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Why Incorporate in Nevada?

Why Incorporate in Nevada?
Posted By: Douglas Burnett on September 17, 2008

Why Incorporate in Nevada?


PRIVACY:

Privacy just might be the principal reason that there were over 40,000 companies incorporated in Nevada in 2004 alone and on any given day, more corporations are formed in Nevada than ALL the other states combined and 99.9% of all Fortune 500 companies have incorporated in Nevada. Unlike other states, Nevada doesn’t want to know who owns the stock of a corporation. The information is simply not kept on file by the state nor is it a matter of public record. To ensure privacy, Nevada is the only state that I know of that allows its corporations to use bearer share stock certificates (discussed below). This means that whoever physically has possession of the stock, is the owner of the stock. For this reason, it is virtually impossible to prove the “true ownership” of a Nevada corporation.

FINANCIAL PRIVACY:

Nevada has developed a corporate structure unlike that of any other state. Previously the preferred state in which to incorporate was Delaware. Nevada created their corporate statutes based on those of Delaware and then improved upon them. Nevada statutes allow investors and owners of Nevada corporations to remain completely private. Most states in this country require that you publicly file the name and address of a corporation's directors, officers, and stockholders. This information can then be publicly accessed by a brief telephone call to the Secretary of State's office in the state of incorporation. Nevada, in an attempt to create a private corporate shelter, requires only the name of the corporation's president, secretary, treasurer and the corporation's directors, specifically excluding vice presidents and stockholders. The state does not wish to know who the investors or stockholders of the corporation are. A Nevada corporation owner can utilize the privacy of contracted officers and directors for his corporation. Consequently, they are the only visible public representatives of their corporation. The owner can still hold the corporate title of vice-president, remaining completely in control, but out of the public's eye. This alone makes Nevada the preferred state of incorporation.

BEARER SHARES:

Nevada has another unique feature that allows corporate stockholders to obscure their ownership of the corporation even further. Nevada is one of only two states that allow its corporations to utilize bearer shares. Bearer shares are a type of stock certificate that says the bearer of the certificate is the owner of the certificates stated number of stock shares. Bearer shares can be impossible to track or trace because the person that has possession of the bearer shares of a corporation would be considered the owner of the corporation. This form places a solid brick wall in the front of anyone who is trying to track down the ownership of your corporation. Other states do not make the use of bearer shares available to their corporations, because bearer shares make keeping track of corporate ownership nearly impossible.

NO IRS RECIPROCITY:

Nevada takes corporate privacy very seriously. In 1992, the Internal Revenue Service came to then Nevada Governor Bob Miller requesting that he establish an information exchange program. The IRS wanted Nevada to exchange all of the information they have on every resident and corporation in Nevada, in exchange for a reciprocal arrangement with the IRS database. The Governor stood his ground and told the IRS he wanted no part of the program.

ASSET PROTECTION COMPARED TO OTHER STATES:

Almost every state in the United States has adopted corporate statues that limit the liability of corporate representatives, including the officers, directors and stockholders. Nevada has very specifically defined in its statutes all corporate cases where fraud has been perpetrated. This means that the corporation can be sued, file bankruptcy or be involved in other unfortunate activities and still not jeopardize the personal assets of its agents or representatives. The significant thing to remember here is that if your corporation does get sued, the initiator of the suit must bring the action against the corporation in its state of domicile. This is where it becomes important to have set up your corporation in a state that has taken a stand to protect the personal liability of a corporation's participants. Nevada has taken this stand quite firmly.

NO STATE TAXES:

Pro-business Nevada, unlike almost every other state in this country, has taken a stand! The state has continued not to tax the income of its corporations or its citizens. Corporations are entitled by state and federal law to many deductions not available to individuals. It’s the responsibility of each individual taxpayer to structure his or her business affairs in such a manner as to minimize your tax liability. While tax evasion is a serious crime, legal tax avoidance is the duty of every business owner. By proper utilization of your corporation, it is possible to ZERO out your taxable income.

NO MINIMUM CAPITAL REQUIREMENTS:

A Nevada Corporation can be organized with very little capital if desired. Many states require that a corporation have at least $1,000 in capital.

ONE PERSON REQUIREMENT:

One person can hold the offices of president, secretary, treasurer, and be the sole director. Many states require at least 3 officers and/or directors. Thus, there is no need to bring other persons into a Nevada corporation if the owner does not desire it.

NO NEED TO COME TO NEVADA:

A corporation can be formed by mail, fax, or phone and the person incorporating never has to visit the state, even to conduct annual meetings.



Meetings can be held anywhere in the world at the option of the director(s).

