What Is a Nevada Corporation?:
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- A Nevada Corporation is a separate legal entity created under the laws of the Nevada Revised Statute.
- Key points:
- It is recognized as a legal person in the eyes of the law.
- To be considered a Nevada Corporation, you must file the correct formation documents with the Nevada Secretary of State.
- Unlike a partnership (which can be an agreement between individuals), a corporation has a more formal structure.
- Management and Structure:
- Officers and directors manage the Nevada corporation.
- Shareholders elect the directors, and directors elect the officers.
- The Nevada Corporation provides limited liability protection to all shareholders, but within certain limits. Shareholders are generally at risk only for their capital contributions and any personally guaranteed debts.
Nevada Corporation Taxes:
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- Nevada Corporations do not pay:
- State business income tax
- State income tax
- State estate tax
- State franchise tax
- State gift tax
- State inventory tax
- Taxes on corporate shares
- Nevada’s tax climate is considered favorable, resulting in lower state taxes for your company.
- Nevada Corporations do not pay:
Record Keeping Importance:
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- Well-documented record keeping is crucial, especially for corporations with few shareholders.
- Proper records are essential for maintaining the corporate veil and proving separation between the corporation and its owners.
- Shareholders, directors, and officers must adhere to formalities, including annual meetings and proper recorded decisions.
Advantages of Incorporating in Nevada:
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- Piercing the Corporate Veil:
- Requires the presence of “fraud” or “manifest injustice.”
- Charging Order Protection:
- Protects stockholders of closely-held Nevada Corporations with 2 to 75 shareholders.
- S Corporation Protection:
- Prevents S corporations from losing their federal S election due to judgments against shareholders.
- Reinstatement of Entities:
- Preserves the corporate veil by treating the reinstated Nevada Corporation as always being in good standing.
- Efficient Business Court:
- Minimizes costs and risks of business litigation for Nevada Corporations.
- Piercing the Corporate Veil:
Remember, incorporating in Nevada offers legal protection, tax benefits, and streamlined processes.
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