When You Can't Afford Mistakes...

Launch Your LLC or Corporation with Confidence!
Ready to Launch?
We'd love to hear from you.
1-800-351-5111
1-702-367-7373

Nevada Corporate Planners, Inc. is a BBB Accredited Business. Click for the BBB Business Review of this Manufacturers Agents & Representatives in Las Vegas NV

NEVADA CORPORATE PLANNERS INC

D&B business directory

 

 

 


Strategies That Don’t Work with Nevada Corporations and Common Mistakes

When forming an entity in Nevada, whether it is a Corporation, Limited Liability Company or Limited Partnership it is critical that it is formed properly.  Failure to do so may cause legal and tax challenges. 

The business of forming Nevada corporations has skyrocketed over the last couple of years.  Many people around the country are saving money in state taxes by incorporating in Nevada.   States like California do not like losing state tax revenue to Nevada.    They especially don't like it when people still live in California and operate their business there, while running all their profits through a Nevada bank account and don’t pay California taxes.

In any area, there is always misinformation that exists.   For many years we thought the world was flat until there was some investigation to discover that was not true!  That is also true in the business of forming Nevada corporations.  The increase of companies forming Nevada corporations without doing their proper homework is taking many people down the path of uncertainly at best, and illegal activities at worst. We estimate that 70% of the people who incorporate in Nevada are NOT going to be able to take advantage of the tax benefits that Nevada offers. It is becoming economically profitable by other states to review their procedures to make sure their tax is being collected.   You will begin to find people, who thought they were getting away with tax savings, start to be audited for things they have done improperly over the last few years.  In other words, just because you haven't been audited by the state taxing authorities does not mean you have structured your business properly.  Remember, we rarely get audited for something we did last year; usually it was for something we did 2-3 years ago.  And when states like California start auditing you and looking to collect penalties and interest for the previous 3 years because you should have registered to do business in California, you will be sorry!

Here are the most common mistakes people make when incorporating in Nevada, or strategies that don't work:
 

1. Relying on Bearer Shares

2. Not having the corporation have an employee.

3. Relying on privacy as your primary asset protection strategy

4. Having an independent contractor take fringe benefits to which employees only are entitled.

5. Not having substance by being based in Nevada

6. Not issuing stock

7. Thinking a Nevada corporation is an asset protection tool

8. Having a Nevada corporation without a business license
 

Again,  it is critical to set up things properly.  When it comes to tax and asset protection planning strategies, they do change.  As you know, there were many tax changes in 1997.
 
You need to be aware of both new tax changes and new case law with regard to asset protection that may effect your situation.   If you have any questions about this article call Nevada Corporate Planners, Inc. at (800) 351-5111. At NCP, Inc. it is our job to research these things and let you know how they may effect your situation.


Bearer Shares-
Fact or Fiction?

First, it is necessary to understand the importance of Bearer Shares and why they are a primary strategy for many registered agents in Nevada. Bearer Shares are supposedly a way of holding stock privately, and a way to have some tax advantages.

Normally, when you fill out the back of a stock certificate, you must print the name or the company name of who owns that stock. Then you must record in the stock ledger the shareholder, address, date, number of shares, and if it was an original issue or a transfer. Obviously whoever stock is issued is the owner of the corporation. If is it to the Bearer, then whoever holds onto that certificate, at a particular moment, will thereby be considered the owner of the corporation. Others say you can simply hand off the certificate to a friend before you go into court and "legally" say you are not the owner (we will address later why that won’t hold up). Well, if you issued stock to yourself and had to record your name in this ledger, you would have very little privacy. Keep in mind, in Nevada this information is not listed in state records, so it is much more difficult in general to find out who the stockholder is in Nevada than any other state. Also, a registered agent is only obligated to hold a copy of the stock ledger statement at their office, which tells where the actual stock ledger is kept which can be anywhere in the world. This is why it can be so frustrating for attorneys to get to first base and discover the owner of the corporation.

