Nevada Incorporation: Advantages of Incorporating in Nevada
The Benefits of Nevada Corporations
A Nevada corporation has many advantages over its cousins in other states. Namely, business owners enjoy the following benefits from having their businesses incorporate in Nevada:
- Extremely favorable taxation environment. There are no taxes on corporate or personal income, capital, corporate shares or stock transfers. Nevada also does not have a franchise tax.
- Corporate meetings can be conducted anywhere. They do not have to be held within the state.
- Officers and directors of the corporation do not have to be residents of the state or even 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 do not have to be shareholders, and can be nominees
- Bearer shares are permitted
- Shareholders are not public record. Nevada law even has 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 purchase, sell, hold or transfer shares of their own stock
- Piercing the corporate veil is extremely difficult in Nevada. In over two decades of case law, there has only been one 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, personal property or real estate including leases and options. The directors can also 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 personal liability, which includes any act by officers, directors, employees, stockholders or agents of a corporation for acts executed within their corporate roles for which they believed to have been lawful.
- No joint and several liability. This form of liability states that if more than one defendant is responsible for injury incurred by the plaintiff, then each defendant is equally liable for the entire amount of the judgement. So if you are involved in a personal injury incident while conducting company business, a smart plaintiff’s attorney can sue both you and your corporation for the same incident. Nevada law has abolished this form of liability. Instead, each defendant is assigned a “percentage of fault” with the total being 100 percent. Only defendants then found liable are required 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 advantages, it must follow certain requirements to prove that the corporation is truly operating out of Nevada. Simply having a P.O. box will not suffice for proof of operations in that state. However, 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 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 several Nevada incorporation services that will assist in the setup and maintenance of these items. If you’re new to incorporation in Nevada, it is a good idea to use one of these services to avoid costly first-time mistakes.