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Click
here to Incorporate Online!
Click
here to Form
a Limited
Liability
Company (LLC)
Online!
If you're considering forming a Nevada Corporation or a Nevada LLC (Limited Liability Company) you've come to the right place.
Before forming a business, there are several important issues to consider to make sure that you choose the business entity structure that will best serve your business and personal objectives.
Asset
Protection / Personal
Liability
Shield
Click here for more information about Asset Protection
One of the primary concerns of most individuals when starting a business is that of ensuring asset protection and protection from personal liability. Entity choice is important, as the protective qualities vary depending on the type of business entity chose. Aside from the protection issues, in making the decision as to which entity type to choose, there are many other factors that should also be carefully considered for each possible entity type, including: the cost of formation, the ease or complexity of formation, the formalities legally required to maintain the entity, the transferability of the business interests/ownership, tax consequences, etc.
Which
Business
Entity
Should
I Choose?
There are several business entity options available in Nevada and elsewhere, including (but not limited to): a Corporation (Nevada C Corporation or Nevada S Corporation), a Limited Liability Company (LLC), Limited Partnership (often referred to as a "Family Limited Partnership" of "FLP"), Limited Liability Partnerships ("LLP"), General Partnerships, and Sole Proprietorships.
Sole Proprietorships and General Partnerships (beware of the dangers)
While Sole Proprietorships and General Partnerships are the most economical ways to begin engaging in business with some tax and other advantages, these types of business entities have the enormous drawback of providing no shield of separation between business liabilties and the business owners. In other words, if business is a sole proprietorship or a general partnership and the business is sued, the individual business owners will be completely exposed to the debts and liabilities of the business. What this means is that the business owners personal assets (e.g., homes, cars, bank accounts, investment accounts, etc.) are subject to attachment and execution by business judgment creditors.
Unlike the sole proprietorship and the general partnership, other business entities can shield the business owners from the company's debts and other liabilities.
The Nevada Corporation
ADVANTAGES OF A CORPORATION: A Nevada Corporation offers an excellent shield of separation between the debts and liabilities of the corporation and the individual shareholders or owners of the corporation. Corporations in general have various statutory or legal formality requirements both in the formation and continued internal governance of the company. For example, when the corporation is formed not only must the Articles of Incorporation be filed with the secretary of state's office in the state of incorporation, additional formatilies are required (such as a meeting of the organizers, a meeting of the board of directors, a meeting of the shareholders, written minutes of the meetings, adoption of bylaws, issuance of stock certificates, etc.). After the initial organization, annual meetings are required of the board or directors and of the shareholders. Written minutes of each meeting must be kept in the corporate book. Etc.
ADVANTAGES OF A NEVADA CORPORATION: Nevada offers maximum protection for shareholders (business owners) and for the officers and directors of the corporation. Nevada has statutorily limited the ability of a litigant to pierce the corporate veil (aka: "piercing the corporate veil"). Nevada's corporate law, in NRS 78.747 specifies that:
"Except as otherwise provided by specific statute, no stockholder, director or officer of a corporation is individually liable for a debt or liability of teh corporation, unless the stockholder, director or officer acts as the alter ego of the corporation." NRS 78.747(1)
NRS 78.747(2) goes on to clarify that:
"A stockholder, director or officer acts as the alter ego of a corporation if:
(a) The corporation is influenced and governed by the stockholder, director or officer;
(b) There is such a unity of interest and ownership that the corporation and the stockholder, director or officer are inseparable from each other; and
(c) Adherence to the corporate fiction of a separate entity would sanction fraud or promote a manifest injustice."
(emphasis added).
Moreover, NRS 78.747(3) mandates that "[t]he question of whether a stockholder, director or officer acts as the alter ego of a corporation must be determined by the court as a matter of law."
(this means that a judge will be making this determination and not a jury that is unschooled in corporate law).
