Nevada State Corporate Network, Inc.

Corporate Strategies

Clients have used their Nevada corporations and corporate bases to their advantage in many interesting ways, especially those who have corporations in other states and are losing from 3 to 12% of their income to state corporate taxes. (If you have a corporation qualified with the state of California, for example, and are using California as your corporate base, you are paying a minimum of $9,600 on every $100,000 of taxable income.) Many have solved this problem by moving their corporate base or by setting up an additional corporation in Nevada.

You probably already provide your business with capital or services that it needs to function on a daily basis. With a little more imagination, a Nevada based corporation could be utilized to provide those very same functions. What if your Nevada corporation were to bill your present corporation for its management services in the amount of $150,000? That management fee is a tax deductible item reducing total taxable income to only $50,000. Then you could, by forming another Nevada corporation, provide accounting services to your current corporation and bill it $45,000 in accounting fees, leaving only $5,000 in taxable income. Get the idea?

All you need to do is make sure that the accounting and management are actually being done through your Nevada corporations, and that those services are being properly billed and invoiced. If you have someone appointed as officers and directors of your Nevada corporations other than yourself, no one can connect the ownership of the Nevada corporations (which is not public knowledge) with that of your current corporation (which most certainly is public knowledge).

Remember, Nevada has NO state income tax whatsoever. Therefore, all the income that appears in your Nevada corporations saves you thousands of dollars. This strategy provides you with a completely legal means of paying the least amount of tax on the money you have worked so hard to earn!

As important as the considerations of taxation are to businesses everywhere, we have found that the issue of liability is of equal concern to those who are involved in their own businesses. This is of particular importance in the economic times in which we live. For example, if you are an independent businessman (cabinet maker, barber, secretarial service, etc.) and have built your business on consistent, reliable service, you have worked hard and want to make sure you’re protected from unforeseen events. No one can predict how the courts will rule when someone goes after everything you have, simply because he/she tripped on the sidewalk outside of your shop.

You will be more secure if you form a Nevada corporation to which your present business is indebted. Because of the debt owed by your business, and the foresight you had to make a UCC-1 filing in the applicable counties, the Nevada corporation has the first lien on all of its assets. Now when a legal adversary wins a judgment that closes down the shop, your Nevada corporation takes possession of the assets to which it has a legal right. Because you have incorporated in the state of Nevada, and have acted legally, you did not have to disclose your ownership of the Nevada Corporation. You have, therefore, protected all you have worked so hard to build.

There are other strategies for using your Nevada Corporation to your advantage which are far too numerous to mention here. Our clients are constantly discovering new uses for their Nevada based corporation. When executing any corporate strategy, always check with your legal and tax advisor’s to tailor it to your specific situation.

1-800-910-9919 or visit our web site for more information. Nevada State Corporate Network, Inc. – Graig Zapper – President

The C Corporation:

The C corporation is the regular corporation in Nevada. Normally, you will not see the letter “C” used, but when it is, the reason is to distinguish it from the “S” corporation. When you complete the paperwork to form a corporation, you will have formed a “C” corporation unless you take the extra step to file for Sub Chapter S status with the Internal Revenue Service. A “C” corporation which is not considered to be in the personal services business may elect to end its tax year on a date other than December 31st. This designation must be made at the time the SS4 form is filed to obtain the corporations “EIN” number.

The S Corporation:

The S corporation is formed when you take the extra step to 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. The S corporation must maintain proper records and meetings as though it were an S corporation.

The Professional Corporation:

Nevada recognizes the use of professional corporations. This does not mean that the other types of corporations are not used by professionals or that you aren’t professional if you use them. Instead, it is simply a type of corporation that authorizes only members of the designated profession to be shareholders. Doctors, Lawyers, and CPAs are three examples of professionals who frequently use professional corporations.

If you are not a licensed professional, you can not own shares in a professional corporation. Thus, an unlicensed individual could not own part of a doctor’s practice by simply becoming a shareholder. Professional corporations are taxed like regular corporations. However, unlike a regular corporation, a professional corporation does not protect the shareholder from malpractice claims against the professional or in some cases, others in the corporation. The professional corporation does provide liability protection for shareholders from other actions such as personal injury.

The Limited Liability Company:

The Limited Liability Company (LLC) provides the benefits of a regular corporation but with no separate taxation. As of October 1, 1997 Nevada joined with over 40 states to recognize “Single Member LLC’s. Virtually all of the 50 States of the Union recognize multi-member LLC’s. A growing number are giving the same recognition to single member companies. This gives the small business person all of the advantages of an LLC even though he or she is the only member. These advantages are:

• It is a Tax Pass through entity like a partnership or Sub-S corporation

• It offers its members all the liability protection of a C-Corporation

• Its members are State tax free in Nevada

• Under the “Check the Box” rules effective January 1, 1997 the taxpayer can elect to have his company taxed as a corporation or partnership.

• All 50 states recognize LLC’s and 40 of them recognize single member LLC’s – This means that the tax advantages of Nevada will be recognized in your home state.

You, of course, can have more than one member of an LLC. The structure of an LLC is different than a regular C-Corp, 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.

1-800-910-9919 or visit our web site for more information. Nevada State Corporate Network, Inc. – Graig Zapper – President