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FAQ’s

Q. How will a Nevada corporation benefit me if I live in another state?

A. Nevada Corporations can provide of tremendous benefit for those operating their business in another state. With a Nevada Corporation, liability stops with the corporation. As an officer, director or shareholder, you cannot be held responsible for lawsuits against your corporation except in the case of outright fraud. Nevada statutes have made it nearly impossible to pierce the veil of a Nevada corporation regardless of where it conducts business. Depending on your state laws, you will most likely be required to qualify it as a foreign entity and be subject to taxes on income earned in that state.

Q. I’ve heard Corporations are complicated to operate. How difficult is it?

A. If you’re already operating your business as a sole proprietor, your daily activities will hardly change at all. What changes is your frame of mind and how you think for the business. Since the Corporation is a separate legal entity, the business decisions you make are on its behalf, not yours. It’s money is it’s, not yours. Remember, you are not the corporation… You control the corporation. By separating yourself from the business in this way, you’ll be separating yourself from the liability. Note: Major business decisions must be documented with proper formalities. As a client of Corporate Nevada we are here to provide you assistance with your formalities.

Q. What is the best entity to hold my Real Estate in, Corporation or LLC?

A. Both the corporation and the LLC will protect you with limited liability from lawsuits but the LLC is the entity of choice when it comes to holding real estate. This is due to the favorable tax advantages the LLC receives with regards to long term capital gain tax when it elects to be taxed as a partnership or disregarded entity. Corporations (“C” or “S”) or LLCs electing “C” or “S” do not receive the same tax benefit.

Q. Will Nevada “bearer shares” provide me greater privacy or protection?

A. As of 2007, under NRS 78.235, Nevada laws forbid the use of Bearer shares. Quote, “A corporation has no power to issue a certificate in bearer form, and any such certificate that is issued is void and of no force or effect.” Bearer shares never offered the level of secrecy claimed by their promoters. First, creditors will ask at a debtor’s examination a question like “In the last three years, have you ever held shares in any corporation?” If you ever held bearer shares during this time, you would have to answer “Yes” or else you would subject yourself to perjury.

Also, if the bearer shares cannot be located, the court may be able to simply deem the corporation to be dissolved, possibly exposing those most closely associated with it liable for the Corporations debts.

Then, there is this nasty little secret about bearer shares: Every time that bearer shares change hands, it is either a sale or a gift giving rise to tax consequences! So, let’s assume that a corporation has $100,000 in assets, and that the federal gift tax rate is 50%. If Bob gives his shares to his friend Sam, then Bob just triggered the federal gift tax and now owes $50,000. to the IRS. If Sam later gives the shares back to Bob, then another $50,000. is due. Not reporting the exchange could result in criminal charges by the IRS.

Q. What is the best way to pull money out of my Corporation?

A. The short answer is “that depends”. First ask yourself, “What do I need the money for?” Could your need be considered a legitimate business expense? Is this money you plan to put back into the business at a future date? If so, you may consider borrowing the money from the business. Keep in mind all business loans must be documented with a reasonable interest bearing note and repaid. Distribution of profits may be an option but could trigger a taxable event. Taking a salary is also an option but triggers employment taxes and requires more bookkeeping. Always check with a tax professional before possibly creating an unnecessary taxable event.