The first advantage of Bearer Shares centers around the ability to deny your involvement with a corporation. Imagine receiving a subpeona to appear in court. You just got sued personally, and the plaintiff thinks you own a $3 million company. You go into court and hand the Bearer Shares to the bailiff. You get on the stand and under oath say, "I don’t own the stock of this corporation." If they ask who does, you say, "I don’t know." Well, the lawsuit stops. They thought you owned this $3 million company, and you now told them you don’t. You have no other assets personally. In the real world the lawsuit probably wouldn’t stop just like that. Also, in the real world if an attorney has to spend a lot of money to get to first base she/he will require a big retainer depending upon the nature of your case. The big retainer will eliminate 50% of the frivolous lawsuits anyway. Nevada will give you this benefit without Bearer Shares.

The second advantage is centered on taxes. When you have more than one corporation because you want to have more than one tax bracket at the $50,000 level you must not be considered a controlled group. (For the specifics on controlled groups, please see the section on controlled groups). Basically, if you have one corporation and you own 80% or more of that stock then you form a second one and you again own 80% or more of that stock, that will be considered a controlled group. So, instead of getting two separate tax brackets you will get one. Basically, you will pay more in taxes.

For example, if you had a company that was going to earn $200,000 in profits this year, some companies would have you form an LLC and four C corporations to be the members. Then $50,000 would flow from the LLC into each C corporation where each would pay 15% Federal Tax. That would be fine if you are not a controlled group.

People have used Bearer shares and given them to friends to avoid the controlled group rules. To make sure your friends don’t take off with a part of your company you can have them sign the back of the certificate and give them back to you to keep in a safe place, so they can technically never claim ownership. It is kind of like playing hot potato with someone. You never quite have it for very long. In this above example if you were considered a controlled group instead of paying about $30,000 in federal taxes, which is 15% on $200,000, you would be paying around $61,000 (which is $200,000 in one corporate tax income tax bracket)! That is a $31,000 increase in taxes due! Plus the corporations may be viewed as personal service corporations which means it would pay an additional 39.6% tax on that $200,000 in net profits!

Are we saying that Bearer Shares don’t exist? Not exactly. We are saying they won’t hold up the way everyone would like them to, and for some registered agents in Nevada, if you took away this one strategy, you would take away 80% of their strategies!

Now that we have discovered what Bearer Shares are and what they are suppose to accomplish, lets examine why they don’t work!
 

Seven Reasons Why Bearer Shares Don’t Work!

1. We can’t find one court case in the history of the Nevada Court system that even mentions Bearer shares, much less any type of recent court case where they have held up.

2. We can not find a law firm in Las Vegas that uses Bearer Shares as an asset protection strategy.

3. It is not listed in the Secretary of State’s information as a benefit of doing business in Nevada.

4. If you ask the SOS about Bearer Shares it will tell you to call the Security Division that handles securities.

5. When you call the Security Division, it indicates it has heard of Bearer Shares, but is unaware of them as a strategy. 

6. How do you hold meetings with Bearer shares (put this as an extra)?

7. If Bearer Shares don’t work and you lie under oath about not owning stock of a corporation when you know you do, that is a 3rd Degree Felony!
 

We want to point out that Bearer Shares do exist in some offshore countries. And if they were bullet proof they would be a wonderful strategy. 

If anyone can provide facts to the contrary of what we are presenting we would be more than interested. Until then, the whole concept seems to be full of holes!

First, we had two separate attorneys do searches in Nevada State Records on CD-ROM’s and neither of them could find any mention of Bearer Shares! What a shock! You would think a "rock solid" strategy promoted by other companies would have abundant case law.

Second, we had one of those attorneys call all the major law firms in Las Vegas that specialize in asset protection and find out which ones utilize Bearer Shares as a strategy. Only a couple ever heard of it and most importantly, NONE utilize it as a strategy. 

So far we can’t find any mention of Bearer Shares in state court records, nor can we find a law firm in Las Vegas that recommends it as a strategy.

