Any downfall of registering business outside of the state.

... outside of the state where business is conducted?

[georgei]

For folks that have their business(es) registered outside of the state where business is actually conducted, for example, I know there are some financial/tax advantages of registering a business in Delaware of Nevada, are there any down-falls or disadvantages to this?

Thanks,
George

[LifeinAsia]

If you have a physical presence (store front, etc.) in the state where you live, you'll still need to register in that state as well. So you'll have to do 2 sets of paperwork (probably with associated fees) each year, one for each state.

I've heard that California has really started cracking down on businesses registered out of state just to avoid paying CA taxes.

[georgei]

I will have a warehouse with inventory and ecommerce website, no actual physical store.

[jsinger]

Nevada and Utah are corporate homes to America's sleaziest operations. Many "penny stocks" are domiciled there. Unless you live there, savvy credit managers will double check your credentials. May be harder to get a line of credit.

If I owned the IRS (and one day I WILL!), I'd start by auditing every out-of-state business incorporated in those states. Huge red flag. I would never buy stock in a Nevada corporation.

It's like running a shoe store in Des Moines, but doing your banking in the Cayman Islands. No IRS agent would miss that bright red flare!

[jsinger]

tax advantages of registering a business in Delaware of Nevada

Look up the phrase "why Nevada?" in google for their Secretary of State page on the subject. If you're out of state, taxation is minor. Mostly Nevada makes suing officers very difficult. You could even have "bearer" stock certificates. If you get sued, just hand the certificates to your kids. They now own the business.
(watch out for gift tax, tho)

[georgei]

Ok, thanks

[LifeinAsia]

georgei,
A warehouse sounds pretty much like a physical presence to me.

Also, I forgot to mention it before, but if you have your business checking account at your local bank, that will usually also flag you for phsyical presence.