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Nevada Corporations |
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LEGAL NOTICE: |
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Budget Corporate Renewals Inc. |
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Nevada Corporations: Working with a Nevada Limited Liability Company or Nevada Corporation |
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No matter where YOU are, in another state or another country, if you have any business interests or non-employment income, or any assets to protect, you will probably benefit greatly if you incorporate or form a limited liability company in Nevada. Use Budget Corporate Renewals’ incorporation services to form a C corporation in Nevada; form an S corporation in Nevada; form a Nevada limited liability company (all for much less than our major competitors will charge you for the same incorporation services). Let Budget Corporate Renewals be your Nevada corporate headquarters. And if you really want to save money, check out our Guide to Do-It-Yourself Nevada incorporation. We offer FREE CONSULTATION to evaluate your individual situation. Just call us at (702) 870-5351 to arrange a no-pressure session with one of our seasoned, non-commission consultants. Our mission is to help the “little guy” to have informed access to the same tools put in place by the “Big Boys” for their own benefit. It is, after all, NO ACCIDENT that Nevada is the best place in which to incorporate. Check out the section relating to FINANCIAL PRIVACY.
Nevada C Corporation or Limited Liability Company?Now that you are investigating Nevada corporations for yourself, we are certain you will like what you find. Whether you are looking to form a Nevada corporation or a Nevada limited liability company, or maintaining privacy while using a Nevada corporation to manage a Nevada limited liability company, we offer a full range of incorporation services. Each corporate form has its place BUT you will find that a limited liability company located anywhere can benefit greatly if you choose to have it managed by a private Nevada corporation. Nevada is a very small state in terms of both population and bureaucracy. It has no state income tax, so there is little money available to feed the kind of bureaucracy found in, for instance, California. For this reason the State of Nevada simply does not maintain a lot of records and this might present a partial explanation of why there is no provision for keeping track of the stockholders of corporations here. Publicly, at least, this is also justification for Nevada being the only state that does not freely share its records with the Internal Revenue Service. The real reason for the special nature of Nevada incorporation, however, probably has a lot more to do with the need for privacy on the part of those who established Nevada as their own financial “haven”. Liability Protection The State of Nevada is absolutely serious about maintaining the insulation between a corporation and its operator(s). Whereas in other states lawsuits routinely pierce the corporate veil placing liability on the corporation’s officers, directors, employees and agents, in Nevada there have only been two cases since 1975 in which the corporate veil has been pierced—both cases involving outright, undeniable fraud. Nevada incorporation stands up to serious court challenges. The Nevada Supreme Court has established a strict, three-part test for determining the permissibility of penetrating a corporation to get at the people behind it. The funny thing is that even when all three tests have been met, Nevada’s Supreme Court has not felt compelled to allow piercing. The best example of this might be the case of Rowland v. Lepire. Lepire was a contractor who operated his Nevada corporation without regard for adherence to corporate formalities. He freely commingled corporate and personal funds and kept no corporate records. Worse, he volunteered to the Court that he was the sole owner and operator of the corporation. And yet, even in the face of this open admission and the obviously improper operation of the corporation—even when all three parts of the strict, three-part test were failed, miserably—the Court ruled against piercing of the corporate veil. Privacy of Corporate Records With regard to the privacy of corporate records, way back in 1971 the Nevada legislature added a special provision to the corporate statutes, NRS 78.257. This statute makes it a gross misdemeanor for anyone to even attempt to use corporate records for any purpose not in the corporation’s interests. That’s right—even trying to “sneak a peek” at a Nevada corporation’s records for nefarious purposes could result in imprisonment for up to one year in the county jail and a $2,000 fine! Corporate records are, indeed, most private in Nevada—by law. Privacy of Ownership Another area of major distinction for Nevada corporations is the potential for privacy of ownership. As we have just seen, a Nevada corporation’s records—including its stock ledger entries—are private. In addition, the state does not keep any records of stock ownership. That is a good foundation for privacy of ownership but it’s only the beginning. Nevada is one of only a small handful of states that allows the use of bearer shares, share certificates made payable to “bearer”. Such certificates are the property of anyone who holds them. It can be very difficult for an outsider to establish the ownership of a company whose shares are held in this manner. Better still, in Nevada there is no statutory requirement that stock even be issued. Who owns a Nevada corporation when no stock has been issued? That’s up to the Board of Directors and their say is