Third, the state of Nevada doesn’t even list it as one of the benefits of doing business in Nevada. They list everything else!

Fourth, the SOS (702-486-2880) will tell you to call the Security Division (702-486-2440), because they know nothing of Bearer Shares.

Fifth, and most critical is the fact that the Security Division handles everything related to securities. If you had questions about types of stocks available in Nevada, or how many shareholders you can have they will have a very specific answer. But when you ask about Bearer Shares, you will get someone who has simply heard of them at best. At worst, they will not have any comment on them at all! NOW, if Nevada’s own Security Division can’t rule for them, how can any registered agent rely on them as a strategy?

Sixth, can you imagine your Bearer Shares holders being subpoened into court and asked, "Did you ever vote at a shareholders meeting or annual meeting?" You know the answer is obvious, of course they didn’t! Usually, someone will make up three Bearer Shares and distribute them to three people, but no one ever operates as a real shareholder. If it doesn’t make sense to you then don’t expect a judge to believe it either. And to all those companies that say it can be done so easily just ask them for some evidence of success in the courtroom, because you won’t find any!

Seventh, there is a legal term that is called having beneficial interest in a situation. In other words, even though you may not own the corporate stock directly, you may have an indirect control over it. For example, if you issued your corporate stock to an irrevocable Trust, and you were the trustee, you would have control of the corporation. Bearer Shares, if they existed, would do the same thing. You have an indirect control over the corporation. Basically, with Bearer Shares it is very easy to say you don’t own them if they are not in your possession. The challenge is you would still, in most cases, have control over them. When you get on the stand and are under oath you have to be very careful. 

If you are asked if you have any direct or indirect control and you have Bearer Shares and answer NO, that is a 3rd degree Felony! How do you like that! (look up case law for this)

The bottom line is Bearer Shares do not work in Nevada. Don’t be misled by other registered agents that promote them. The key is to do things properly. If you want privacy in your stock ownership you can do that, if it is structured properly.
 


Special Report on Employees and Corporations
According to the IRS, almost every Corporation
should have at least ONE employee!

Recently, the IRS has focused its audit procedures on the issue of independent contractors versus employee status. In order to avoid payroll withholding and the employer’s share of withholding taxes, many companies treat as independent contractors certain individuals performing services for the company.  This is one or two exceptions. Click here to read about the few exceptions.

On audit, the IRS usually takes the position that these persons were really employees, not independent contractors. If the IRS prevails on this issue, the employer is liable for a 100% penalty equal to the amount of income taxes and social security taxes that should have been withheld. This amount is a liability not only to the company, but also of the officers and directors of the company. The IRS can look to the officers and directors for the entire payment of this amount. This potentially enormous liability hangs over the head of every business owner who treat themselves or their workers as independent contractors to their respective corporations.

Nevada Corporate Planners, Inc., in its goal to bring you the most current information to help you down the road of doing things properly, is excited to present this Special Report. With over 30,000 Nevada corporations formed last year, there is a growing concern within the industry, whether people are being presented with accurate information. There is a legal term called form over substance. You need both form and substance to be a legitimate, operating business. The form part is easy, that is simply forming the corporation. The area of substance is where most people, in our opinion, fail to follow through and use Nevada corporations properly. 

In order for your Nevada Corporation to have proper substance, it should include the following:

1. Up-to-date corporate records (with all necessary Minutes and Resolutions).

2. A bank account in Nevada.

3. A Nevada office complete with phone line (in most cases).

4. A business license in Nevada (in most cases).

5. Properly completed contracts and employment agreements.

6. Copies of payroll tax returns.

7. Copies of local phone bills.

8. At least one employee of the corporation!
 

This last characteristic for corporate substance is the most commonly missed. Many people are calling themselves an independent contractor to the corporation. As you read earlier in the IRS Report this is an important distinction to consider. If you are a true independent contractor, that is fine. Most are not. Consider this fact:

Most corporate officers, including Vice-Presidents are considered employees by the IRS!

