Open an LLC Bank Account Opening a bank account for your Delaware Limited Liability Company is important for liability protection as the account separates the business's funds from the member's personal funds. Several documents will be needed to open a business bank account, such as: A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC. Copies of the original LLC formation paperwork from the state showing the creation of the LLC. Driver's licenses of the members. Depending on the LLC age, a Delaware Certificate of Good Standing may be needed to prove the LLC is active and in good standing with the state. Related: How to Open a Business Bank Account for your LLC Apply for Business Licenses and Permits Depending on what your business does and where it is located, there will likely be various business licenses and permits to register for. Some common registrations include: Business License – Every business operating in the state will need to obtain a state of Delaware business license from the Delaware Division of Revenue.
The EIN will be needed to hire employees, open a bank account, register for business licenses and permits, file tax returns, and more. There is no cost for the EIN when registering through the IRS. The number is available immediately when applying through the IRS website; however, you can also register by phone, fax, or mailing IRS Form SS-4. Related: How to Apply for an EIN Elect the LLC's Form of Federal Income Taxation One of the major benefits of the Limited Liability Company is the tax flexibility it provides. When applying for the Employer Identification Number, you will choose how the business entity will be taxed for federal income tax purposes. While there are some limitations, an LLC may be classified for federal income tax purposes as a: Sole proprietorship Partnership C-corporation S-corporation While this may sound confusing, this refers to how the LLC is taxed, not the legal structure. Consider talking with an accounting professional as some tax elections come with potential downsides such as double-taxation (C-corp).
Whew… alright, I get a little angry here. Other industry related issues. Again, we get painful phone calls from our readers about these issues. Recently, a guy from Pennsylvania running a trucking company in Pennsylvania formed an LLC in Delaware. Later, he tried to register his trucks as being in Delaware with the department of transportation. They denied his application because he was not a resident of Delaware, and that ended up costing him $20, 000 of business that month. I'm not going to list out dozens and dozens of examples here, but I just want to let you know. This information, you're not going to find on websites promoting Delaware, and you're probably going to hit industry specific quirks where you're going to have issues with your out of state LLC. All right, take away. Instead of forming an LLC out of state and then later learning that you need to register your out of state LLC as a Foreign LLC in your home state, paying for an extra registered agent, paying annual reports in two states, having tax liabilities potentially in two states, and dealing with the headaches of two LLCs, just form the LLC in the home state and the state where you're doing business.
In short, the whole reason that he formed the Delaware LLC in the first place is defeated. It's not saving him any money on taxes. In fact, this whole loophole is unknowingly costing him a lot more money. What about the Delaware Court of Chancery and Delaware Law? I'm sure you've read online something about these. The Delaware Court of Chancery is the oldest and most established business court in America, and Delaware has the most robust business case law. Who cares? What are you starting, some lawsuit rampant company where you're going to go to court every other month? Look, take your reality check. Not that this information is not true, it just doesn't apply to you. Again, take a reality check. Most of the companies promoting Delaware, they don't give a crap about your business's long term success and well being, and all the headaches that you're going to have to deal with. They just want your money. Don't be misled into the headaches. Focus your energy on running a legitimate and successful company in the state where you actually live and do business in.