final! In 1987 the Nevada legislature added NRS 78.197, a very brief and easily overlooked single-sentence statute with profound ramifications: “A corporation may provide in its articles of incorporation that the holder of a bond, debenture or other obligation of the corporation may have any of the rights of a stockholder in the corporation.” Wow. You don’t even have to own ANY stock to own the corporation. Another tool for privacy of ownership is the concept of a “proxy” to vote the stock. With this kind of an arrangement it doesn’t matter who owns the stock—the power of control over the corporation rests in the right to vote the stock. An additional method of maintaining privacy of ownership can be established through the use of nominee stockholders. Since there is no liability whatsoever to owning stock, it is usually quite easy to come up with persons willing to hold the stock, governed by a side agreement that would allow for the stock to be returned under certain conditions. How do these privacy provisions relate to a Nevada limited liability company? A Nevada limited liability company can be managed by a private Nevada C corporation. Structured in this way, who knows who owns the Nevada corporation, which manages the Nevada limited liability company? Privacy of Control The use of contract officers and directors has been a tacitly accepted practice in the State of Nevada for more than seventy-five years and is the foundation for privacy, though it goes entirely unmentioned in Nevada’s statutes (except with regard to very strong protection of a corporation’s officers and directors). It is the potential for privacy of control that sets Nevada corporations apart from those of other jurisdictions. Private control of a Nevada limited liability company is possible, too, as explained above. An outsider looking up the public record of a Nevada corporation using contract officers and director will only find the name of the contract officers and director, probably at the address of the resident agent. The Nevada corporation does, of course, have to function in the world. This is usually accomplished through “secondary” officers, provision for which is normally made in the corporation’s bylaws. A vice president, for instance, is typically given all of the authority of the president in the president’s absence. Similarly, the corporation may have an assistant treasurer or an assistant secretary. The Nevada corporation may have any number of such secondary officers, any of whom may serve for any period of time from a day to many years. Actions of a secondary officer are valid if they are endorsed by the corresponding primary officer.
How Nevada Corporations Can Benefit YOUThe amazing thing is that this incredibly versatile tool, set up by the Big Boys for their own greedy purposes, can work even BETTER for everyday people. Yes, as an INFORMED “little guy” you can have all of the advantages enjoyed by the big players—and yet operate almost invisibly, with an extremely low profile afforded by a Nevada corporation structure. If you have any assets to protect or any non-employment income, if you’re in business or even thinking about getting into a business, and yes, no matter where YOU are, you really should take advantage of this extremely useful and unique financial tool. Even if you do not have assets to protect, you might find acquiring a pristine Nevada shell corporation to be the best investment you ever made. Unused “shelf” corporations (formed and “put on the shelf”, with no activity) typically increase in value by up to $1,000 per year—which amounts to a pretty fine rate of return on the annual maintenance costs of less than $500. Let’s look at some common situations where Nevada corporations pay for themselves over and over, year after year. Applying this Knowledge—Nevada Corporations in Another State or Another CountryThe most common use of Nevada corporations, believe it or not, is by persons in foreign jurisdictions—whether another state or another country altogether. (See the Strategy, “I live in another state or another country”.) In most cases where the business has an active presence in the foreign jurisdiction it is necessary to register or qualify the corporation to do business there. But there are a lot of situations in which a Nevada corporation is not considered to be actively in business in the foreign state. You must determine what constitutes doing business within your jurisdiction. In most cases, for instance, it is entirely permissible for a contractor to effect sales on behalf of a foreign corporation. A Nevada corporation could contract with someone in another state or country to provide consultation, for instance. In such a case the contractor would have a presence elsewhere but the corporation itself would not. You would have to pay home-state taxes on any income received from the Nevada corporation but most of the income might remain in Nevada where there is no state income tax. In many cases this strategy can result in tax savings of thousands of dollars per year, year after year. In cases where it is necessary to register to do business in the foreign jurisdiction, a simple two-corporation strategy can usually be employed. The first corporation registers to do business and otherwise meets the regulatory requirements in your home state. It then does business with a separate Nevada corporation set up for privacy in such a way that most or all of the profit ends up with this private Nevada entity. For this strategy to work, it is often helpful to have the private Nevada corporation exist “at arm’s length” with the home-state business. As an example, let’s say you have a bicycle store in Monterey, California, which is subject to state tax of 9.3% in addition