Key Takeaways

  • Nevada benefit corporations balance profit-making with creating positive impacts for society and the environment.
  • Nevada is attractive for incorporation due to no corporate income tax, no franchise tax on income, and strong privacy protections for owners and directors.
  • Directors of Nevada corporations enjoy broad discretion in decision-making, limited liability protections, and flexible governance structures.
  • Benefit corporations in Nevada must prepare annual benefit reports, which disclose how they meet their public benefit obligations.
  • Nevada corporations don’t need to be headquartered in Nevada to qualify, and the state has fast incorporation timelines (7–10 business days).
  • While Nevada offers significant advantages, businesses should also weigh compliance costs, reporting requirements, and whether investors prefer Delaware or other jurisdictions.

Benefit Corporations

Also known as B corporations, benefit corporations involve for-profit organizations that use several key factors when evaluating their decision and strategy making processes. They use society, the environment, and profitability to determine what works best. They also let the for-profit company subordinate its fiduciary duty in order to turn a profit.

Benefit corporations also allow higher management to evaluate other areas instead of relying on the interests of shareholders. The corporations look at how the community, employees, and environment have an effect on their decisions. Benefit corporations create a positive impact on society and the environment.

Nevada passed Assembly Bill 89 in May 2013 to authorize benefit corporation filings, and the following January, the Nevada secretary of state accepted filings for benefit corporations. These corporations must specify one or more public benefits as an extra purpose.

Also, in Nevada, companies can become benefit corporations when they create a general public benefit. Typically a third-party evaluates certain requirements.

Articles of Incorporation, which corporations fill out to form B corporations, identify the specific public benefits, such as promoting science, preserving the environment, or giving the underserved certain products. Existing corporations can become benefit corporations if they fill out amended articles with the secretary of state and then pay the filing fee.

In addition, all B corps must provide benefit reports and standard annual reporting. All shareholders and the secretary of state must receive these reports via online resources. Directors and officers must consider the impact their decisions have on employees, customers, stakeholders, the environment, and the community.

Advantages of Nevada Corporation Benefits

Nevada is widely regarded as one of the most business-friendly states in the U.S., and these advantages extend to benefit corporations as well. Some of the most notable Nevada corporation benefits include:

  • No corporate income tax or franchise tax on income – Unlike most states, Nevada does not impose a corporate income tax, making it highly attractive for businesses seeking to minimize tax liability.
  • No personal income tax – Shareholders and employees benefit since Nevada does not collect state personal income tax, reducing the overall tax burden.
  • Strong privacy protections – Nevada does not require corporations to publicly disclose shareholder names, and directors/officers enjoy enhanced confidentiality compared to other states.
  • Limited liability protection – Corporate officers and directors are shielded from personal liability for lawful acts of the corporation, reinforcing the corporate veil.
  • Flexible governance – Nevada law gives directors significant discretion in decision-making without constant fear of shareholder lawsuits, so long as their actions are lawful.
  • Business-friendly court system – Similar to Delaware, Nevada has developed specialized business courts that provide predictable rulings and efficient case handling.

These structural advantages make Nevada a favorable jurisdiction for entrepreneurs who want both the social mission of a benefit corporation and the tax/privacy benefits of Nevada incorporation.

Requirements to Become a B Corporation

To become benefit corporations, companies must have several key features:

  • They should have a purpose and strive to create a positive impact on society and the environment. Corporations should also contribute to specific purposes that benefit the public.
  • They should have accountability, where higher level management, such as directors and officers, think about the impact of their decisions on others. These individuals include stakeholders, employees, and customers.
  • They should have an independent benefit director that provides a statement in the yearly benefit report. This report declares if the corporation created a specific or general public benefit.
  • They should have transparency, which means they should publish a public report that evaluates their social and environmental performance against a third-party standard. This report should remain available online via a company website.

Forming a Nevada Corporation

The process of forming a Nevada benefit corporation is similar to creating other corporate entities but includes specific reporting requirements. To establish a Nevada corporation, businesses must:

  1. File Articles of Incorporation with the Nevada Secretary of State.
  2. Submit an Initial List and State Business License Application at the time of formation.
  3. Designate public benefits in the Articles if electing benefit corporation status.
  4. Pay state filing fees, which are competitive compared to other states.
  5. Receive incorporation documents quickly—processing typically takes 7–10 days.