Question: Can you be an independent contractor to the corporation and still be the Vice President? A shareholder? A director?

Answer:  No.

Question: How do I act as an independent contractor and still run the corporation properly?
 

If you are not a shareholder, officer or director (including Vice President) then you can become an independent contractor (if done properly) to the corporation; provided you have at least one employee! This means someone needs to be paid as an employee of the corporation. We recommend a salary paid at least once a month.

Keep in mind most corporate officers are considered employees!

Question: What are the steps to properly become an employee of the corporation?

1. Form the corporation (an obvious one).

2. Obtain a Nevada Business License (See Our Supplemental Guide for this information).

3. Have an employee contract for each employee.

4. Pay yourself as an employee, either monthly or semi-monthly. Pay the necessary payroll taxes; both on the employer side and the employee side. Nevada Statues say you must pay each employee twice a month. In Nevada Revised Statue 608.060 it states the exceptions to semi-monthly payments. If you have any questions about this or the exceptions call the Labor Commission in Nevada at 702-486-2650. If you are a one person corporation, then you can pay yourself quarterly if you wish. The Labor Board is not concerned about one person corporations.
 

That’s it! Four Easy steps and Now you’re doing things right!

Question: Is there any more privacy between being an employee or an independent contractor to the corporation?
Answer: Certainly. In general, the independent contractor has less information to give than that of an employee of a corporation. An independent contractor will receive a 1099 at the end of the year from the corporation (this does have your SSN# attached to it!).
An employee of the corporation will receive a W-2 at the end of the year (again this will have your SSN on it).

Question: Is it possible to have an employee of the corporation who is not a corporate officer?
Answer:  Yes!

Question: How does the IRS know if Nevada corporations do not have employee(s)?
Answer: They match up Form 940 and 941(Employer’s Quarterly and Annual Unemployment Tax Return). If they show no record of these returns being filed by the employer (i.e. the corporation) this draws a serious red flag, indicating the corporation has no employees! It may take them some time to audit everyone, but we strongly recommend not playing the odds. If your current corporation is not doing things properly, now is the time to start making some changes. 
So . . . 

 1. If you are the Vice President and you do not want to be an employee, resign and become an independent contractor or appoint someone else to be the VP and pay them each month.

2. If you are the officer and would like to continue to be, start paying yourself as an employee.
 

Relying on Privacy as your Primary
Asset Protection Strategy

When it comes to protecting your hard earned assets you want every advantage possible. An ideal situation would be where you were sued both personally and as a business and you had to lay your whole asset protection plan out in front of the judge and have the judge rule in your favor that everything was structured properly for business reasons! And of course your assets were all protected! That would be ideal! 

Now, if it takes longer for someone to get to first base in your situation to figure out who the owners are, wonderful! That just means the plaintiff will have to spend more money! After all, aren’t most lawsuits a simple game of economics. And if you can make it very expensive for the plaintiff to find your assets so much the better!
 

So what is the challenge….

The challenge is that many companies rely solely on the privacy of your situation with Bearer shares (which don’t work) and nominees (which do work to a certain degree) to protect your assets. And the whole plan is designed upon the fact that no one will discover your assets to start a lawsuit. And the rest of the plan is all full of holes! There is no substance to the corporation or LLC! No employees anywhere! No business license. If you took away the privacy of those plans, you would have a plan that was like Swiss cheese, all full of holes! The only way you would be protected would be to hide under a rock because you had to be so private!

Again, if you structure a rock solid asset protection plan and have privacy along with it, that is the icing on the cake!

The common places most people have to give up their identity as being linked to a corporation are in the following areas:

1. Issuing stock

2. Obtaining a Nevada Business License

3. Opening a Nevada bank account

4. Being an employee or independent contractor to the corporation 

5. Entering into other contracts or agreements

6. Loan applications from banks


You must realize you may be private on the surface level of the corporation like in the state records, but eventually your name will show up in one of these 6 areas. So don’t be mislead that you are going to be so private and no one will locate you. 
If you don’t like that option, simply don’t be any part of the corporation, including being the signer on the bank account and/or independent contractor.