to federal tax. Let’s say this business is making $200,000 per year in sales and shows a net profit of $50,000, on which the California tax amounts to $4,650. What if this California business contracts with a Nevada corporation to do its marketing and promotion? Or what if instead of buying bicycles and parts from a dozen different suppliers it makes an arrangement with a Nevada corporation that can supply it with a full range of bicycles and parts, acting as a middleman? Let’s look at the results. Next year, the Monterey bike shop is not as successful as it has been in the past. Its contract with the Nevada corporation has been expensive and cut into its profitability to the point that on the same $200,000 in sales there is NO profit. This means, of course, that there is no California State tax to be paid—a saving of $4,650. The Nevada-based marketing or middleman business, however, has been very successful, showing a net profit of $54,650 (including, for the sake of this example, the taxes saved in California). These retained earnings are now held in the haven of Nevada, where they are far more secure. Now if a bicycle falls off the rack and hits a customer, there is at least $54,650 held away and apart from the assets of the Monterey bike shop. If the customer sues and takes it all, the bike shop owner at least has some security in the knowledge that it isn’t ALL gone. Ideally, of course, this strategy would be in place over a number of years, during which the California business would have turned over all of its real assets to the Nevada corporation in satisfaction of its agreement—leaving NOTHING for prospective litigants to attack. In many instances when an asset search turns up nothing, an otherwise potentially devastating lawsuit simply goes away because there is no profit in pursuing the matter. Two major purposes have been served through employment of this strategy: immediate tax savings of thousands of dollars, year after year, and protection of the hard-earned assets of the business. Less than a thousand dollars worth of setup costs and a few hundred dollars per year of maintenance costs for the Nevada corporation—that’s all it took to accomplish these amazing results. Nevada incorporation can develop into a long-term plan that can greatly simplify Estate Planning. A corporation doesn’t die, it just gets a new president. A little foresight can easily limit probate costs as the “heirs” gain control of the corporation through normal corporate procedures. It is hard to conceive of a profitable business in a foreign jurisdiction that would not benefit by many times the costs of setting up a Nevada corporation strategy similar to this. For foreign nationals, of course, there are additional benefits to being associated with a U.S. corporation and these are hinted at in Operating Tip #10. Nevada Corporations vs. Going “Offshore” Some people have spent thousands and thousands of dollars setting up IBCs (International Business Corporations) and complex offshore structures. What an extreme disappointment and rude awakening for them to find out that disclosure requirements in offshore locations have been substantially increased and offshore transactions targeted by the IRS. All locations with which the United States has an MLAT (Mutual Legal Assistance Treaty)—which is virtually all of them—are affected. We have heard stories from those formerly involved with such structuring indicating that many offshore corporations are simply being abandoned because of the loss of privacy. But what of those situations where substantial assets have been transferred to those offshore locations? One solution might be for some of those offshore companies to invest in Nevada corporations—where most of that money should have gone in the first place. As this realization dawns on people and they take action, it would not be surprising if Nevada sets yet another new record for corporations formed in a given year.
Who Can Benefit from a Nevada Corporation?Are you in business? “Keep your business to yourself”: Do better business, protect your assets and save taxes by working with a PRIVATE Nevada corporation. Do you have any assets to protect? If so, you should have a Nevada corporation managing a limited liability company so those assets can be handled PRIVATELY. Do you have non-employment income? You should work with a Nevada corporation for their income-splitting potential. Do you have money to invest? You could invest it through a Nevada corporation but you might also consider investing it IN Nevada shelf corporations for their practicality and superb investment qualities. Do you have any situation in your life in which it might be helpful to have a corporate friend? If you have any income beyond your living requirements, a corporate friend could allow for income-splitting possibilities, as a basic example. Have you built an estate to pass on to your heirs? You might want to consider sheltering it in a Nevada corporation that could provide you with all manners of perks while preserving your estate, keeping it out of the costly probate process. “Old corporations never die, they just get a new president.” Have you ever considered tapping into the commercial possibilities of the Internet? Just think of the advantages afforded to a Nevada corporation, from privacy to tax savings. Are you a foreign national who would consider immigrating to the United States at any point in time? Perhaps you should get that Nevada corporation in place today! Special immigration possibilities are available for treaty investors and treaty traders, as well as executives and managers of foreign affiliates. Budget Corporate Renewals Nevada Incorporation Services
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