The HBS Blog offers insight on Delaware corporations and LLCs as well as information about entrepreneurship, start-ups and general business topics.
It used to be that banks offered toasters or beer cozies for opening a new account, but since the Dodd-Frank Act, bankers are more concerned with not opening accounts for the wrong people than they are about finding new clients. Many bankers in big cities are fearful of any new customer who walks in requesting to open a new account.
For this reason, walking into a bank to open up a business account for your newly-formed Delaware company can be stressful. Banks and bankers are a diverse group, each with their own set of suspicions and biases. They fear the regulators more than they want your business.
However, if you walk in prepared, your chances of opening an account without being cross-examined or embarrassed are greatly improved. In fact, if you have a clear idea of what you’ll be asked to present and already have it in your briefcase, opening a business bank account can actually be a stress-free event.
First, let the bank representative know right away what your new company does and why you’ll need a bank account. This may sound obvious—every company needs a bank account—but think about it this way: the first thing the bank representative will have to explain to his/her supervisor is what you’re doing with your new company and why you want a bank account.
Try to tailor the following explanation to your situation:
Now you have answered the first question he/she will have to relay to his/her supervisor and banking regulators.
Next, you want to establish a connection between you and the bank. Try this line, using your own referral:
Now the bank representative is feeling great about opening an account for you, because you have a good reason to need a bank account and there is a pre-existing connection between you and the bank.
At this point, you can continue to impress the bank representative with the documents in your briefcase, which should include:
You might also have a Banking Resolution already prepared, but banks usually have their own forms they prefer to use. A banking resolution can also be in the form of corporate minutes of a meeting of the members with a special resolution giving you the power to open a bank account at a specific bank.
We are happy to share this example of a banking resolution with you.
Remember, you can call Harvard Business Services, Inc. from the bank if there are any questions about your Delaware company, or if you need any documents emailed to you while you wait.
You've been in a band for five years. Your band has been gigging regularly, both locally and statewide. That is fantastic! New musicians are discovered every day, and there is always a need for exciting new music.
Here at Harvard Business Services, Inc., we have been helping musicians create Delaware LLCs and corporations since 1981, and we would love to help you.
So why incorporate your band?
First we should clarify why musicians—typically the last people to consider themselves business people—should actually be very keen to incorporate their bands. It's the smart thing to do, on many levels.
The reason a band should incorporate is because most musicians’ dreams are to become the next Rolling Stones, Mumford & Sons or Maroon 5. However, in order to do that, you have to attract the notice of an A&R representative and then get signed to a record label.
Say your dream comes true and a record label likes your band and wants to help you create music for the masses—amazing! However, that record label wants to sign your band, not a group of individuals. The label is not investing in you solely, it is investing in your band, and the label wants to see that your band is in an LLC or corporation. Incorporating your band accomplishes several things for you. It:
For more in-depth information, visit our asset protection for musicians page.
The second question musicians should consider is: "What type of company should a band form?"
Typically, a band chooses to form an LLC. The LLC is by far the most popular type of company formation, as it has fewer corporate formalities and allows you to operate your business as you see fit.
The LLC is governed by a contract, called an Operating Agreement, which all members agree upon; by utilizing your LLC's Operating Agreement, you can shape the company structure to fit your specific situation.
The final question your band should be pondering is: "How do we incorporate?"
Incorporating a band is as easy as calling us at 800-345-2677. If you have any questions about incorporating your band or questions about forming a Delaware LLC, you can also email or live chat with us.
We all know moving can be a big pain. Actually, moving can be the biggest headache in the world. In order to help make your move a smoother transition, we have come up with some important things to remember when moving your business, whether it is around the corner or across the country.
Change Your Address with Post Office
This is an obvious one that should be at the top of your check list of things to do. You want to make sure that mail sent to your previous address has a way of being forwarded to your new location. The USPS makes it easy to update your address, whether it is online or in person at your local post office. You can review the USPS moving guide here.
Update Your Address with Your Registered Agent
Your Registered Agent is the liaison between the Secretary of State and your company. Registered Agents are required to maintain up-to-date contact information for your company in order to be able to forward important and time-sensitive correspondence to you, such as Franchise Tax and Registered Agent renewal notices. If you do not update your address in a timely manner with your Registered Agent, you may miss these important notices and, as a result, miss the filing due dates and consequently lose the good standing status of your company.
You can use our change of address form in order to update your address with Harvard Business Services, Inc., or call 800-345-2677 or 302-645-7400, Ext 6903.
