Incorporate in Las Vegas: Everything You Need To Know
When you incorporate in Las Vegas, you form a new corporation under the business laws of Nevada.3 min read
2. Deciding on a Business Entity
3. Creating a Nevada Business
4. Disadvantages of Incorporating in Nevada
5. Corporate Prevalence in Nevada
When you incorporate in Las Vegas, you form a new corporation under the business laws of Nevada. Although most business owners operate in the state where they live or are located, some choose to form their business entity in another state because of beneficial tax treatment and corporate laws.
Advantages of Incorporating in Nevada
Some of the reasons businesses choose to incorporate in Nevada include:
- No corporate or personal income tax at the state level
- No taxes on corporate shares
- Small employer payroll tax
- Average business tax savings of 20% over other states
- Dedicated business court for more efficient, less costly commercial litigation
- Personal liability for owners of Nevada corporations and limited liability companies (LLCs)
- Legal protection against charging orders
Deciding on a Business Entity
Establishing a Nevada LLC or corporation creates a legal entity that is separate from you as an individual. This means that if your business is sued or accrues debt, your personal assets cannot be seized to settle these financial obligations. This protection takes effect as soon as you file articles of incorporation to register a Nevada business.
While corporations have a long history as the most common type of business entity, they carry many default rules and regulations that must be followed. The LLC, which combines elements of the corporation and the partnership, is much more flexible when it comes to administrative requirements. For this reason, most new small businesses opt to form as LLCs to save money while retaining limited liability and avoiding stringent managerial regulations.
Creating a Nevada Business
File official documents with the state, called the articles of incorporation. These list the name and street address of the business, along with the name and address of a registered agent who has agreed to accept service of process on behalf of your business. This form will also ask for the type and amount of stock that will be issued.
Disadvantages of Incorporating in Nevada
Most Fortune 500 companies are based either in Delaware or Nevada. For small business owners, however, forming a business in a state other than where you live could be more trouble than it's worth. You may find that the business and tax benefits are minimal compared to those received by large businesses. In addition, shareholders often require Fortune 500 companies to exist in one of those two states to streamline compliance with securities law.
Keep in mind that even though you can avoid income tax by incorporating in Nevada or Wyoming if you live there, if you reside elsewhere you'll still be responsible for income taxes in your home state. If you register in a state other than where you do most of your business, you also forfeit limited liability and put your personal assets at risks. You will need to register in your own state as a foreign entity as well, which carries additional costs and fees.
Privacy protection has long been a reason for business owners to incorporate in Delaware or Nevada. Although these states once kept most corporation information confidential, disclosure rules have been strengthened and enforced in recent years. You'll also need to disclose this information when you register as a foreign entity in your home state.
Talk with a qualified business attorney and certified public accounting before deciding where to form a new small business. Although costs are associated with hiring these professionals, it will be well worth the investment when it comes to time and money saved.
Corporate Prevalence in Nevada
Nevada's reputation has been somewhat tarnished in recent years by companies from other states that form in the state and use fraudulent business taxes. Still, tens of thousands of new businesses flock to Nevada to incorporate every year.
The state's license fee of $200 has raised more than $100 million every year. In 2012 alone, Nevada made $133 million in corporate filing revenue. This is comparable to the amount raised by the state's tax on live entertainment.
The average number of new businesses formed in Nevada every year is around 55,000 to 60,000, down from a 2006 pre-recession peak of 85,000. Some of these businesses have physical locations, employees, and full operations in the state, while others were formed solely to hold assets such as real estate and operate elsewhere.
If you need help with incorporating in Las Vegas, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.