In sum, the Nevada corporate law ultimately limits the ability of a business litigant to pierce the corporate veil on a finding of alter ego to only those situations where recognizing the "corporate shield" would "sanction fraud" or promote "a manifest injustice." In addition this statutory protection of corporate officers, directors and shareholders from personal liability from the corporations debts and liabilities, Nevada has a body of case law that explicitly disfavors piercing the corporate veil.
Some of the other advantages of Forming a Nevada Corporation are as follows:
- No State Corporate Income Tax
- No State Taxes on Corporate Shares
- No State Franchise Tax
- No Personal Income Tax
- No Internal Revenue Service (I.R.S.) Information Sharing Agreement
- Relatively low Annual Fees
- Minimal Reporting and Disclosure Requirements
- Stockholders are not Public Record (i.e., bearer shares are allowed in Nevada) (maintaining maximum Stockholder anonymity & privacy)
- Only one person is needed to create and maintain a legal Corporation or LLC
- Stockholders, directors and officers need not live in or hold meetings in Nevada; they need not even be U.S. citizens
- Directors need not be stockholders
- Officers and directors of a Nevada corporation or LLC can be protected from personal liability for lawful acts of the corporation or LLC
- 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 their decision is final.
- A case law history which favors the business owner and which makes it difficult to "pierce the corporate veil."
C Corporations and S Corporations
One often hears the terms "C Corporation" ("C Corp") and "S Corporation" ("S Corp"). When it comes down to it, in the "real world" a corporation is really just a corporation (although there are differences between professional corporations, publicly traded corporations, private corporations, etc.). The C Corp or S Corp distinctions are only IRS taxation distinctions in the "tax world". ( click here for more information on the different tax treatments of S Corporations and C Corporations ).
Click here to Form a Nevada Corporation Online
Nevada Limited Liability Company (Nevada LLC)
One of the advantages of forming a Nevada Limited Liability Company (Nevada LLC) is the simplicity of formation. Unlike the corporate formation, the Nevada Limited Liabilty Company Act does not require much in the way of business formalities either in the Nevada LLC formation or in the continued internal operation and governance of the LLC. The Nevada LLC law does not require any organizational meetings or minutes, it does not require annual meetings or minutes. The appointment of officers and/or directors is completely optional. In sum, the business owners decide how they want to internally govern their own Nevada LLC and the state does not impose its will on the Nevada LLC business owners. If the Nevada LLC business owners want to appoint officers, fine. The state does not care one way or the other. If the Nevada LLC business owners want to require themselves to hold annual meetings, fine. But the state of Nevada does not care one way or the other.
In addition to the lack of state imposed business formality requirements, the Nevada Limited Liability Company law allows the Nevada LLC owners (members) and managers to maintain a maximum degree of annonymity where desired. Particularly when used in conjunction with a Trust (which can have other advantages in the estate planning and asset protection planning realms), maximum annonymity of the the members or managers or the LLC can be achieved and maintained.
One of the main advantages of the Nevada LLC is its inherent ability in providing not only a shield of the LLC members (business owners) and managers from the business debts and liabilities (the same type of corporate shield of protection that the Nevada corporation provides) but also the protection of the individual LLC members (owners) equity ownership interests in the LLC and, vis a vis the equity ownership protection, the protection of the business assets from any "back end" liabilities (click here for a more in depth discussion of "front end" and "back end" liability issues and protection).
Click here for more information about the benefits of Forming a Nevada LLC
Click here for information about the Nevada Asset Protection Trust
Click here for more about Business Formation considerations
Why Form a Business in Nevada?
