Out of State Banking

Banking with a Nevada or Wyoming Company

Almost every client who forms a Nevada or Wyoming corporation or LLC with us intends to have a bank account in the name of the corporation at some point.

At the outset, it should be noted that many potential clients have come to us with the idea that if they form a corporation, they can then have a bank account that they could not otherwise have had because they are on “check systems”. (“Check systems“ is a system used by banks to deny accounts to persons who have previously had accounts, but owe a bank money because of overdrafts, etc. This “blacklisting” is removed after 5 years.) Although a bank requires a Federal Tax ID number for the corporation to open the account, this is not the exclusive documentation. They will also require a Social Security number of any signer on the account, even if added at a later time. Therefore the formation of a corporation solely to enable a “check systems” client to have access to a bank account is not available and is a waste of time.

It is thought by many corporation owners that once they form an out-of-state corporation (hereinafter, referred to as a “foreign corporation”), they need only go to their local banks, submit their “corporate paperwork” and open checking accounts. It is not always quite as easy as that. Although not prohibited by law from doing so, it is the policy of many banks not to open an account for a foreign corporation unless that corporation has registered with the Secretary of State of the residence of the local bank. This registration process is not a difficult or expensive but does have some negative consequences for the corporation.

As a result of the registration of the foreign corporation, the corporation will now be subject to the payment of all state income taxes imposed upon corporations operating within that state. The corporation will also be subject to all of the disclosure laws and other rules, statutes and regulations that the state imposes upon all of its corporations. Thus, most of the benefits gained by the formation of the Nevada corporation or a Wyoming corporation will be lost.

In order to avoid the result set forth above, it is often better to open an account in the state where the corporation is formed. If the bank also has branches in the state of residence of the owner, the owner may then make inter-branch deposits and solve the problem. Where, however, there is no branch of that bank located in the state of residence of the owner, he may have to resort to electronic funds transfers, wires or mail for the deposits.

For those who are seeking asset protection, one should consider that when a bank account is opened in the jurisdiction where the corporation is formed and that bank has branches in the residence state of the owner, the convenience of making deposits locally may be offset by the fact that a court seeking the assets of the owner has jurisdiction over the bank chartered in the state of residence even though the funds may be shown to have a Nevada or Wyoming bank account number. In other words, the corporate funds are not completely out of the jurisdiction and control of the local courts where the bank has branches in the local jurisdiction. For this reason, many owners will seek to open bank accounts with no connection to their states of residence.

Corp95 has access to many banking solutions for their clients. At one time, the registered agent for a corporation could open a corporate checking account by simply going to a bank, asking for a signature card and sending it to the client Since the passage of the Patriot Act, whereby banks are required to “know their customers”, this is no longer possible. Banks now want to deal directly with the client. We can provide banking information for Nevada and Wyoming banks that will open accounts for our clients by mail or telephone; stock brokerage institutions with checking account authority and internet banks, all designed to resolve the banking issues raised by our clients. We can even provide foreign bank information, although the use of these banks requires further reporting to the IRS than one would usually have to make when using a US bank.

Upon formation of a corporation with Corp95, we provide the client with all of the banking information available to us and will work with the client for the solution of the client’s banking needs.