Incorporation and Registration of Business When Done in Different States

Question

I started an ecommerce site and incorporated in Delaware based on reading advice on various message boards. I am physically located in Chicago. Now that I am doing my business taxes, TurboTax asks me for an Illinois Business Registration number. I did not register my business in Illinois. Questions:

What is the difference between incorporation and registration of the business?
In my case, do I need to register in Illinois despite being incorporated in Delaware?
Also, I have collected sales tax for items sold to people with an IL address, how do I go about giving it to the state?

Thanks very much in advance for any advice.

Jarie Bolander · Answer 1 · 2010-02-11 03:14:43Z

As far as the state of Illinois is concerned, you are what is called a foreign entity. The reason being you are incorporated in the state of Delaware. As a foreign entity, you have to register with the state you do business in. The difference is incorporation is the legal structure of your business while registration just says you are in business, within the state.

You do need to register in Illinois.

You need to obtain a resellers permit. This will set you up to pay sales taxes in your state. The Secretary of State is usually the person who administers this.

Dana Shultz · Answer 2 · 2010-02-11 05:40:24Z

I agree with the first two paragraphs of Jarie's answer. (I don't know enough about Illinois taxation to comment on the third paragraph.)

Please see the post "Why (not) incorporate in Delaware?", which discusses (albeit from a California perspective) why the knee-jerk choice to incorporate in Delaware is not always the best choice.

Disclaimer: This post does not constitute legal advice and does not establish an attorney-client relationship.

asked	3 years ago
viewed	553 times
active	3 years ago

Incorporation and Registration of Business When Done in Different States

2 Answers