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Incorporate in Nevada
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NEVADA- A Favored Destination for Incorporation
Nevada, located in the western United States is famous for glittering resorts, scenic attractions, small town festivals, man made wonders and its casinos. A place full of thrills and excitement, it attracts lots of people for another reason as well. It is one of the most preferred destinations for incorporation of companies.
Studies reveal that close to 45,000 entities were formed last year. So, what makes Nevada so popular Incorporating in Nevada gives access to a series of fiscal and legal benefits. Asset protection and tax exposure reduction are the two primary reasons that make Nevada popular.
Nevada, also nicknamed The Silver State is extremely corporate friendly. This state has laws which are favorable to business owners and corporate officers. Whether you are starting a new business or shifting base, whatever be the reason, this state is the preferred jurisdiction for all new ventures.
Incorporating Your Business:
Incorporation is the establishment of a legal entity otherwise known as a corporation. The very first step for a successful business is to form a corporation.
A corporation is a distinct legal entity created under state laws which can open a bank account, purchase property, enter into contracts and operate a business. One of the most important features of a corporation is that generally, its owners are not personally liable for the debts of the corporation. Anyone who completes the articles of incorporation and pays the state filing fee can form a corporation. There is no age, residency or other legal requirement.
The main aim of forming a corporation is to protect your personal assets. It also helps to save money on taxes and reduces your chances of audit. Forming a corporation infuses credibility, trust and professionalism.
A traditional corporation, known as a C-corporation, is taxed as a separate entity, leading to double
taxation. One tax is at the corporate level on the corporations net income and another tax to the shareholders when the profits are distributed to them. An S-corporation is a corporation that elects to be treated as a pass-through entity (such as a sole proprietorship or partnership) for tax purposes. All of their income is allocated to stockholders. Since all corporate income is "passed through" directly to the shareholders who include the income on their individual tax returns, S-corporations are not subject to double taxation.
However, C-corporations have greater tax planning flexibility and can shield stockholders from direct tax liability. S-corporations are subject to limitations, such as the number and type of stockholders it can have.
LLC or Limited Liability Companies are a relatively new type of business entity that combines the personal liability protection of a corporation with the tax benefits and simplicity of a partnership.
Advantages of Incorporating in Nevada:
Nevada offers many benefits for business owners and entrepreneurs making it a hot destination to incorporate a new business. Tax benefits, privacy and the protection Nevada provides for its shareholders makes it a one of the most popular states for businesses. Nevada is considered to be the most beneficial state for incorporating business due to the advantages listed below:
1. No Corporate Income Tax
2. No Taxes on Corporate Shares
3. No Franchise Tax
4. No I.R.S. Information Sharing Agreement
5. Nominal Annual Fees
6. Stockholders are not Public Record
7. No Personal Income Tax
8. Minimal Reporting and Disclosure Requirements
Additional Advantages:
1. It is not necessary that stockholders, directors and officers live or hold meetings in Nevada or even be U.S. citizens.
2. Directors need not be stockholders and may be nominees.
3. Directors and officers of a Nevada corporation can be protected from any personal liability for lawful acts of the corporation.
4. Piercing of the Corporate Veil does not happen in Nevada as it does in other states.
5. Nevada courts have a history of case law protecting the corporate veil, making it the most difficult in the country to pierce.
6. Nevada corporations may purchase, hold, sell or transfer shares of its own stock.
7. Nevada corporations may issue stock for capital, services, personal property or real estate including leases and options. The directors determine the value of any of these transactions and their decision is final.
8. A Nevada corporation may be formed for the sole purpose of limiting a persons liability in any lawful business venture.
9. The use of bearer shares is not prohibited in Nevada.
10. The Nevada Law Library is an extensive storehouse to research all aspects of Nevada law.
Nevada Incorporation Information:
Choosing a Corporate Name
The first step to forming a corporation is choosing a business name. The name you choose must be distinguishable from any other registered Nevada business entity and is subject to certain exceptions under state law.
Articles of Incorporation
While incorporating your business in Nevada, articles of incorporation must be filed with the Nevada Secretary of State. The Nevada Business Corporation Act (Chapter 78 of the Nevada Revised Statutes) requires certain information be included in the articles of incorporation. They are listed below:
1. Complete Information of the Incorporators - The minimum number of persons (one or more), eligibility requirements and the name and address of the incorporator should be listed in the articles.
2. Corporate Purpose - There is no stringent rule in Nevada regarding the purpose of forming a corporation. Any lawful business activity can become a corporation and hence the purpose need not be stated.
3. Information on the Director The minimum number of directors should be furnished with their complete name and address. A director must have completed 18 years of age.
4. Stock Information The number of shares that the corporation is authorized to issue must be stated in the articles along with the number of shares of each class or series, if applicable.
5. Other Information The street and mailing address of the companys initial resident agent is to be given. If it is registered as an investment company, any provision limiting or eliminating annual shareholder meetings must be listed.
6. Optional Provisions - Nevada allows optional provisions to be integrated into the articles of corporation for those companies who wish to add some more criteria such as a specific corporate purpose, provisions managing and regulating the affairs of the business, provisions governing the distribution or division of its profits.
7. Officer Information - Officers may be listed in the bylaws or elected by the board and may appoint other officers, in compliance with the bylaws. They must be natural persons and every corporation is required to have a president, secretary and treasurer. Any officer may hold more than one office in the corporation.
8. Bylaws Corporations in Nevada generally have bylaws written to manage the business and affairs of the corporation. A corporation maintains its bylaws at its principal executive office and is not required to file them with the state. The board of directors must adopt initial bylaws for the corporation.
9. Resident Agent Every Nevada Corporation must have a resident agent in Nevada. A resident agent is the person or entity designated to receive official state correspondence and notice if the corporation is served with a lawsuit. The agent must reside in Nevada and have an office which is open during regular business hours and is located in Nevada.
10. Income Tax Rate Nevada does not collect state income tax.
11. Annual Report - An annual list of Directors, Officers ad Resident Agent must be filed with the Nevada Secretary of State on the last day of the anniversary month of incorporation. The filing fee is based on the value of the corporations total authorized stock.
12. Foreign Qualification If you are operating your primary business office outside Nevada and you do business in Nevada, then you may be required to register as a foreign corporation in your home state.
With such flexible laws and regulations it comes as no surprise that small and big companies are domiciled in Nevada and accrue benefits.
Cost of Incorporation:
The cost of incorporation is very minimal in Nevada in comparison to other states such as California and Delaware. There is no state income tax or franchise tax. An initial list of officers and Directors is due after 30 days of incorporation with a $ 125 fee. Annual fee is $125.
Nevada Gaining Popularity:
Nevada has become a very popular state for incorporation. Known as the tax-free state, Nevada is a stiff competitor to Delaware which is popular because of its history, experience and pro business climate. Nevada with its hassle free laws, pro business environment and lack of formal information sharing with the IRS has made it a preferred state for incorporation.
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