Few legal scholars would dispute that Nevada (often called the "new Delaware") currently has what is considered to be the most favorable business entity laws in the United States which provide real advantages to businesses of all types. Some of the advantages over many other states of Forming a Nevada Corporation or of Forming a Nevada LLC include:
- No State Corporate Income Tax
- No State Taxes on Corporate Shares
- No State Franchise Tax
- No Personal Income Tax
- No Internal Revenue Service (I.R.S.) Information Sharing Agreement
- Relatively low Annual Fees
- Minimal Reporting and Disclosure Requirements
- Stockholders are not Public Record (i.e., bearer shares are allowed in Nevada) (maintaining maximum Stockholder anonymity & privacy)
- Only one person is needed to create and maintain a legal Corporation or LLC
- Stockholders, directors and officers need not live or hold meetings in Nevada, or even be U.S. citizens
- Directors need not be stockholders
- Officers and directors of a Nevada corporation or LLC can be protected from personal liability for lawful acts of the corporation or LLC
- 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 their decision is final.
- A case law history which favors the business owner and which makes it difficult to "pierce the corporate veil."
Click here for more information about the Nevada LLC
Click here to Form a Nevada LLC online
Why
Choose an Attorney
to Incorporate
My Business?
While
there are
currently
many non-attorney
incorporation
services
now available
which tout
their low
incorporation
fees, there
a number
of very
real reasons
why you
should
choose
a licensed
Attorney
to form
your new
business,
including:
- Non-Attorney
individuals
and companies
cannot
lawfully
provide
you with
legal
advice
concerning
the formation
and maintenance
of your
company.
- Many
of these
individuals
and companies
fees
are so
low because
they
do not
disclose or provide
all of
the services
needed
to complete
the incorporation
and formation
filing
and process
for full
compliance
with
the applicable
Nevada
statutes.
This
may lead
to your
paying
even
more
fees
in the
long
run.
- Some
of these
companies
and individuals,
while
advertising
that
they
are "incorporating" a
company
for you,
actually
only
form
an entity
with
themselves
shown
as legal
owner
and then "sell" the
consumer
a corporate
or LLC "shell".
Some
unwitting
consumers
are then
left
on their
own,
not knowing
that
additional
filings
and procedures
are required
until
they
discover
that
their
entity
charter
has been
revoked
or that
may be
subjected
to personal
liability
are then
hit with
additional
fees
and costs
to bring
the entity
into
compliance.
- Many
of these
companies only file with the state the bare minimum publicly filed documents and merely
provide
you with
non-customized
Forms
that
may or
may not
fit your
company's
specific
needs (mainly because it would be practicing law without a license for them to do anything other than give you or fill in blank forms for you but more importantly because they lack the legal education and expertise to give them the ability to draft customized agreements and documents).
- An
Attorney,
on the
other
hand,
can assess
your
specific
needs
and provide
you with
valuable
legal
advice
and a
customized
entity
formation
that
may save
you hundreds
or thousands
of dollars
in the
long
run.
- An
Attorney
can provide
you with
ongoing
legal
advice
and assistance
to help
ensure
that
your
company
continues
to provide
you and
your
associates
with
the personal
liability
shield
that
is critical
to ensure
that
the individuals
are not
saddled
with
costly
personal
judgments
and other
problems.
- An
Attorney
can provide
your
business
with
ongoing
legal
advice
and assistance
to help
you make
important
decisions
that
may greatly
impact
your
company.
Note: Beware of corporate "nominee services" and the potential pitfalls associated with these types of arrangements. There are better, less risky ways to accomplish the desire for anonymity in forming a business in Nevada.
To form a Nevada Corporation, Nevada LLC or other type of business entity either give us a call to speak to an attorney or to schedule an appointment for a free consultation. In the alternative you can click on one of the following links to complete the online formation questionnaire for Nevada Limited Liability Company Formation or to Incorporating in Nevada to get your business formation started immediately.
Click
here
to
Incorporate
Online
Click
here to
Form a
Limited
Liability
Company
(LLC) Online!
NEVADA INCORPORATION LAWYER - NEVADA BUSINESS LAWYER
NEVADA LLC LAWYER - NEVADA ASSET PROTECTION LAWYER
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