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Company:

We formed a LLC in Delaware as a 50/50 partnership. We have an agent in Delaware, EIN, Operating Agreement, Articles of Organization. Our company will operate over the internet as a technology/software company where user's can pay a subscription fee to use the online software.

Situation:

We want to open a business account with Chase Bank in Illinois but we have been told that we need to register our Delaware LLC with the Secretary of State and make these extra filings, paperwork and fees in order to open a business bank account.

Question:

What is considered "operating" in Illinois? Is having a bank account in Illinois considered operating? We don't sell anything in a physical location or sell anything specific to Illinoisans because we are an internet company. Our business does not have any connection with Illinois specifically outside of just having a business bank account so I am a little confused on why the extra registration and fees are needed because in the LLC, I thought income tax falls on the individuals and not the business itself.

Is this specific to Chase bank? Can we just use a personal bank account instead?

My assumption is this extra stuff is not needed because even though it is an LLC, we will be taxed as individuals and money made would be part of our incomes and we are selling software over the internet. I am understanding that these extra things are required because we are trying to specifically open a business bank account. So if we just don't do that, can we avoid this?

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  • Where is the company's home office?
    – D Stanley
    Nov 30, 2018 at 22:20
  • could you simply open an account with Chase Delaware? you could still use ATMs and Chase branches in all states, you'd just have a different routing number (and no problems)
    – Aganju
    Dec 1, 2018 at 1:10
  • Forget about Chase and try a normal bank; local credit unions are great also.
    – Fattie
    Dec 1, 2018 at 5:07

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You can't use a personal account. The issue isn't about how you are taxed. If you are a business then banks want you to use a business account. They charge fees differently, they provide a different basket of services, they expect a different amount of activity for a business account.

What type of services? Multiple people allowed to sign checks, hundreds of deposits a month, multiple credit cards and debit cards...

That EIN means you are a business and that they know that.

You mention Delaware, and Illinois, but where are you? Where one or both of you are located might make the most sense for the bank. That gives you an easy way to see the banker if there is a need. It can also be required to visit a branch in person when setting up the initial account.

You describe your business as:

Our company will operate over the internet as a technology/software company where user's can pay a subscription fee to use the online software.

Each of those users will be making a payment to your business you need an account that can handle that.

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