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Incorporate in Nevada
Reduced Tax Exposure
· No Corporate Income Tax
· No Taxes on Corporate Shares
· No Franchise Tax
· No Personal income tax
Nevada Protects the Corporate Veil
When you form a corporation whether it is in Nevada, California, Texas or wherever, you must follow certain corporate formalities. Remember, a corporation can do everything you can do except act or think, and it does that through its board of directors, officers and shareholders. It is easier for someone to pierce the corporate veil of a company involved in a lawsuit if the corporation has not kept accurate corporate books or if it has commingled funds. Another contributing reason corporate veils get pierced has to do with low capitalization. In some states, like California, we recommend that you capitalize your corporation with at least $1,000. If not, it can be easier for someone to prove that you were simply the alter ego of the corporation (one and the same as the corporation) and pierce the corporate veil!
Nevada has a three-prong test that must be proven (all three parts must be proven) to pierce the corporate veil:
· The corporation must be influenced and governed by the person asserted to be the alter ego;
· There must be such unity of interest and ownership that one is inseparable from the other;
· The facts must be such that adherence to the corporate fiction of a separate entity would, under the circumstances, sanction fraud or promote injustice.
The burden of proof of the three “general requirements” is on the plaintiff who seeks to pierce the veil, and a failure to prove any of the three will result in the veil not being pierced. Essentially Nevada says that unless you can prove fraud the corporate veil will not be pierced. That is awesome protection.
If your company is incorporated in Nevada you have something called “choice of law jurisdiction.” What does that mean? It means you can enter a contract and decide that it falls under the laws of Nevada (state of domicile) not the other state (state of doing business). If there were a challenge you would have the laws of Nevada in your favor. This may work in your favor and discourage lawsuits! There is something also called “choice of forum”. This means you may want the case heard in the state you choose, which in most cases would be Nevada! Someone in the (state of doing business), bound by a choice of forum in Nevada, may have to travel to Nevada for that lawsuit to occur. That may curb this person’s enthusiasm to sue your company. Now you see why small and large companies are rushing to be domiciled out of Nevada!
Nevada Offers the Best Protection of Board of Directors from Shareholder Lawsuits!
In order to find the Board of Directors liable, the shareholders must prove gross negligence on behalf of the Board of Directors. The test to prove gross negligence in Nevada is to pierce the corporate veil.
No other state has such a high test!
No Information Sharing Agreement with the IRS
Nevada is one of only two states that do not exchange information with the IRS. If your company has to register in another state, keep in mind, that state will probably exchange information with the IRS.
In Nevada, One Person Can Hold All the Corporate Positions
One person can hold the offices of President, Secretary, Treasurer, and be the sole Director in Nevada. Many states require at least three (3) officers and/or directors. Thus, you don’t need to bring other people into your Nevada corporation if you do not want to do so.
Nevada Only Requires the List of Officers to be Up-dated Annually
If your officers change throughout the year, the corporation is not required to update the Secretary of State every time a change is made. The corporation may update it (which requires a fee) or wait until the corporation’s annual renewal is due.
Nevada Corporations May Purchase, Hold, Sell or Transfer Shares of its Own Stock.
Nevada May Issue Stock for Services!
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 their decision is final.
Nevada Does Not Require Stockholders, Directors and Officers to be U.S. Citizens or Live or Hold Meetings in Nevada!
Directors need not be Stockholders and Officers and Directors of a Nevada Corporation to be protected from personal liability for lawful acts of the corporation.
In Nevada, There is No Joint and Several Liabilities!
The other significant change in Nevada law is the abolishment of joint and several liabilities. Joint and several liability means that should a judgment be entered against several defendants, they will each assume equal liability for the full amount of the judgment, regardless of their relative fault in causing the damages. Nevada now requires the court to assign a percentage of faults to each defendant, from zero to one hundred, with the total equal to 100 percent. Every defendant found liable is required to pay a share of the total judgment, no greater than his or her fault.
Nominal Annual Fees
Nevada Provides Indemnification of Officers Automatically When Articles are Filed!
Articles get automatic indemnification of officers: As of June 15, 2001, Nevada Revised Statutes (NRS) 78.037(1) allows officers to be automatically indemnified, whether it is stated in the articles or not!
Nevada Does Not Require the Members to be Listed in State Records!