Earlier this month, I travelled to Delaware for a family event.
Before the event, I had been trying to open a business bank account for an LLC I incorporated in Delaware several year ago. I intended the LLC to be a placeholder for any future business I might start.
I decided to open an LLC in Delaware because it has a business-friendly legal climate, and its annual business franchise fee of $250 was a fraction of California’s $800.
This year, I finally generated income from my business and decided to open a bank account in California to safeguard it.
Talk about being naive.
I registered my Delaware-headquartered business in California, which took two months. Just when I thought I was ready to open an account, I next had to apply for a California business license. The state estimated that the time to complete this process would be four months.
Frustrated that my check would no longer be valid by the time California’s labyrinthine bureaucracy stamped my paperwork, I decided to see if I could simply open a business account in Delaware.
The catch: I needed a business license.
So I went online, filled out a form in less than 3 minutes, and the state of Delaware granted me a temporary business license online.
I opened a bank account in Delaware the following day.
It costs $85 and takes four months to get a business license in California. In Delaware, it costs $43.50 and takes three minutes.
In the end, it is California’s economy that suffers. A California credit union lost my business to a Delaware one solely because Delaware’s government ran a process that was over 57,000 times more efficient, but cost half as much.