Question

Topic: Strategy

Primarily Web Based Business To Begin

Posted by Anonymous on 4/2/2008 at 11:48 AM ET 25 Points
Hello,

I have been doing alot of reading about where to incorporate my new business (gourmet food product) and familiar with the benefits of home state vs. deleware vs. nevada. I also know that you have to register/foreign qualify in every state that you plan to sell in.

However, my question is--if the business is going to be primarily web/internet based, and I anticipate that even though my marketing efforts will focus on my state but there will be people purchasing from other states, where should I incorporate? I certainly can't afford to register in all states, including D.C.

Any feedback/direction would be appreciated.

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RESPONSES

  • Posted by Inbox_Interactive on 4/2/2008 at 12:00 PM Accepted
    From an incorporation standpoint, you don't need to register in every state where you have customers. I'm not addressing the sales tax issue, though, just the incorporation issue.

    You need to choose a state for your incoporation first.

    My personal opinion is that for most small businesses, that should be in the state where you are physically located. It's just easier to deal with, and you don't have to worry about being a "foreign" corporation and all that nonsense.

  • Posted on 4/2/2008 at 12:11 PM Author
    Thank you Inbox. My sister, the attorney(not corporate or tax law though), said that I should consider Deleware because of all the benefits.

    However, my understanding is that even if I incorporate in Deleware, if I am physically running the business out of my home state of Virginia, I'd still have to register as a foreign entity in Virginia and pay taxes, etc. Do you know if this is correct?

  • Posted by Harry Hallman on 4/3/2008 at 8:18 AM Accepted
    You can do an LLC is most states online. It is easy and you can do it yourself. If you could move anywhere I would choose a state where there is no sales tax or income tax. I don't know what Virginia offers in those terms.

    I think the registering as a foriegn corp is more appropriate when you are hiring employees in another state.
  • Posted by Inbox_Interactive on 4/4/2008 at 8:43 PM Accepted
    If you incorporate in a state other than your home state, you will be a foreign corporation in your home state.

    For 99% of small businesses, this is a waste of time and money.

    If things go crazy and you need to incorporate elsewhere, you can reincorporate in the state of your choosing in the future when it makes sense.
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