Software Business: What does it mean by "Doing Business"?

outdateboy

When talking about forming an LLC, in which state to form the LLC is a question many people have asked. Form it in your home state or in states like Nevada or Delaware? The answers I see most often is "if you will be doing business in your home state, you will need to file `foreign qualification` with your home state, which charges you fees similar to if you were to form your LLC at your home state at the first place".



For a software startup, I want to understand what it means "by doing business" (i know it`s a silly question). I am working on my own software startup and distribute free software. Revenue stream is from advertisement. 
My questions:1) I am working alone now in CA but will soon hire people in CA. Does the employment part count as "doing business in CA"?2) If my ad sponsor is from CA? Does that count as "doing business in CA". My guess is it probably does.  If that`s the case, my sponsors can come from all 50 states. Does that mean I need to register "foreign qualification" in all 50 states? Do people usually find out where the other company is formed before they enter a contract with them? Do people do this kind of filing on demand as they enter more and more contracts with other businesses from all over the states?3) If I register my LLC in Nevada, do i need to physically go to an Nevada bank to open a bank account? Do local CA banks usually open accounts for Nevada address?

robertj

Since you reside in California - you will be required to
1. Pay California income tax on the results of your company
2. Pay the registration fee ($800) to California as a "foreign" entityrobertj2009-7-22 10:59:41

infinique

Try opening a bank account with Citi Bank rather than local banks with limited footprint across America.

movingsoftware

Thanks for sharing this information about software business. I found this information really helpful as well as informative. Keep sharing more such posts.