, opening your LLC in DE was likely a bad move. Your pass-through income will still get taxed in CA so all you got is the extra burden of filing your corporate taxes with DE.

Yoksel said:   What MrKlick said and this is correct to my understanding as well, you're not legally allowed to run your business in CA at this time. The DE LLC gives you the right to run your business in DE. In most other states you have to register your LLC as a foreign corporation and pay appropriate fees.
You're effectively trying to get out of paying taxes and fees in CA but since you're a full-time resident of CA, this is not going to work. It is especially a hard case with CA, where the Department of Revenue is very stingy.
As a side note, opening your LLC in DE was likely a bad move. Your pass-through income will still get taxed in CA so all you got is the extra burden of filing your corporate taxes with DE.


No. We are not a brick-and-mortar business. Everything is done online. So we don't need and don't have a physical office open to clients. DE is more pro business and charge less corporate than California. DE charges $250 as opposed to CA charges $800.

All I need is to open a business checking account. As refrring to CORPORATIONS CODE SECTION 100-195 of CA, I found that maintaining bank accounts in California does not count as intrastate commerce, and therefore doesn't require California registration. The info is quoted as follows:


191. (a) For the purposes of Chapter 21 (commencing with Section
2100), "transact intrastate business" means entering into repeated
and successive transactions of its business in this state, other than
interstate or foreign commerce.
(b) A foreign corporation shall not be considered to be
transacting intrastate business merely because its subsidiary
transacts intrastate business or merely because of its status as any
one or more of the following:
(1) A shareholder of a domestic corporation.
(2) A shareholder of a foreign corporation transacting intrastate
business.
(3) A limited partner of a domestic limited partnership.
(4) A limited partner of a foreign limited partnership transacting
intrastate business.
(5) A member or manager of a domestic limited liability company.
(6) A member or manager of a foreign limited liability company
transacting intrastate business.
(c) Without excluding other activities that may not constitute
transacting intrastate business, a foreign corporation shall not be
considered to be transacting intrastate business within the meaning
of subdivision (a) solely by reason of carrying on in this state any
one or more of the following activities:

(1) Maintaining or defending any action or suit or any
administrative or arbitration proceeding, or effecting the settlement
thereof or the settlement of claims or disputes.
(2) Holding meetings of its board or shareholders or carrying on
other activities concerning its internal affairs.
(3) Maintaining bank accounts.
(4) Maintaining offices or agencies for the transfer, exchange,
and registration of its securities or depositaries with relation to
its securities.
(5) Effecting sales through independent contractors.
(6) Soliciting or procuring orders, whether by mail or through
employees or agents or otherwise, where those orders require
acceptance outside this state before becoming binding contracts.

(7) Creating evidences of debt or mortgages, liens or security
interests on real or personal property.
(8) Conducting an isolated transaction completed within a period
of 180 days and not in the course of a number of repeated
transactions of like nature.
(d) Without excluding other activities that may not constitute
transacting intrastate business, any foreign lending institution,
including, but not limited to: any foreign banking corporation, any
foreign corporation all of the capital stock of which is owned by one
or more foreign banking corporations, any foreign savings and loan
association, any foreign insurance company or any foreign corporation
or association authorized by its charter to invest in loans secured
by real and personal property, whether organized under the laws of
the United States or of any other state, district or territory of the
United States, shall not be considered to be doing, transacting or
engaging in business in this state solely by reason of engaging in
any or all of the following activities either on its own behalf or as
a trustee of a pension plan, employee profit sharing or retirement
plan, testamentary or inter vivos trust, or in any other fiduciary
capacity:


But thanks for your input, anyway!

Jammyc said:   Yoksel said:   What MrKlick said and this is correct to my understanding as well, you're not legally allowed to run your business in CA at this time. The DE LLC gives you the right to run your business in DE. In most other states you have to register your LLC as a foreign corporation and pay appropriate fees.
You're effectively trying to get out of paying taxes and fees in CA but since you're a full-time resident of CA, this is not going to work. It is especially a hard case with CA, where the Department of Revenue is very stingy.
As a side note, opening your LLC in DE was likely a bad move. Your pass-through income will still get taxed in CA so all you got is the extra burden of filing your corporate taxes with DE.


No. We are not a brick-and-mortar business. We intend to offer online marketing strategies to clients. Everything is done online. So we don't need and don't have a physical office open to clients. DE is more pro business and charge less corporate than California. DE charges $250 as opposed to CA charges $800.

But thanks for your input, anyway!

But you are physically doing the work in CA. And the LLC's income passes through to your personal return, which means you'll pay tax based on your state of residence (CA) anyways.

You seem to be taking a generic concept, and failing to appreciate and respect the details that actually make the concept valid...

Jammyc said:   Yoksel said:   What MrKlick said and this is correct to my understanding as well, you're not legally allowed to run your business in CA at this time. The DE LLC gives you the right to run your business in DE. In most other states you have to register your LLC as a foreign corporation and pay appropriate fees.
You're effectively trying to get out of paying taxes and fees in CA but since you're a full-time resident of CA, this is not going to work. It is especially a hard case with CA, where the Department of Revenue is very stingy.
As a side note, opening your LLC in DE was likely a bad move. Your pass-through income will still get taxed in CA so all you got is the extra burden of filing your corporate taxes with DE.


