OfflineHave you been thinking about incorporating, or forming an LLC? In your research, you may have heard that Nevada is the way to go. After all, that’s where all the celebrities and con-artists flock to do business!
But why is Nevada really so popular?
While it’s true that there are three good reasons to choose Nevada as your company’s home, let’s first dispel the myths surrounding this choice:
Incorporating in Nevada will lower my taxes. This is NOT true. Though Nevada doesn't have a corporate income tax, you’ll probably have to file one wherever you’re doing business as a nonresident.
It will save me money, in the end. FALSE. In reality, Nevada has a lot of fees that other states don’t have. And as I said above, you’ll most likely have to file one in the states you’re doing business as a nonresident. Therefore, it’s usually cheaper to incorporate in your home state.
While it won’t save you money, necessarily, there are some major perks to incorporating in Nevada:
Protection From Liability. It’s harder to “pierce the corporate veil” in Nevada, meaning it isn’t as easy for the court to remove protection from individual members of a corporation or LLC and hold them responsible for corporate debts. Most states require about $1000 of capitalization to be seen as legitimate and not pierce their veil. Nevada requires only $100, and are more liberal about the yearly formalities (such as keeping meeting minutes).
More Privacy. As I mentioned above, Nevada corporations are granted more privacy. Nevada doesn't readily share company information with other states. In addition, the shareholders’ names do not go on the public record.
No Joint & Several Liability! If you are found jointly liable for a debt in other states, you may be responsible for the entire debt if your co-shareholders don’t pay up. In Nevada, you are assigned an initial percentage, and the courts cannot make you liable for any more than that percentage in cases of joint liability. tlanzaro
that sounds like awesome info. I had heard about Nevada LLCs before. but is it ideal to open a NEVADA LLC form the getgo? your should it be done later on when you actually have more than assets. one are 2 properties doesn't seem like very much. Im from florida and I was wondering if it would cost me a lot more to incorporate in Nevada than in florida. the 2 properties I own are in florida. is it wise to incorporate and than quickclaim both properties to the llc? one of the properties is free and clear.
I like this article. Nevada is one of several states that have better liability protection because they don't allow the corporate veil to be penetrated for lack of corporate notes or being undercapitalized. In states like California, attorneys penetrate the corporate veil easily on LLC, C Corps or S Corps that are owned by one person. States like California also charge an outrageous annual registration fee on LLCs; $800 annually. Many other states, like Nevada, charge much less; $200 or less, and when you have several LLC it can really add up.
Keep in mind why you are forming an LLC. You want asset protection and tax write offs. If you are not holding any properties in your own name you probably don’t have any liability; such as when you are wholesaling and your cash buyer is actually purchasing the property. Once you own property of your own for resale or an income stream you will want to hold it in an LLC for protect against law suits. If you do joint ventures or have partners you will also want to do business as a LLC so you don’t incur liabilities from your partner’s debts. As you obtain more property you will want to create additional LLC so that the amount of exposure to liability is lessened. But be carefully not to create more LLC’s than are absolutely necessary because you have to pay registration fees annually on each one of around $250 and your accountant will charge you approximately $400 to do the taxes for each LLC. So the cost can really add up. You only need one LLC to reap the tax benefit of writing off expenses.