Our Delaware registration makes us liable for far more even though we have not US operations at this time

Though my business was based in in Kenya, we had registered a Delaware C corporation in the US. Our registered address was our lawyer’s address. One day, the lawyer contacted me and told me two things: I hadn’t paid the Delaware franchise tax for two years so in addition to fines, the company would be closed; and the freight forwarder we used was being investigated under the Foreign Corruption Act, our company was one of the accounts being investigated.

I was shocked. We didn’t have any income in the US and the demands from Delaware were two years old. How could I be liable? This was the first I was hearing of them. Second, it’s almost impossible to get things done in Kenya without minor bribes; I’m not sure how anyone does any business without some infringement. Could they demand my records in Kenya? If I didn’t have the US company, would any of this have happened? Our lawyers set everything up and received all correspondence – are they liable?

We got into a real mess because we didn't keep accounts from the beginning

I have a photographic memory. I keep all the details of the business in my head. I do have a notebook where I record invoices and orders and once every couple of months I do a profit and loss.

In the first quarter, our business had $18K in sales. Now we have $87K and I think we’ll reach $150K by the middle on next year. I still keep everything in my head but I have to admit some things are slipping through the cracks.

Finally, I gave in and we hired someone to do the accounts. He slaved away and after two months had things somewhat under control. He found over $12K in unpaid bills including demands for the local and federal tax offices. Together these came to over $30K; we don’t have that kind of cash on hand.

Two days later we saw the first set of accounts since we started the business. We had lost over $90K, were selling at least half our products at a loss, and had not paid state sales tax for three months.

I was astonished. I priced all my products myself and thought we were making good profit since we had cash in the bank. I was also sure I had paid the tax bills.