Nevada Incorporation: The Advantages of Incorporating in Nevada

Incorporation in Nevada has become an attractive option for savvy business entrepreneurs, and for good reason. Nevada corporations enjoy many benefits just not available anywhere else. We will not only investigate why this is so, but you will also know what to be aware of when incorporating in Nevada, and how to avoid the most common first-time mistakes.

Advantages of Nevada Corporations

A Nevada corporation has many benefits above its cousins in other states. Namely, business owners enjoy the following benefits from having their businesses incorporate in Nevada:

  • Very favorable taxation environment. There are no taxes on corporate or even private income, capital, corporate shares or even equity transfers. Nevada also doesn't have a franchise tax.
  • Corporate meetings can be conducted anywhere. They don't have to be held in the state.
  • Officers and directors of the corporation do not have to be residents of the state or U.S. citizens
  • Minimal reporting and disclosure requirements. No annual report of stockholder meeting dates is required; only the current list of officers and directors is necessary.
  • Directors don't have to be shareholders, and can be nominees
  • Bearer shares are permitted
  • Shareholders aren't public record. Nevada statutes even have sanctions against the use of corporate records by those outside of the corporation in a manner detrimental to shareholder interests
  • No IRS information sharing agreement
  • Nevada corporations can buy, sell, hold or even transfer shares of their own stock
  • Piercing the corporate veil is very demanding in Nevada. In greater than two decades of case law, there has only been 1 incident where piercing the veil has happened, making it the toughest state in the union.
  • Corporations can be formed for the sole purpose of asset protection
  • Nevada corporations can issue stock for capital, services, individual property or even real estate including leases and options. The directors can as well set the value of any such transactions, and the decision is considered final.
  • No minimum requirements on the amount of capital necessary to form a Nevada corporation
  • Strongest indemnification for private liability, which includes any act by officers, directors, employees, stockholders or even offices of a corporation for acts executed in their corporate roles for which they believed to have been lawful.
  • No joint and several liability. This form of liability states that if even more than 1 defendant is responsible for injury provoked per plaintiff, then every defendant is equally liable for the entire amount of the judgement. So if you happen to be included in a personal injury incident while conducting company business, a smart plaintiff's attorney can sue both you and your corporation for the whole amount. Nevada law has abolished this form of liability. Instead, every defendant is assigned a "percentage of fault" with the aggregate being 100%. Only defendants then discovered liable are expected to pay any judgement-and only in proportion to the fault percentage.

State Requirements for Nevada Corporations

In order for owners of a Nevada corporation to maximize its financial benefits, it must follow certain requirements to prove that the corporation is truly operating out of Nevada. Just having a P.O. box will not suffice for proof of operations in the silver state. This proof can be demonstrated if the company has:

  • An actual Nevada business address
  • Pays for its own location expenses. Corporate credit card statements or even cancelled checks meet this requirement.
  • Its own phone number
  • A current business license, if applicable for the corporation's line of business
  • A bank or brokerage account in Nevada

There are many Nevada incorporation services that will help in the setup and maintenance of these items. If you're new to incorporation in Nevada, it's a very good idea to utilise one of these services to avoid costly first-time mistakes.

Jim Hood is a senior contributing editor at The Incorporation Station, which provides tips and strategies to incorporate your business for maximum advantage. He also writes guides on evaluating and hiring Nevada incorporation services.

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