Change Your Address with the IRS
You would hope the United States Post Office would somehow link to the IRS to update your company’s address, but it does not work like that, though it would be nice if it did. The IRS wants you to file a change of address form with them in order to update the current contact information for your company. However, Harvard Business Servcies, Inc. would be happy to handle this filing for you for a small fee. This will save you the time and hassle of having to deal with the IRS. Please contact the Mail Center if you would like to use our convenient IRS change of address service. You can send an email to email@example.com or call 800-345-2677 or 302-645-7400, Ext 6903.
Update Your Address with Your Bank
Do not forget to change your address with your bank. You do not want your important banking statements with account details ending up in someone else’s hands. Oftentimes, you can verbally update your address by stopping into your bank; remember to bring your ID to confirm you are on the account. You may also have to sign a change of address form but it will be quick and easy.
If your business is moving to a new state, be sure your local bank has a branch in your new location. If it does not, you may want to think about changing banks for the sake of convenience. Each bank is different and will have different requirements for opening a new business account. Some banks may simply require your Certificate of Formation/Incorporation and EIN while others may request a Certificate of Good Standing (or a certified copy). We have outlined some of the most common requirements in more detail in a blog article entitled Banking Clarification.
If you have any further questions during your company's move, please do not hesitate to contact one of our customer service representatives. We would like to help make your move as painless as possible. Call us directly at 800-345-2677 or 302-645-7400, email us or Skype us at DelawareInc.
Your new company has been formed, the Federal Tax ID Number (also known as an Employer Identification Number or EIN) has been obtained and everything seems to be in place, until your bank asks for confirmation of the EIN issued by the IRS. Now what?
The IRS sends out a confirmation letter for every EIN application it processes. This EIN confirmation letter is called CP 575, and the IRS mails it to the address listed on the SS-4 application within eight to ten weeks of issuing your company a Federal Tax ID Number.
Sometimes your company’s bank or a vendor may request to see this confirmation letter. Unfortunately, it is not uncommon for people to misplace the letter; in addition, it seems as if many international business owners never receive the confirmation letter—it appears to get lost in transit.
If either of these scenarios happens to you, don’t worry—there is a solution if you don’t have possession of the EIN confirmation letter. You can contact the IRS directly at (267) 941-1099 and request a replacement confirmation letter called a 147C letter; the IRS will fax it to you upon request.
If we obtained the EIN number on behalf of your company, feel free to request that the 147C letter be faxed to us at (302) 645-1280. Once the fax has been received, we will email the letter to you as a courtesy.
Unfortunately, we are not able to contact the IRS on behalf of your company due to its strict privacy policies. Be prepared for lengthy hold times when you call the IRS; our clients have reported that hold times tend to be shorter the earlier in the morning you call, so try calling as close to 9 AM as possible.
If you have any questions about obtaining an EIN for your Delaware company or requesting a 147C letter from the IRS, feel free to contact us with your questions at 800-345-2677 or firstname.lastname@example.org.
What Happens If Your Delaware Company is Voided?
In order to keep a business entity in good standing status in the state of Delaware, an annual Franchise Tax Fee must be paid. The tax amounts and due dates vary, depending on the business entity type.
For example, a corporation that does not file and pay its annual Franchise Tax report for two years in a row will automatically be voided by the state.
An LLC (limited liability company) or LP (limited partnership) that does not pay its Franchise Tax Fees for three years in a row will be cancelled by the state.
What Does It Mean to Have a Business Entity Voided by the State of Delaware?
There are several ill effects of a voided or cancelled business entity. The Delaware Secretary of State will not issue any type of certificates, such as a Certificate of Good Standing, for the company.
Generally, the activities of the business will remain in effect, such as any contracts or agreements established during the voided period. However, the company name becomes available in the Delaware database, and anyone else can form a new company with that name.
Unfortunately, many people end up facing this situation when it comes to taking care of the annual obligations for their business entities. They know there are mandatory payments, but daily life interferes before they realize they have missed the due dates, and as a result their entity has been voided.
What To Do If Your Company Has Been Voided?
First, don’t panic. The state will not pursue you, personally, for the outstanding Franchise Tax Fees. The Franchise Tax Fees are imposed on the business entity itself, thus it is the business entity that owes them to the state.
Second, the process to restore the company is relatively simple. Formal renewal documents should be filed with the Secretary of State, and the past due Franchise Taxes, late penalties and interest fees need to be paid.
Once the renewal documents and appropriate fees have been successfully submitted and then approved by the Secretary of State, the business entity is restored—it is as if the company was never voided or cancelled.
If you need to renew your Delaware business entity, contact us and we will gladly research your specific situation and provide you with guidance in order to reinstate your company as swiftly as possible. You can call us at 800-345-2677 or email us at email@example.com.