LIVE AND WORK ANYWHERE YOU WANT BUT INCORPORATING IN NEVADA IS A MUST:

Anyone in the United States can incorporate their business in any state they choose. By doing so they will be governed under the laws of the state of incorporation, if brought into a court of law.

HOW DO YOU KNOW IF YOU NEED TO FILE IN ANOTHER STATE AS A FOREIGN CORPORATION?

As a general rule, if you have a storefront or a license (such as a contractor) in that state you will have to file in order to be authorized to do business there or if you were to call the state’s taxing agency and ask if you were required to file in your state, they would say simply YES, if you earn money in the state. Having stated the obvious, some businesses such as truckers, Internet marketing, network marketing or a consulting business operating in several states can set up their base of operation anywhere and in many cases, owe no duty to their home state taxing authority.

WHAT A NEVADA CORPORATION TAKES WITH IT ACROSS STATE BORDERS:

When you are conducting a business in your home state you still have the choice of deciding which state to incorporate in. Although it would be nice to take advantage of the tax benefits of other states rather than your own, you are subject to local and state tax in the state in which you are doing business. So why would you want to incorporate in another state?

TAKE NEVADA LAW WITH YOU!

One of the many things that make a corporation such a powerful entity within which to place a business enterprise is that it is durable. Not only in terms of time, but also, given the right protection by the laws of its state of incorporation, it can also weather the storms of litigation. What does this mean for the principals of a Nevada corporation that live in, and do business through that corporation in another state? First, in some very important instances, if that Nevada corporation is sued in another state, and it is properly registered to do business in that state, that state’s courts will use NEVADA law to adjudicate certain issues. Second, the obvious advantage to this is that when you incorporate in Nevada, which has powerful laws protecting its corporations, you can take those protections with you across state lines. This dramatically enhances the protection (limitation of liability) that that corporation can give you as a corporate principal.

NOMINEE OFFICERS:

Owners of Nevada Corporations who wish to remain “invisible” to prying eyes can achieve something unattainable otherwise. They can become the man/woman behind the actions, face and voice of the corporation (like in the movie The Wizard Of Oz), and invisibly control their corporation by using a “nominee” (this means a legal stand-in” for the true owners - Nevada is the only state that I know of that allows nominee officers). By employing a “nominee”, corporate owners receive total privacy and anonymity protection. Using a nominee (such as the service provided by ES) DOES NOT mean that you are surrendering any portion of your corporation or control over it. This process is a simple business transaction wherein you are essentially hiring someone to sign on the public record so that you don't have to. The nominee signs on as all corporate officers (including the President, Secretary, Treasurer, and Director) with the exception of the Vice President. It is the Vice President who is granted FULL signatory control over the corporation (the Vice President is not shown on the public record (therefore the VP is also invisible). Once your name is out of the public eye, you and your assets can become “invisible” to prying eyes, and you can then freely manage things from behind the scenes. Remember that the corporate bylaws and a Declaration of Beneficial Interest (ES’s nominee service contract), strip the nominee officer of any and all actual power. It is a simple business transaction, a win-win situation for everyone except those trying to locate the actual ownership of the corporation, and/or any assets they may own. Additionally, you as the corporate owner retain the power to remove the nominee from the public list at any time you wish. Best of all, you, as the owner, are the ONLY signer on the corporate bank account.

SO HOW DOES IT WORK?

Unfortunately, everyone will not be able to use these strategies. These strategies work with the self-employed and those who manage their own businesses - small and large. The first step is to establish a Nevada Corporation to work with your current non-Nevada company (or with you personally if you are a 1099 person or a sole-proprietorship). Then you will want to place the Nevada Corporation in a position where it will be providing a service or leasing equipment or property to your non-Nevada corporation.Your Nevada Corporation can act as a supplier, consultant, marketing service, advertising service, management company, or financier. All of these businesses could provide a service to your current home state corporation.

Your current home state business can then divert profits that are being taxed, and direct those profits into Nevada where there will be no state taxes. For instance, if your home state business sells computers, why not have your Nevada corporation purchase the computer from your present supplier, mark it up to near retail, and sell it to your home state business to be resold. You have just left all of the profit from the sale of the computer in tax-free Nevada, and reduced or eliminated any home state tax that you will have to pay. Now, if this strategy is implemented in a high tax state like California, your overall tax savings can be substantial.

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Joyce Brayboy
Media relations specialist at U.S. Army Research Laboratory
very informative. Thanks!
Tuesday, September 23rd 2008 at 10:38AM
Contact me I am interested today
Bro Wisdom2See
We Lead By Example For A Corporate Understanding
To Righteously Compete Within A Global Market.
Bro Wisdom2See
www.SolarWindPower.biz
www.TalkBlackLiveRadio.com
Wednesday, October 1st 2008 at 12:13PM
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