No. We are not a brick-and-mortar business. We intend to offer online marketing strategies to clients. Everything is done online. So we don't need and don't have a physical office open to clients. DE is more pro business and charge less corporate than California. DE charges $250 as opposed to CA charges $800.

But thanks for your input, anyway!

Doesn't really matter. Talk to a tax specialist.
If your LLC is treated as a disregarded entity, you'll file Schedule C and will be taxed in CA on all profits as a full-time resident.
If your LLC is treated as an S-corp, you'll have to pay yourself a salary in CA (means registering with the local DOL which is going to be a trouble without the business license) as well as your pass-through distributions will still be taxed in CA.
I guess you might be saving on the license fees in DE but as you've already found out, it comes with extra issues too.

All I need is to open a business checking account. As refrring to CORPORATIONS CODE SECTION 100-195 of CA, I found that Maintaining bank accounts in California does not count as intrastate commerce, and therefore doesn't require California registration. The info is quoted as follows:


191. (a) For the purposes of Chapter 21 (commencing with Section
2100), "transact intrastate business" means entering into repeated
and successive transactions of its business in this state, other than
interstate or foreign commerce.
(b) A foreign corporation shall not be considered to be
transacting intrastate business merely because its subsidiary
transacts intrastate business or merely because of its status as any
one or more of the following:
(1) A shareholder of a domestic corporation.
(2) A shareholder of a foreign corporation transacting intrastate
business.
(3) A limited partner of a domestic limited partnership.
(4) A limited partner of a foreign limited partnership transacting
intrastate business.
(5) A member or manager of a domestic limited liability company.
(6) A member or manager of a foreign limited liability company
transacting intrastate business.
(c) Without excluding other activities that may not constitute
transacting intrastate business, a foreign corporation shall not be
considered to be transacting intrastate business within the meaning
of subdivision (a) solely by reason of carrying on in this state any
one or more of the following activities:
(1) Maintaining or defending any action or suit or any
administrative or arbitration proceeding, or effecting the settlement
thereof or the settlement of claims or disputes.
(2) Holding meetings of its board or shareholders or carrying on
other activities concerning its internal affairs.
(3) Maintaining bank accounts.
(4) Maintaining offices or agencies for the transfer, exchange,
and registration of its securities or depositaries with relation to
its securities.
(5) Effecting sales through independent contractors.
(6) Soliciting or procuring orders, whether by mail or through
employees or agents or otherwise, where those orders require
acceptance outside this state before becoming binding contracts.

(7) Creating evidences of debt or mortgages, liens or security
interests on real or personal property.
(8) Conducting an isolated transaction completed within a period
of 180 days and not in the course of a number of repeated
transactions of like nature.
(d) Without excluding other activities that may not constitute
transacting intrastate business, any foreign lending institution,
including, but not limited to: any foreign banking corporation, any
foreign corporation all of the capital stock of which is owned by one
or more foreign banking corporations, any foreign savings and loan
association, any foreign insurance company or any foreign corporation
or association authorized by its charter to invest in loans secured
by real and personal property, whether organized under the laws of
the United States or of any other state, district or territory of the
United States, shall not be considered to be doing, transacting or
engaging in business in this state solely by reason of engaging in
any or all of the following activities either on its own behalf or as
a trustee of a pension plan, employee profit sharing or retirement
plan, testamentary or inter vivos trust, or in any other fiduciary
capacity:


But thanks for your input, anyway!

Buddy, CA does come behind folks like you real hard for their pound of flesh. Franchise Tax Board just wants it's $800 year after year from you and it will for sure find out a way to get it from you. And then you can sit around double-posting over and over again that you are not a B&M company.

You keep talking from your client's angle - where everything you do for them is online. But CA's FTB will look at it from your angel and say - where did you operate from when you solicited & provided so and so said online-marketing-service? Were YOU in CA or DE....and you sure were in CA...and you sure have to pay the $800 annual Franchise tax. You better talk to an attorney and do the right thing once for all.

OP, I'm not in CA. Looks like you've done some research already which is a good thing. I will not try to figure out if you're right or wrong on that. Just two points:
1. I personally had a problem opening a bank account in the state where I did not have the license to operate. It was a no go with HSBC. I had an account in the state where I operate already but I wanted to have an account with HSBC for other reasons. Didn't happen.
2. Maybe you'll get out of paying for CA business license. Just don't expect getting out of CA income tax for the mere fact you're running an online business and your company is registered in DE.

Thanks for your input. I will just file the income tax like I should while I live here. Income tax is not an issue here. DE is more a pro-business state so many companies choose to establish their entities there.

Most larger banks will not care where your LLC is. They want to open accounts...

Why don't you try EverBank? They offer the most competitive business checking/savings rates I've seen.

Jammyc said:   Thanks for your input. I will just file the income tax like I should while I live here. Income tax is not an issue here. DE is more a pro-business state so many companies choose to establish their entities there.
So who did you pay to create your LLC? I'm assuming they're the ones that sold you on the whole concept with marketing copy?

Just ask any bank with branches in both states, even much-reviled BofA was happy to service my account across the country. Why are people asking whether they can ask?



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