Having an Independent Contractor
Taking Fringe Benefits or Meals, Travel and Entertainment Deductions

This is one of the biggest and most common mistakes everyone makes. People are trying to avoid payroll taxes, so they structure a situation (or so they think) that they will be paid as an independent contractor to the corporation. There is no problem in being an independent contractor to the corporation. The problem lies in these areas:

1. When there are no employees of the corporation

2. When they are taking fringe benefits or meals, travel and entertainment deductions as if they were an employee.

First off, there must be at least one employee of each corporation. The IRS doesn’t understand how it is possible to operate a corporation solely with independent contractors and not have at least one employee. If this is a one person corporation then you would be the employee!

Second, if you were an independent contractor to your corporation, and someone else must have been the employee, then you would not be entitled to fringe benefits! Those are only reserved for the employees!

Fringe benefits include things like being able to take expenses for meals, entertainment and travel. Fringe benefits also include things like: no-additional cost services, qualified employee discounts, working conditions, fringe benefits, de minimis fringe benefits (use of copy machine for personal use), and qualified moving expense reimbursements. These are all excluded from employee’s gross income.

Independent contractors would not get these benefits and would have to pay for them out of their own pocket!

Many people are going to find out the hard way when they get audited by the IRS after they have been a one person corporation taking pay as an independent contractor and not having any employees anywhere! The IRS on several occasions have gone back and deemed all that income subject to FICA and FUTA and penalties and interest! And usually it is a 100% penalty!

From 1988 to1994, the IRS conducted 11,400 audits of firms forcing the reclassification of nearly 500,000 persons as employees rather than independent contractors, producing an additional $751 million in payroll taxes and penalties. Studies show that IRS rulings support "employee" status 90 percent of the time. The IRS is no respecter of size. Audits range from IBM, right down to the "mom and pop" enterprises.

Also, keep in mind the IRS has strict guidelines for what qualifies someone to be viewed as an independent contractor. The essential test is whether management has the right to supervise and control the manner and means of work done by an individual. If the worker clearly controls his or her work methods, works for multiply employers, sets his or her own hours, is liable to suffer or make a profit and provides for his or her own equipment the IRS will usually concede this person is an independent contractor.
 

Not Having Substance of
Being Based out of Nevada!

General Rule # 1:* In order to properly form a base in Nevada to serve your customers, the following requirements should be met. They include having the following:

1. A Nevada corporation

2. A Nevada bank account

3. A Nevada physical and mailing address

4. A Nevada phone number

5. A Nevada business license (if required)

6. A Nevada office

7. An employee to the corporation [both the corporation and individual must pay the proper payroll taxes (in general this is true for all corporations).] This is the one that every seems to miss. If you do the work from your home office in your home state, then you have created nexus in your home state. Then it makes no sense to create nexus in Nevada also. The exception to this would be if someone owned a restaurant in California and Nevada and had to allocate revenue to both states. They may have an incentive to establish additional nexus in Nevada.
 

*NCP, Inc. offers a Las Vegas Office and bank account that can accomplish 1-6 for you, and refer you to a company to help you with your payroll!

Step 1:

 strategy.JPG (25937 bytes)

 
Now, you have a presence in Nevada for your new marketing company. If you look at it from a logical point of view, would you do business with a company out of Nevada that did not have all these things? Absolutely not!

Note: "Substance over Form". Form refers to the first part of this equation. This is met when you form the corporation or LLC (This is what we can do for you at NCP, Inc.). Your new business should also have the proper substance so it can stand up to any incident of questioning of its existence. Forming the corporation or LLC alone would not stand up against scrutiny by a judge or a state tax examiner. You need to add substance to the equation. Substance is everything we put in place to establish your presence in Nevada as in Situation #1. Do you see how having the proper business presence in Nevada provides substance? Without substance the corporation may be ruled a sham! In other words, if you are considering using a Nevada corporation or LLC, and you do not operate it with proper substance, serious challenges may soon follow!
 

