Hi,

I'm starting a business that will sell digital products and services over the web. I'm trying to determine where best to file an LLC. One of the goals of starting a business that is completely operated over the internet is to free myself up to move - I live in Wisconsin now but will be moving to Canada in August. I'm hoping it's possible to use the Internet such that my business operates out of 1 state, no matter where I, as the owner, am located. I would just pay taxes as a non-resident in the state of incorporation and claim a credit on my Wisconsin personal tax form while in the US. Is this possible?

Here are some of the questions I'm playing with:

1) Do I need a physical mailing address in the state of incorporation in order to also allow it be the state of operation? Or can a registered agent fill that need, so that the business not actually need have a separate physical location?

2) Assuming a registered agent is all that's necessary, can I then open up a business bank account in the state of incorporation and transact all business in that state? Will selling services and goods to clients in other states necessitate that I qualify to operate in the clients' respective
states? Or will they operate in my state? Will the fact that all
transactions take place in the state of incorporation allow it to also be the state of operation, taking precedent over the fact that I'm working on a computer in another state (or country)?

3) Does the location of any equipment I use to operate the business, such as the location of my host's web servers or the computer that I'm using to answer email, program, etc. constrain the state of operation? In other words, if I have assets that participate in the business, must my business qualify to operate in any state in with the assets are located?

What I'm hoping I can do is file the LLC in a state like Delaware or Nevada (any suggestions on currently the most friendly state to Internet Businesses?), open a bank account over the internet with a bank in that state and have a registered agent set up for any physical mailings or notifications. I would then be free to live in any state of my choosing (or internationally), while for tax purposes the business operates out of the state of incorporation, regardless of where I'm doing the work from or where the assets (such as web servers) are located. And I would only file state taxes in the state of incorporation/operation.

Thanks for your help!

Best,
John


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Thanks for the info. Yes, I will not elect to be taxed as a corporation, but instead report on my personal return. What I guess I'm trying to figure out is how to do this as simply as possible. Given that I'm running a "virtual" business (which in reality can be managed from anywhere) and that I will definitely be moving, I'm trying to get together a strategy that speaks to 2 issues:

1) How do I take advantage of my business to minimize the number of states I have to report income to, long term? Can I take advantage of the fact that my business is over the internet to consolidate the state of incorporation and the state of operation, and then file in that state as a non-resident?

2) How do I minimize other state-required documentation? Can I structure myself initially so as to only have to worry about business licenses, franchise fees, etc. in one state, rather than in multiple states? Since my business is over the internet and not local, what strategies can I use to ensure that all transactions occur in my state, or at such a level that I do not have to qualify as a foreign corporation (get business licenses, etc.) in other states?

Just wondering if there are any business owners who have already run into these issues and solved them??

Thanks

Please let me know how you decided to operate?