We practice law in these areas:
ADVANTAGES OF INCORPORATING IN NEVADA
- There is no Nevada State Corporate Income Tax or Nevada Taxes on corporate shares;
- There is no Nevada Franchise Tax;
- There is no Nevada Personal Income Tax;
- No IRS Information Sharing Agreement;
- Nominal annual fees;
- Nevada Reporting and Disclosure Requirements are minimal;
- Stockholders are not public record;
- Stockholders, directors and officers are not required to reside or hold meetings in Nevada, nor are they required to even be U.S. Citizens;
- Directors need not be stockholder;
- Officers and directors of a Nevada corporation are protected from personal liability for lawful acts of the corporation;
- Nevada corporations may purchase, hold, sell or transfer shares of its own stock;
- Nevada corporations may issue stock for capital, services, personal property, or real estate, including leases and options. The directors may determine the value of any of these transactions and once their determination is made, their decision is final;
- Nevada is one of the most difficult states in which to “pierce the corporate veil”;
- A Nevada LLC allows for “multi-tiered” ownership wherein an S or C corporation can be a member–this can allow for substantial tax benefits, and increased liability protection;
- Nevada allows for “single member” LLCs;
- The LLC allows for the “special allocation” of profits–the disproportionate splitting of Member profits and losses (in different percentages than their respective percentages of ownership). This means that Members can enjoy the benefits of receiving profits (and writing off losses) in excess of their individual ownership percentage, so long as it is clearly delineated in the Operating Agreement;
- Nevada LLC members enjoy Limited Liability, which means they are mostly personally protected from any liability of the LLC and successful judgments, as well as from the LLC itself;
COMMON MISTAKES FOR NEVADA CORPORATION
Just because you have not been audited by the state taxation authorities, does not mean that you have a properly structured business. Keep in mind, we seldom get audited for something we did last year; usually it is something we did two to three years previously. The most common mistakes people have made when incorporating in Nevada are:
- Relying on bearer shares;
- Not having any employees in the corporation;
- Having to rely on privacy as the primary asset protection strategy;
- Having an independent contractor take fringe benefits that are entitled to employees;
- Failing to actually being based in Nevada;
- Not issuing any stock;
- Thinking a Nevada corporation is an asset protection tool;
- Owning a Nevada corporation without a business license.
WHAT IS INCORPORATION?
To incorporate is to establish a business entity. There are many varying forms of business formation which have similar features, and a few with unique features that distinguish them for particular uses. Hurtik Law can help you decide which vehicle is the best choice for your business needs whether it be the establishment of a Limited Liability Companies (LLC’s), A Partnership, S Corporation, C corporation or A Series LLC.
Corporations are creations of the State in which it is domiciled and have many of the rights and privileges of a citizen of that State. Your corporation is governed by the laws of the State that it is established in, however; you can register your corporation in other States as a Foreign Corporation doing business in that State and still have protections of the domiciled (where you form the corporation) State.
The main reason Nevada Corporations have become popular is that Nevada is very corporation friendly. State laws governing the establishment and conduct of a corporation vary from State to State. In Nevada special attention is given to issues of indemnity and privacy. The stockholders and officers of a Nevada Corporation are afforded very favorable treatment in many ways. For many years Delaware was the State of preference and Delaware Corporations are still common today. Today however, Nevada is the State of preference for forming a corporation.
A corporation offers excellent protection from lawsuits for the individuals involved in the company, when run properly. There are ways to indemnify the officers and shareholders and insure them so that they are protected from litigation arising from the conduct of the company depending on the place of incorporation.
Liability Protection is the major reason people incorporate businesses today. Beyond the legal issues and the proper conduct and operation of the corporation there is also the issue of privacy. In a lawsuit the opposing attorney will almost always attempt to prove that the individuals in the company, either as stockholders, officers, directors, or employees are personally responsible and therefore can be held liable in the lawsuit. This is one area where the State of incorporation is very important. There are some questions to consider when selecting a state:
1. What information is a matter of public record?
2. Can the Officers, Directors, and Stockholders, be indemnified against claims?
3.What IRS agreements for sharing information does the State have in place?
When a corporation is formed, it is formed as a C corporation (at the state level). That is, the corporation is responsible for paying income tax. By consent of all of the stockholders, the corporation can elect to be an S corporation, IRS form 2553. An S corporation is not taxable for income tax purposes. Taxes are passed to the shareholders on schedule K-1 much like a partnership. This election does not affect the liability protection of the corporation. Since there are so many issues that can be involved, the best tax strategy for a corporation is to consult a tax expert on such matters.
The corporate structure also allows for many other tax advantages surrounding key man life insurance, retirement plans, professional expenses and many other issues.
Individuals with concerns regarding social security, potential estate taxes, and selling or closing an ongoing business make corporations an ideal tool in Estate Planning. Here the State of Incorporation is an important factor, since the sale and transfer of stock differs from State to State. The manner in which stock is held is a key issue in determining proper estate planning.
Let the experienced and knowledgeable attorneys at Hurtik Law & Associates assist you in forming your Nevada Corporation. Contact Hurtik Law & Associates at (702) 966-5200 to set up a consultation