Hello,

Well, we just incorporated in Delaware for various reasons. We mainly incorporated in Delaware because we plan on relocating to another state within a couple months. We figured since we're going to be moving anyway, we might as well incorporate in a better state since we'd have to switch filings later anyway. It seemed like a good choice since all of our main paperwork would be filed in the foreign state, giving us the flexibility to move around and just file a business license/foreign corp. form with our new state. We're currently in Tennessee.

Anyway, we went through a company online to get setup and paid $675 for the actual Delaware filings and other forms. I called the TN department of revenue last month to get an idea of how much it would cost to operate as a foreign corporation. I was told that since we were a web hosting company and home-based, that we would not have to pay sales/use tax to Tennessee. We would only need to file a foreign corporation form for $25 up front, and $100/year in April.

Well, today we did the incorporation with Delaware and I went to find this foreign corporation form on the TN web sites. The only thing that I can find that allows you to operate as a foreign corporation would cost us $600. I really can not see paying $600 to a state that I just have a house in. We don't have any TN customers. Every single thing we do is over the Internet. We do design web sites, however none have been for TN customers. Every single aspect of our business is online. So, this fee seems a bit ridiculous.

I called the Secretary of State's corporate info line and they said that we have to pay $600 since we're not domestic to TN. Well, I started emailing the Secretary of State and Department of Revenue, as well as calling through and talking to various people. Nobody can give me the same answer as to what taxes we need to pay and what forms we need to file. I'm going to be incredibly upset if I end up having to pay $600 to TN when I don't have anything to do with this place other than that I live here *temporarily*. I'm even more frustrated that most of the people I talk to don't understand web hosting. And the folks who don't understand web hosting end up telling me that I have to pay more taxes and file more forms.

So, for those of you in the "know", can you please tell me what forms and taxes you actually have to pay/collect/file in your states? I understand that it's best to consult an attorney at this point, but I'm basically broke if I have to pay an attorney and the $600 filing fee. I currently have a business license as I was a sole proprietor until today. I've even been told from the department of revenue by *some* people (those who understand hosting) that I don't even need a business license. I'm just so tired of the back and forward and not getting anywhere because each person gives me a different response.

I need to know what to do with my business license and what I should be filing in my state now that I'm a foreign corporation. I'm really hoping that I'm exempt since I'm just web hosting from the $600 fee.

thanks!

If the Department of Revenue is who you have to deal with regarding business licenses, tell them you're getting conflicting answers from different departments and ask them to fax to you a statement that you don't need the license (and keep it on file with all your business paperwork). Once you get that, then inform the other departments that the Department of Revenue provided a different answer and challenge them to prove otherwise.

You obviously want to do everything "by the book," which is a wise approach to take in business. By obtaining difinitive answers from the various government angencies on the regulations that they're responsible for, you are taking totally reasonable steps to "ask the experts" how to follow the procedures correctly the first time.

One very important tip when dealing with the government: always be polite no matter what because sometimes government workers are under a lot of pressure due to massive changes in regulations, and the last thing they need is yet another jerk telling them off (it's far more common than people think it is -- I know this because many of my friends and relatives work in various government agencies, and the general public can be downright nasty on a daily basis).

You made a good point. Unfortunately they say that their advise cannot be construed as legal advice and they don't provide any certified or guaranteed answers. I'll try again with them tomorrow and see if I can get someone to fax me something.

The $600 form is called a Certificate of Authority and seems to be the standard form filed whenever you plan to incorporate in another state and do business in your domestic state; or any other state for that matter. Anyway, it looks like something I won't be able to get out of. And that's on top of the $20 filing fee for franchise/excise tax, and the $15 fee for another business license from the county, and $159 from Delaware for a Certificate of Good Standing (required for the Certificate of Authority).

This is getting ridiculous. And I may end up having to hire an attorney to boot.

This is getting ridiculous. And I may end up having to hire an attorney to boot.

I would actually highly recommend an attorney! Even if it were not for this issue, having an attorney look over your business before problems can develop is never a bad idea.