For years, Delaware has been considered to be the prime state to incorporate and still holds the number one position for registered corporations. However, what you may not know is that Nevada has become the choice of many business owners who want to form a corporation and has been closing the gap to number of filings with Delaware in recent years. Before considering your options, you should know the advantages you’ll gain if you start a business and incorporate in Nevada.
You may wonder if incorporation is the right choice for your business. Even if you’re a one-man operation, incorporating (or forming an LLC) may be the best business entity for you. The major reason to incorporate is that it protects your personal assets from business debts, helps keep the IRS off your back (because a sole proprietorship is more likely to be audited), a better marketing advantages (which sounds better as you introduce yourself, the owner operator or the CEO of your company) and helps you get more access to cash and capital!
If you’re looking for a state that allows more protection and levels of “hoops” to jump through for those looking to get access to your money, the small investment to start in Nevada and foreign register (or qualify) to your home state may be very much worth the extra investment. Keep in mind, that many may tell you to keep it simple, which of course is inversely related to asset protection!
Here are the advantages that you can benefit from if you incorporate in Nevada:
It’s Extremely Difficult for Anyone to Pierce Your Corporate Veil!
First, what exactly does “piercing the corporate veil” mean? When you form a corporation you must follow certain corporate formalities. If your corporation does not comply with all relevant corporate rules and regulations, keep accurate records of meetings by minutes, or if the corporation commingles funds, your board of directors, officers and shareholders could be held personally liable in the event of a lawsuit. “Piercing the corporate veil” refers to having personal assets exposed in a corporate lawsuit.
How does Nevada feel about this? Nevada has a tough attitude about piercing the corporate veil, which is why major corporations domicile in Nevada. Essentially, Nevada says that unless they can prove fraud, your corporate veil will not be pierced! That provides an awesome degree of protection for your personal assets.
Your Officers and Directors Can Be Indemnified.
In 1987, the Nevada Legislature passed a revolutionary law that permits corporations to place provisions in their articles of incorporation that eliminate the personal liability of officers and directors to the stockholders of Nevada Corporations.
Nevada Corporation Code allows for the indemnification of all officers, directors, employees, stockholders, or agents of a corporation for all actions that they take on behalf of the corporation that they had reasonable cause to believe was legal. This indemnification can include any and all civil, criminal and administrative action. These two laws can provide you with complete protection for the officers and directors of your Nevada Corporation, as long as they act prudently in their roles.
Delaware and a few other states soon adopted lesser versions of this law, but Nevada’s law remains among the most thorough and comprehensive in the country.
Always do your research to determine your best course of action. For many people, however, Nevada offers a great mix of protection and flexibility when it comes to protecting your assets in today’s difficult economic environment.
About The Author: Scott Letourneau is the CEO of Fast Business Credit, Inc. When it comes to securing cash and vendor lines of credit and avoiding costly mistakes his company is the authority. For further assistance regarding the development of business credit go to http://www.FastBusinessCredit.com or call FBC at 1-888-313-6333 begin_of_the_skype_highlighting 1-888-313-6333 end_of_the_skype_highlighting or 702-977-5246 begin_of_the_skype_highlighting 702-977-5246 end_of_the_skype_highlighting.