Why
Incorporate in Nevada?
Why
were nearly 45,000 Nevada corporations
and LLCs formed last year?
Unfortunately,
most for the wrong reasons;
attempting to save state income tax and privacy.
The right reason; Piercing the Entity Veil
Nevada
is the most difficult state in the country in which to pierce the corporate
veil. This means it is the most difficult state to break through the
corporation and go after its officers or shareholders personally. To
pierce the veil of a Nevada Corporation requires proving each part of
a three-prong test in order to win your case. Unless outright
fraud is involved, it is almost impossible to pierce the corporate veil
in Nevada. No wonder why so many attorneys have you incorporate in Nevada
first, even if the corporation has to register as a foreign corporation
in your state. You will not find better protection anywhere!
Thin
Capital Rules (Both Corporations and LLCs)
You can
capitalize a Nevada entity with $100 or less. In many states it is a
good idea to have at least $1,000 or more to capitalize an entity. Nevada
also allows you to issue stock or certificates for services. Also in
many states, corporate veils are being pierced because of too little
capitalization. This is not true in Nevada!
Low
Profile (Both Corporations and LLCs)
The
owners are not listed in any state or public records! Whether you
are an attorney or the IRS, you cannot determine who the owner
is of a Nevada Corporation or LLC by calling the Secretary of State.
If you want to safeguard against lawsuits, privacy is important! If
you want to keep your profile low and your name off the state records,
just ask one of our consultants about our Corporate Officer Service!
No
Reciprocity with the IRS
(Both Corporations and LLCs)
Nevada
is the only state in the country that does not exchange information
with the IRS! No financial or ownership information is shared.
Nevada
has become the domestic haven of choice, offering an unmatched
and powerful pro-business environment.
No
State Corporate Taxes (Corporate Benefit)*
Nevada
has NO state corporate taxes. It also has no franchise tax,
estate tax, stock transfer tax, capital gains tax, personal income tax,
inventory tax, tax on corporate shares, inheritance tax, estate tax,
gift tax or minimum tax! Corporations and LLCs require only an annual
fee of $85. A federal tax return must be filed annually, even if
there is no activity. Most Nevada companies have to register in the
state(s) that they do business; therefore, this benefit will not exist
for such companies. This is a great motivator for companies to relocate
their operations in Nevada! This advantage is not available to 95% of
companies looking to incorporate in Nevada because they will have to
register in their home state of operations.
* LLCs
in Nevada are not taxed at the entity level (the state where the entity
registers may be different). They are like S corporations and Limited
Partnerships (having two members and being taxed as a partnership is
usually ideal).
Only
One Person Required
(Corporate Benefit, LLCs Require Two)**
One person
can hold the offices of President, Secretary, and Treasurer and be the
sole Director. Many states require at least three officers and/or directors.
Thus, there is no need to involve other parties in a Nevada corporation,
unless the owner desires. Keep in mind that officers of a corporation
are not necessarily the owners, nor do they have to be Nevada residents.
**An LLC
is best structured with at least two people or entities to form it.
Nevada does allow single member LLCs, but that is not recommended.
51
Years of Case Law (Corporate Benefit)
Nevada
has over 51 years of case law backing up its corporations. The court
system in Nevada is very pro-business oriented. The landmark case (Roland
vs. Lepire) in 1983 showcased how difficult it is to pierce the corporate
veil in Nevada.
I
Don’t Live in Nevada. Can I Still
Form a Corporation or LLC There?
Yes, and
the key question will be, "Do you have to register as a foreign
entity doing business in your home state?" Most of the
time the answer will be yes. Don’t be misled by what other companies
may tell you. In Indiana, a foreign corporation doing business in
Indiana without authority, is subject to a penalty of $10,000. Setting
up a sham operation will only cause legal and tax challenges for you.
Now, keep in mind a Nevada Corporation or LLC is an entity of Nevada.
As a corporate officer or member of an LLC you can live anywhere in
the world. The key is can you establish your company operations in Nevada
which means having your employees located in Nevada. For most who do
not want to relocate their operations here, Nevada still offers a powerful
shield as you will read about soon.
As you
read on, you will learn specifically what these terms mean and if your
new entity has to register in your home state. Even if that is the case,
there are many advantages to forming an entity in Nevada first then
registering as a foreign corporation in your home state. This will also
be covered in a later section. Now let’s see how these powerful
entities apply to your specific situation!
When
Can You Benefit From
What Nevada Has to Offer?
It is very
simple. When you run your company through Nevada, with employees from
Nevada doing the work in Nevada you are assured that you can take advantage
of everything Nevada has to offer. What does that mean?
Now you
have an overview of what is considered doing business in other states
and how that process is handled. If you are going to have to register
to do business in your state or register as a foreign corporation, what
are your options? If you are in a position where you know for sure
you have to pay state taxes in your home state, then you have two options:
- Incorporate
or form an LLC in your home state, or
- Incorporate
or form an LLC in Nevada, then register to do business in your home
state.