Issuing Corporate Stock

In Nevada, stock can be issued in consideration of cash, property or services. In many states you can not issue stock in exchange for services. Nevada also has an advantage, because they have "Thin Capital Rules," which basically means you can issue stock for as low as $100, whereas many states have minimal capital requirements. This can come into play in other states when someone is trying to pierce the corporate veil and claim the corporation was undercapitalized. 
 
There are no time constraints for issuing stock in Nevada. Do not be misled to believe this means a corporation does not have to issue stock! That could be a big mistake! Keep in mind, stock issuance can come into play if someone is trying to sue the corporation, pierce the corporate veil or if the IRS is auditing the corporation. In these instances, it is critical to have complete corporate records in place. We strongly recommend doing it right from the start, so if any of these situations arise the corporation is ready to stand up to any of type of scrutiny. Take the logical perspective. If an exchange of assets does not take place, then the corporation itself has no assets or owners. If the corporation has no assets or owners, it cannot do anything and becomes a useless entity. Do you want to risk a judge ruling that because the corporation did not act like one, there is no liability protection and you are held personally liable for all the corporate acts? I hope not! 
 

Thinking a Nevada Corporation is a Primary
Asset Protection Tool To
Protect All your Assets

What is the main function of corporations in asset protection and what are their limitations? The main function of a corporation, whether it is in Nevada or anywhere else, is its ability to insulate personal assets against liability. 

Basically, when you get sued as a corporation operating your business, your personal assets are separate and can be protected. The challenge is that a corporation is not always an ideal vehicle to protect your personal assets.

There are two major drawbacks of the corporation as an asset protector:

1. The transfer of assets to and from the corporation may carry tax implications. Yes, you can transfer assets into the corporation tax free under IRC 351, but you must take back 80% of the stock. In other words, you are trading one asset for another and are really no better off than when you started.

2. Creditors of a stockholder can claim the shares you own or any obligations due you from the corporation. The corporation actually has marginal use in wealth protection. Did you ever consider this happening to you? If you get sued personally and own 100% of your corporate stock you lose your entire company! Even if you own a small percentage of stock or have loaned money to a corporation you can lose that by a personal lawsuit or creditor going after you! How are most of us most likely to get sued personally? What is the one thing just about all of us do? We drive cars! Did you know the one thing that insurance companies will not cover in an automobile accident that could cause you to lose all your assets personally? Do you know the tools that can prevent that from happening and it is not a Nevada Corporation? Call our offices at (800) 351-5111 for these answers and more! Keep in mind the corporation is a key component of your overall asset protection plan, but keep in mind it does have limitations.
 

Do Nevada Corporations have any special advantages in forming a corporation as opposed to forming one in your home state when it comes to asset protection? Yes and no. Nevada is the most difficult state to pierce the corporate veil, which is a major reason most major companies incorporate in Nevada first even though they may have to register to do business in your home state. When it comes to pure asset protection the answer is no! Yes, Nevada is much harder to get to first base and trying to determine who the stockholders are, and that may be a benefit in a frivolous lawsuit, but when it comes to a serious big time lawsuit, it will be not much different. Please read the section of why Bearer Shares don’t work either. 

Unfortunately, many companies in Nevada that promote Nevada corporations promote them as a magical asset protection device that will save you from any situation, even a situation where there is fraudulent conveyance! That is simple not true. There are different tools to accomplish different things. Be cautious of companies that primarily promote just Nevada corporations, because it is not the cure-all that they make them out to be.
 

Having a Nevada Corporation
Without a Business License

Are Nevada Corporations required to have a business license in the state of Nevada? In most cases Yes! It depends upon the corporation’s activity. 

For example, if a corporation is going to be a shelved or inactive, (meaning it will do no business and just sit on the "shelf") then No business license is required. Nearly all other situations do require a business license, according to the Nevada business license division. 

