Tell me more ×
Answers OnStartups is a question and answer site for entrepreneurs looking to start or run a new business. It's 100% free, no registration required.
up vote 2 down vote favorite

I understand you can incorporate in other states for legal/tax advantages. Suppose I wanted to stay in-state for now. Can I claim my business is in a nearby city for tax purposes, using a PO Box? The startup is purely online, with no physical product.

Mike

share|improve this question

3 Answers

up vote 2 down vote accepted

You're mixing two concepts:

  1. You can incorporate in a certain state. Some states require you actually have a physical presence to do that, others (like famously Delaware) don't.
  2. Your primary business operations happens at a certain physical address. If you work from home, that's your home. This is not the address you have to give out to customers -- that can be anything.

In general lying to the government about anything is bad. The best-case scenario is always "nothing happens," but there's always downside.

So in the end, this is a matter for an accountant and/or lawyer. Certainly incorporating in certain states has advantages.

share|improve this answer
up vote 2 down vote

I'm not a lawyer, but I've been looking into this same issue recently, so here is what I have found.

Where you incorporate defines the set of rules that your corporation operates under, but it doesn't hide you from the state that you operate in. Many people cite Delaware as a favorite state because of their rich case-law, and favorable rules. However, you can't escape registering in the state that you operate. Even though you might be a Delaware corporation, you still have to register with the state that you operate in, and you still have to pay the state franchise fee. As an example, if you operate in California, but incorporate in Delaware, you have to qualify (register) your corporation to do business in California, and you are still on the hook for the $800 annual franchise fee.

share|improve this answer
up vote 0 down vote

You "can" lie about where your business is located for tax purposes.

You should not do so - you should obtain your business license from the city where your business really is located (whether in your home, an office, or elsewhere).

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

share|improve this answer
Quck question: Lying about location and getting caught, does that pierce the corporate veil? – Gabriel Magana Mar 8 '10 at 20:07

Your Answer

 
discard

By posting your answer, you agree to the privacy policy and terms of service.