Hello, so I'm starting a merchant services company(ISO)and I'm having a very difficult time figuring out a few things. One, i wanted to know where to incorporate the business. Now from research I've done it says to stay in your "home" town and for me that is california which the taxes and everything is ridiculously high. So i was thinking about going out of state, now heres where things get tricky. Since I'm technically not selling anything and providing people with a service (that actually connects them to another bank) is it wise for me to stay in california? i was thinking about going to Nevada. Also if I'm going to be providing the payment processing to businesses outside my state do i need to get a foreign entity registration? technically I'm just a middle man connecting a bank to a business at which my payments come to me from that bank. So would i get away with just being incorporated in nevada or would i have to have it incorporated in every state? I'm sorry if I'm not making much sense, my brain is fried from researching all of this.
thank you

Hello, so I'm starting a merchant services company(ISO)and I'm having a very difficult time figuring out a few things. One, i wanted to know where to incorporate the business. Now from research I've done it says to stay in your "home" town and for me that is california which the taxes and everything is ridiculously high. So i was thinking about going out of state, now heres where things get tricky. Since I'm technically not selling anything and providing people with a service (that actually connects them to another bank) is it wise for me to stay in california?==========>>>>>>aslongas it is worth it, you can incorporate in another state and register as a foreign company in your home state of CA. It really is all a matter of determining how much money and time you stand to save, and if it is worth the extra hassle. Remember that you will have to pay fees to conduct business as a foreign entity, so if your business is smaller, it could end up costing you quite a bit of money. The IRS, when tax time comes, also looks to where you do business, not where you are incorporated, and if they feel you are trying to avoid taxes, you could be hit with tax penalties. But a neat part of incorporating is that you are, in fact, creating a legal entity entirely separate from yourself. So that entity can move and live wherever it wants depending on what is best for it. Typically, online businesses choose to incorporate in states that are deemed as "Tax Havens;" Incorporating in Nevada or forming a business in Delaware are the two most commonly chosen solutions. This is because online businesses do not do business in just one area, and often try to sell to customers in a variety of states. Interstate taxation is limited, which is good for your customers, but all of the taxes associated with a corporation still have to be paid at the rate established by the state in which the company was incorporated within. So incorporating in a state where these taxes are low, or non-existent, makes quite a bite of sense as it saves you money, which is always a good thing. You need to determine if you will be selling your product to people outside of your incorporation state. Whatever your eventual choice, be sure to do your research and consider all of your options. You will need to have either a physical presence or a registered agent in whichever state you choose to incorporate within, and should also be aware of any expenses or fees you will have to pay. Be sure to visit the state's website, and look around the secretary of state's page; it will help you in becoming familiar with all of the requirements and laws applicable to businesses operating in that state's borders.


? i was thinking about going to Nevada. Also if I'm going to be providing the payment processing to businesses outside my state do i need to get a foreign entity registration? ========>>>as mentioned previously;yes. An out of state corporation conducting business in another state must qualify to do business in that state. A company that has a physical presence in a state or repeatedly engages in business transactions in that state is conducting business within that state. Most states will consider Sales of goods or services
Providing services or labor;Construction work
as intrastate business when they occur within a state's borders: Most states will consider a company to have engaged in intrastate business when it has employees in another state, owns or rents real property, or uses a warehouse in another state to ship merchandise to customers in that state.however you do not need a foreign corroation aslongas you are engaged in mail order and telephone sales when it is the only type of transaction the company engages in within that state; A national advertising campaign targeted at customers in that state;Sales conducted through independent contractors in that state or etc.


technically I'm just a middle man connecting a bank to a business at which my payments come to me from that bank. So would i get away with just being incorporated in nevada or would i have to have it incorporated in every state?=======>> By law, if your corp plans to conduct business in any other states than your state of incorporation of CA, then you may need to register your business in those states under foreign qualification rule; say, you incorporated your business as a CA corp but are physically located in NYS. You?ll need to file a foreign qualification to conduct business in NYS. For this reason, it?s often best for small companies with fewer than 5 shareholders to incorporate in their home state.However, say you?re a consultant who performs the majority of your work online, with clients in multiple states. In this case, you do not need to file a foreign qualification. Just because you?re making money from clients in other states doesn?t mean you?re transacting business there, according to the law as mentioned previously.

Thank you so much this was incredibly helpful