Nevada Corporations

Ever hear those radio ads for incorporating in “tax free Nevada.” I hear them all the time. At first it sounds like something that might be beneficial to running a business, but they aren’t telling you everything. It is true that Nevada is tax-friendly to business with no franchise tax, no personal income tax, no corporate income tax, no filing of meeting minutes, et cetera. However, Corporations in Nevada are NOT setup as a tax avoidance tool, except in the state of Nevada ONLY.

Nevada, like Delaware, has favorable corporate laws that offer maximum protection from director liability. Nevada has no state income tax. However, if you are doing business in another state, you will have to register as a foreign corporation with that state’s secretary of state and file income tax returns in that state. In essence, if you are doing business only in the state of Nevada, then it is good. Otherwise, you will still have to pay franchsie taxes, income taxes, et cetera according to the state in which you do business.

So, the only remaining benefit of a Nevada corporation is director liability; and if the company is made up of just one owner, that results in the owner protecting himself in case he sues himself (not gonna happen). I personally choose a Limited Liability Company (LLC) and feel that this is among the best choices for a small business.

Perhaps you should consult with a certified public accountant (CPA) or certified financial planner (CFP) to determine what entity best meets your needs and financial goals.

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