Today, 80-90% of all Nevada corporations, especially those not doing any business in the state of Nevada do not carry business licenses. That spells trouble! If your goal is to form a Nevada based corporation and realize not only the tremendous tax advantages, but also to protect your assets, the area of business licenses needs to be handled properly! Think of it this way, how many businesses do you interact with on a weekly basis? 

Of those, how many have a business license? Let’s see, there is the grocery store, dry cleaner, local restaurant, gas station, realty office . . . just about all of these carry a business license. Again, the point is to do it right. The common response is . . . I do not have any mployees working in the state of Nevada, therefore I do not need a business license in Nevada. That affects the amount of employee tax due, however a business license is still required.

 Let’s assume you live in California and you want to start a Nevada Corporation to act as a trading company. You will be the only employee working for this corporation and you intend to set up a profit sharing plan as well. What are the licensing requirements in Nevada?

 There are actually 4 Steps involved (i.e. four offices to contact). Since our office is located in Clark County (not the city of Las Vegas) a business license is only required for Clark County.

1. Department of Taxation.

2. SIIS (State Industrial Insurance System) or any other private workman’s compensation carrier.

3. Clark County Business License Department.

4. ESD (Nevada Employment Security Division).
 

1. Department of Taxation: 

a. Sale and Use Tax- This is a 7% tax on all items sold within the state of Nevada. If you sell books around the country, there is no sales tax due! A one-page Combined Sales and Use Tax Return is filed monthly with the Department of Taxation, whereby you report and pay all sales tax collected. You have until the end of the following month to submit this return along with any sales tax due.

If the corporation purchases items outside the state of Nevada, and there is no sales tax applied, sales tax will be applied as if that item was purchased in Nevada with sales tax. In other words, the corporation will have to pay sales tax each month on those items it purchased out of state with no sales tax.

Nevada Seller’s Permit (Resale Number)- If your corporation is selling a product or any tangible items within the state of Nevada, it is a state requirement for your corporation to obtain a state Seller’s Permit. A state Seller’s Permit number will allow your corporation to purchase supplies to be sold by your corporation without having to pay tax on those items, as long as they are for resale. This number is used by the state of Nevada to collect its sales tax on items you sell. These taxes are collected by your corporation and paid to the state of Nevada.

b. Quarterly Business Tax- The fees are $25 per employee per quarter working in Nevada. If you have four employees and only one worked in the state of Nevada, then the corporation would pay $25 per quarter or a total of $100 per year.
The Department of Taxation has an application fee $25 plus a start-up fee ranging from $75 - $250 based on the type of business.
 

2. SIIS (State Industrial Insurance System).

a. The corporation must have a workers’ compensation policy with SIIS, or private carrier, if it has any employees (this includes any part-time or full-time employees and paid corporate officers). There is no grace period for obtaining a workers’ compensation policy. You are subject to the assessment from the moment you hire an employee or become a corporate officer. If the corporation pays you only in reimbursements (not considered salary) no SIIS is required, as long as there are no other employees. If you are an officer of a Nevada corporation and are paid by an out-of-state corporation, then no SIIS is required, since you do not receive any paid compensation from the Nevada corporation.

b.  What is the penalty for noncompliance? Failure to obtain coverage constitutes a misdemeanor and you may be subject to a fine and/or closure of your operation in Nevada. You may also be liable for any medical and compensation expenses associated with any claim filed by an injured worker if the accident occurs within the course and scope of employment. Also, Nevada Revised Statues 616D.200 was amended requiring SIIS to collect three times the premium that would have otherwise been owed to the system during any period an employer has failed to provide workers’ compensation for his employees. If you have already been quoted your penalty, this penalty may increase for each day you continue to remain uninsured.

c. The SIIS fee is based on the amount of payroll and the nature of the business. For example, if your total payroll was $1400 per month, the fee would be $9.10.
 

