If you are thinking about LLC and incorporation in Nevada, you should be aware that there are a lot of misinformation concerning this legal process is this state. In making up your mind whether you’ll undergo the steps on how to incorporate in Nevada, or have an LLC, you must know exactly what can this process give your company. On this note, you should gain knowledge of the half truths and myths there are typically considered as facts by many.
The following are some of the most popular myths:
Complete Asset Protection in Nevada
This is actually false. While a Nevada company is awarded with some benefits of protection, the degree of these advantages relies on every unique station. (In most cases, it’s best to consult a lawyer to find out if a Nevada company will be beneficial to you.) In addition, it is expected that the primary shareholder(s) of the company to guarantee some obligations of the company, inquire about leasing, credit accounts, and many more. As such, if assurance is provided, the Nevada Corporation does not give out any asset protection advantage for the obligation is already guaranteed.
Evade Home Taxes with a Nevada Company
This is not true! Even if a company is in Nevada, but the board is in another country and the state endows tax on income, then society is obligated to recompense the state tax on income generated in that state. Even if your Nevada company has sufficient income to house on a Nevada bank account, this will not relieve you from getting tax on earnings or income.
Bearer Shares in Nevada Corporation and LLC Can Strengthen Privacy
Don’t believe this. Bearer shares when going public are not recommended. While they are not prohibited by the State of Nevada laws, keep in mind that as the owner of the company, you should be able to justify all of your actions. However, just because it is not unlawful does not delineate that it is a good practice. These are seen by some as proponent’s strategy, wherein the bearer shares seem to offer asset protection for the reason that when your company has potential creditors or claimants trying to get your goods, you can immediately hand your company’s shares to a family member or a friend. He or she will become the instant owner(s) of the shares, and thus can be considered that the creditor must recompense any interest in shares in the creditors or company.
This method also brings forth the idea that the lawyer attempting to collect the debt will not be fully aware of the situation. Any competent lawyer will ask if you ever managed and owned any interest, stocks, or shares in the company, and the time you transfer such ownership. Keep in mind that bearer shares can create many types of fraudulent applications for transfer to include gift tax ramifications and possible income that you don’t anticipate.
Use Nominee Directors or Officers to Protect Privacy and Assets
It’s not good to hand over company or property responsibilities to a stranger. Using nominee officers and directors are typically suggested by business self-appointed lawyers and experts. However, it’s complex to come across with lawyers that put forward this strategy. While you can take advantage of the privacy at first, keep in mind that you can lost the privacy when there is a summon served and you will be compelled to give your contact information of the owner of the company. You will be required by law to perform this and let go of your privacy. In addition, the use of a nominee officers or directors will not grant additional protection activities.
The Level of Asset Protection and Privacy Level in Nevada is the Same
This is not at all times true and may vary depending on your company’s financial status. One company can receive more protection and privacy over another company in the same line of business.
There is no IRS Information Sharing in Nevada
Even though Nevada LLCs don’t share information with the Internal Revenue Service, it doesn’t mean that the IRS will not have any information about your company. Note that you will need the services of IRS to procure the name and social security numbers of people who transact with your company to offer an EIN.
Don’t just put into practice any business tax advice or settle tax debt advice that you get from someone who is not a lawyer and haven’t managed his or her own company. You should not take suggestions and tips about property and asset protection from someone who is not legally authorized by law.
In actual fact, Nevada incorporation and LLCs are not for everyone but can be beneficial for someone. However, it is not the best strategy to take for each small business operators, particularly those who not work and live in Nevada.