Importantly, a Nevada corporation does not have to maintain its headquarters in Nevada. Businesses may be physically located elsewhere while still enjoying the tax and legal benefits of Nevada incorporation.

Benefit Corp vs. Certified B Corp

For benefit and certified B corporations, directors must take into account the decisions they have and how they affect shareholders, stakeholders, the community, the environment, and employees. Both types of corporations must publish a public report that measures their social and environmental performance.

To qualify as certified benefit corporations, the business must achieve a specific minimum score on the B impact assessment. However, the benefit corporation must publish a public report that determines their social and environmental performance against a third-party standard, but the report doesn't need verification or certification.

Both benefit and certified benefit corporations came about from a nonprofit called B Lab. Certified B corporations must have support from B Lab for a variety of services, such as sales, marketing, business strategies, and saving money.

The District of Columbia along with 20 states recognize the corporate status of B corporations, while certified B corporations have recognition in all 50 U.S. states and around the world.

Potential Drawbacks of Incorporating in Nevada

While Nevada corporation benefits are substantial, they may not suit every business. Consider these potential disadvantages:

  • Additional costs for out-of-state businesses – Companies operating primarily outside Nevada must still register as foreign corporations in their home state, incurring extra fees and compliance requirements.
  • Perception among investors – Some investors prefer Delaware due to its long history of corporate case law, which provides greater predictability in litigation outcomes.
  • Annual fees and reports – While tax savings are significant, Nevada corporations must pay annual business license fees and file required reports, including benefit reports for benefit corporations.
  • Potential scrutiny – Because Nevada offers strong privacy protections, regulators sometimes scrutinize corporations more closely to ensure compliance with federal laws.

For mission-driven businesses, these drawbacks are often outweighed by Nevada’s favorable legal and tax environment, but careful planning is key.

Benefit Corporations: A Marriage of Opportunity and Community

Benefit corporations are a combination of for-profit and nonprofit concepts. They are for-profit entities, which means they issue shares, pay shareholders dividends, and seek financial gains. Nonprofits do not have these entities.

Benefit corporations also serve benefits to the general public, which include protecting the environment, helping low-income people, and promoting health.

Savvy investors can use benefit corporations to push charitable agendas since the companies cannot stray from their vision once they establish the articles of the corporation. Assembly Bill 89 lets some shareholders bring forth a benefit enforcement proceeding, which seeks relief. A successful proceeding typically results in attorney fees and injunctive relief.

In Nevada, nonprofit corporations cannot convert to a benefit corporation, but professional corporations can. For-profit Nevada corporations can turn into a benefit corporation, but shareholders who do not wish to join have dissenters' rights. This means they can have their shares bought out at a fair value.

Why Businesses Choose Nevada Over Other States

Businesses often compare Nevada to Delaware and Wyoming when choosing where to incorporate. Delaware is known for its extensive body of corporate case law, while Wyoming is praised for low fees and simplicity. Nevada, however, stands out for a combination of tax neutrality, privacy protections, and strong director protections.

For companies that want to combine profit with purpose, Nevada benefit corporations allow directors to legally prioritize community and environmental goals while enjoying these broader state-level advantages. This balance of mission and financial benefit explains why many founders view Nevada as an appealing jurisdiction for incorporation.

Frequently Asked Questions

  1. What are the main Nevada corporation benefits?
    Nevada corporations enjoy no corporate income tax, no personal income tax, strong privacy protections, and broad liability protections for directors.
  2. Do Nevada corporations need to be headquartered in Nevada?
    No. A business can incorporate in Nevada while maintaining headquarters in another state, though it may need to register as a foreign corporation where it operates.
  3. How long does it take to incorporate in Nevada?
    On average, businesses receive incorporation approval within 7–10 days after filing their paperwork.
  4. Are there extra requirements for benefit corporations in Nevada?
    Yes. They must designate public benefits in their Articles of Incorporation and publish annual benefit reports to maintain transparency.
  5. How does Nevada compare to Delaware for corporations?
    Delaware offers extensive case law and is often favored by large investors, while Nevada is known for tax benefits, privacy protections, and strong director protections.

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