Doing Business in Nevada
Nevada has a thriving business community and is one of the most popular states for incorporation and Limited Liability Company (LLC) formation in the United States due to the tax and formation incentives. Some of the largest U.S. companies, including Harrah's Entertainment, MGM Mirage, Las Vegas Sands, IGT, Allegiant Air, and Zappos maintain their headquarters in Nevada. This state also services many small businesses, particularly in major industries like tourism, mining, and manufacturing. Nevada offers several options for business structuring. Nevada will allow you to form a company in Nevada which will do business outside of Nevada.
Benefits of Operating a Business in Southern Nevada
Best business climate in the U.S.
No corporate income tax and no personal income tax.
Business-friendly state and local government offering excellent incentives.
Computer literate, expanding and cost-effective workforce.
Exceptional telecommunications and technology infrastructure (One of a few cities nationwide that have one gigabyte-per-second internet service).
McCarran International Airport – 7th busiest in the U.S.
Foreign Trade Zone #89.
UNLV Harry Reid Research & Technology Park.
UNLV Science and Engineering Program.
UNLV National Super Computing Center for Energy and the Environment.
Nevada Ranks #2 for policy environment for entrepreneurship across the Nation.(Small Business Survival Index 2013)
Nevada Ranks #3 in the State Business Tax Climate Index 2012. (Tax Foundation)
Forbes listed Las Vegas as one of the up-and-coming alternatives to Silicon Valley.
Las Vegas offers a market area of more than 51 million people within one day’s drive.
Convenient Western U.S. location near other key high-tech markets such as Phoenix, San Diego, Los Angeles, San Francisco, Salt Lake City and Denver.
FDI, a division of The Financial Times, Ltd. in their 2013/2014 rankings for what they deem “American Cities of the Future,” rated Las Vegas eighth for business friendliness among large American cities and among the top 10 large American cities overall.
The C-corporation is the standard corporation in Nevada and derives its name from sub chapter C of the Internal Revenue Code. A C-corporation files its own tax returns and pays taxes on its earnings. The shareholders also pay taxes on dividends or profit-sharing distributions they receive from the corporation.
Some advantages of a C-corporation include: that it allows for limited liability of the owners/officers/directors; it runs on a fiscal year, not a calendar year; profits are taxed at corporate rates on an 1120 return separate from the individual return; profits can be kept as retained earnings; C-corporations often pay less in tax than an individual; C-corporations have no limitations on shareholders. Shareholders can live anywhere in the world and can be any type of entity.
Nevada corporations generally have bylaws that are written to manage the business and affairs of the corporation. A corporation maintains its bylaws at its principal executive office and is not required to file them with the state.
The S-corporation is formed when you file for Sub Chapter “S” status with the Internal Revenue Service. The S-corporation provides the liability protection of a C-corporation and is taxed as though it were a partnership. All S-corporation shareholders must be individuals (not corporations or other entities). In addition, all shareholders must be United States residents. An S-corporation can have only one class of stock, and no more than 35 shareholders. The income and losses of an S-corporation is passed through to the shareholders, and are reported on their 1040 personal tax returns. All profits are taxed even if not distributed. The S-corporation must maintain proper records and meetings as though it were a C-corporation.
Limited Liability Companies
Forming a Nevada LLC has many benefits for a business owner. Nevada does not impose a franchise tax on LLCs. and there are no fees on company shares. Additional advantages include the fact that the state does not require business owners, shareholders, or members to be Nevada residents. Nevada also allows LLCs to have non economic members who do not own a portion of the company, but who still have the same voting rights. Further, the state does not impose a personal income tax
or franchise tax on limited liability companies in the state.
The structure of an LLC is different than a regular C-Corporation, in that there are member(s) and not shareholder(s). There is one main member called a Manager, and that person has the same type of power as does the Chairman of the Board of a regular corporation.
At the end of each year the LLC files a return with the IRS showing how much the profits or losses are and who the members are that get the credit for the losses or owe the taxes for the profits. The LLC does not pay taxes.
LLCs can be set up as multi-member or single-member. A multi-member LLC has two or more owners, similar to a partnership. A single-member LLC has only one owner, similar to an unincorporated sole proprietorship. Nevada law permits the formation of both single-member and multi-member LLCs.
This type of entity is formed when two or more people come together for the purpose of conducting a business. In forming a partnership, all partners must agree on which duties they will each take on and what percentage of ownership they will each hold. Typically this is done with a partnership agreement.
Partnerships are easy to form, but they are taxed according to the tax levels of each partner. There is no liability protection is offered.
The limited partnership provides some of the benefits of both a corporation and a general partnership by being a pass-through organization. Limited partnerships are composed of a minimum of two types of participants: general partners and limited partners. General partners accept the responsibility for and take all the risks involved in managing and conducting the business. Limited partners, on the other hand, are Investors who share some risk, depending on the amount invested, but who have no participation in the actual management of the entity. Limited partners simply enjoy
the profits, and share in the losses, on the basis of what is stipulated in the partnership agreement.
A Business Trust has an important role in asset protection or estate planning. A Business Trust is complex entity created by a trust instrument under which property is held, managed, controlled, invested, reinvested or operated, or any combination of these, or business or professional activities for profit are carried on, by a trustee for the benefit of the persons entitled to a beneficial interest in the trust property.
Corporate Veil, Liability and Other Considerations
It is extremely difficult to pierce a Las Vegas corporation's veil. In most states, certain corporate formalities must be followed or the company loses its limited liability status. In Nevada, a plaintiff has to prove the company is fraudulent in order to pierce a Nevada corporation's veil, even if the company has not kept up with all the required formalities.
Nevada law allows for the indemnification of all officers, directors, employees, Stockholders, or agents of a corporation for all actions that they take on behalf of the corporation that they had reasonable cause to believe was legal. This indemnification can include any and all civil, criminal and administrative action. These laws can provide complete protection for the officers and directors of a Nevada corporation, as long as they act prudently in their roles.
As a shareholder of a Nevada corporation, one does not have a personal obligation to pay company debts and liabilities. The exception to this would be if you issued a personal guarantee on a business loan. Your personal assets are protected from being taken as compensation for company debts and obligations. Furthermore, personal creditors cannot take assets from the company as compensation for your personal obligation. Directors and officers of a Las Vegas business do not have personal liability
for company's debts, unless an omission or fraudulent act gets committed.
A Nevada corporation can hold company meetings in or out of the country. Shareholders, officers and directors of the company can reside in any state. Individual shareholders of a Las Vegas corporation do not have to maintain citizenship in the United States or status as a resident alien. Corporations in Las Vegas can sell, buy and hold shares of its own stock, and the company can issue shares of stock in exchange for services, property, options, leases and money. Owners of a Nevada corporation can maintain their privacy, since the names and addresses of the company's shareholders
are not required to form the entity.