As you are planning an online entity, the physical location will depend mostly on other factors, such as: - What Product or Service are you trying to provide/supply? If it's an online service, then the business may be registered pretty much anywhere. This may change, of course, if the your offering is a tangible product, or even a service where the delivery of such service is location dependent, like hairdressing, etc. - Mode of delivery/distribution of service or product. Once again, if it's a tangible product, which needs warehousing, you may want to go with the state where the warehousing costs are lower. Does the product require distribution channels? If this is true, I would imagine that say Chicago will have a better developed distribution infrastructure, and facilities, than say South Carolina. If on the other hand, the mode of delivery/distribution of service is entirely online, then consideration would be cost and availability of high speed broad band, communication. I do know that there are large chunks of land area in some states, where broadband and cell phones are simply not available or are very poorly covered. - Do you need employees? Here considerations would be availability of talent, minimum wages and costs of employment, availability and proximity to training facilities (if needed), etc. Yes, you would need a business name - maybe a name that describes what you do. The best names are usually one word and are kept own to two syllables. Of course, this not a rule, but it is easier for your clients to remember, especially when the business is going to be mostly online. And you want to ideally register as an LLC, which always be converted to an S-Corp at a future date, if you want to. You will only need to incorporate the business once, and then register in other states if you are operating in those states. Everything else has been covered in quite a lot of detail by Bizmaster. Message Edited by gjosephus on 09-30-2009 04:22 PM -- font size edited

Well before visiting this post, I have never thought that running an online business entails so many intricate things. It just spins my head literarily. I have never thought that it is so much complicated and there are so many legal complications are associated with it. regards shimul website design

shempler, have you considered registering the business in one state (CA, if that's your headquarters) and qualifying to business in CT? Some states exempt internet businesses from their intrastate commerce rules, so I suggest you check the laws in both states to find the best option for you. The previous posts go into detail on the steps you should follow if you're considering this course.

It is probably best to consult an attorney regarding issues like these. Does anyone have information or experience with starting a partnership in 2 different states?

Thank you everyone for your great advice. Currently we have set this aside and have decided to go as independant contractors while invest in each others services.   The first of the year we are starting fresh with all the great advice that you all have given.   We greatly appreciate all the information for us to go in the right direction.;)

Hi Chris, I very interested in your set up procedures. I read this responce you gave. My partner and I are looking to do the same thing. Here is a post for help I just made. Your thoughts and advice would be appreciates.       PLEASE HELP: I have read countless posts on this site and others on this topic, we have also consulted CPA's and tax attorneys and we are still so confused by something that surely is not rocket science   My partner and I, both in different states, CA and CT, are starting a service business, both working from home, online and by phone, have no office, sign designating our office or business on the premises, no employees, no product, (we are headhunters-recruiters) and thus no really liability issues given our industry. We need an EIN number so our clients can pay our invoices for our service. I understand the simplest thing would be to each register as sole proprietors in our individual states but then we need two EIN numbers and that gets confusing for the clients given we are working off one contract and do not want to make things complicated for our clients.   All other options an LLC, Partnership and or just 1099 one of us seem to bring about extra tax burdens to either both of us or one of us.   Note: I am also aware that CA is probably the worst state to do anything in, this posing part of our dilemma.   Note: the person in CA may also be moving to WA state in the next 6 months, which is a much more business friendly state but for now we need to work with what is definite.   I can't believe this is so difficult is there someone out there that can tell us the best way to go about this??   Please someone help two single Mom's trying to live the American dream......     Thank you!

It is also a good idea to have an attorney draft a partnership agreement to cover the operation of the business and decision making authority, particularlly in financial matters, since decisions made by one partner affect all partners. Though you may not think you need one, when one of you decides to leave the business, it will allow a smooth transition. A partnership ceases to exist when one partner leaves the business, either voluntarily or by death or illness. You will want to be certain that you have covered all issues before starting your business. Your attorney can help you with details.

Thank you so much for your responses. I am sure I will be back with a few more questions. But for now you have given me a direction ;)

I just wrote a post about registering to do business with states here: http://community2.business.gov/t5/The-Industry-Word/Doing-Business-in-An...

Thanks everyone for your thorough replies. Sweetestmiracle, we're glad you found helpful advice and please keep us posted on your progress. Best of luck to you!