3. Clark County Business License.

a. Business license registration requires the following information:

1. Corporate name, address, phone number, owner’s name, percentage of ownership, residence address, SSN, date of birth and type of business.

b. The registration fee is based upon the type of business and sales of taxable items. This fee can range between $100-$250 and is paid semi-annually.

c. There is an initial application fee of $30 as well.

 
4. Nevada Employment Security Division (ESD).

a. This department collects unemployment taxes. This tax is paid quarterly (same as Federal unemployment taxes) by the employer (corporation). The tax rate is 3% of gross wages up to $18,000 per employee (2.95% is for the unemployment and .05% is for the claimant employment program). This tax is $540 per quarter per employee if the gross wages are at least $18,000. There is no fee to register with this department. All they require is the corporation’s Tax ID number and general corporate information. A business license is not required to register. Again, if you are paid as a corporate officer by the corporation, you must register with this department.

Below we have listed the addresses and phone numbers of all the necessary departments. If you have any questions regarding these various departments, please call and they can mail you the appropriate forms.
 

Nevada Department of Taxation 

555 E. Washington Ave. 

Las Vegas, NV 89101 

(702) 486-2300
 

State Industrial Insurance System (SIIS) 

7180 Pollock Drive 

Las Vegas, NV 89102 

(702) 837-30000
 

Mailing Address: 

P.O. Box 26929 

Las Vegas, NV 89126 

(702) 259-5988
 

Clark County Business License 

500 S. Grand Central Pkwy. 3rd Floor 

Las Vegas, NV 89155 

(702) 455-0174
 

Mailing Address: 

P.O. Box 551810 

Las Vegas, NV 89155 

(702) 455-4252 

(800) 328-4813
 

Nevada Employment Security Division (ESD) 

1830 E. Sahara Ste. 202 

Las Vegas, NV 89104 

(702) 486-8222
 


You will be pleased to know that our goal is to provide accurate information. If you notice anything that is inaccurate we would appreciate you letting us know so we can make the necessary changes. Let us know if there are other strategies you would like us to do more research on and we can report our findings. Call Nevada Corporate Planners, Inc. at (800) 351-5111. 


Questions about Forming an LLC or Corporation?
Call NCP at 1-800-351-5111

Avoid Costly Incorporating Mistakes!

 


Advanced Research:

Why Nevada?

Why Nevada?- Discover the invaluable benefits you get when you incorporate in Nevada.

16 Reasons to Incorporate in Nevada?- This is the major reason why you need to incorporate in Nevada.

Piercing the Corporate Veil - The #1 reason for you to incorporate in Nevada.

Does Nevada Share Information with the IRS? -This sought-after secret is finally revealed!

Nevada VS. Delaware -Learn the accuracy of the claims made in "Nevada vs. Delaware" reported on many web sites in our industry.

Strategies that Don't Work in
Nevada
- Discover what our competitors DO NOT want you to KNOW!

The Advantage of Incorporating in Nevada - Discover advantages of incorporating in Nevada when your entity registers as a foreign corporation in California.

California had the Highest Percentage of Cases in which Courts had Pierced the Corporate Veil! - Discover why it is especially important for anyone operating in California to have the strong corporate veil Nevada offers!

California's Approach to Piercing the Corporate Veil to Foreign Corporations - Learn how California aggressively attacks corporate privacy.

California's Approach to Choice of Law in the Absence of an Effective Choice by the Parties - Learn what jurisdiction is all about.

The Approach of New York, Wisconsin, and Texas in Applying Their Law to Foreign Corporations (as Compared to California) Three states with a different approach.

Do you Need an Office and Bank Account in Nevada?
- Unless your employees and business are located in Nevada, most likely, the answer is NO!

Snake Oil Strategies Proposed by Others That just Simply Don't Work - The most important article on this site!



Home|About NCP|Testimonials
Research
|Facts|Why Nevada?|Services
Contact NCP|Top 10| Privacy Policy|NCP's Policy

 

Incorporate Now




Follow NCP

FacebookTwitterGoogle Plus


1997 - 2016 © Nevada Corporate Planners, Inc. All Rights Reserved.