BENEFITS OF INCORPORATING IN NEVADA
No
State Corporate Income Tax
Roughly a million corporations are formed each year and the number
is continuing to grow. The reason so many people are choosing to incorporate
their businesses is the vast number of benefits that are granted to
corporations. Because a corporation is
considered an artificial person, it can be used as a fall guy, a servant, a
good friend or a decoy. This is a
person whom you control; however, you are not held accountable for its actions. You get the best of both and this creates
tremendous asset protection.
Additionally, your corporation is separate from you for tax
purposes. The corporation receives
preferential tax treatment from the IRS.
An individual can only earn $26,250 and be in the 15% tax bracket while
corporations can earn up to $50,000 and still be in the 15% tax bracket. Furthermore, corporations spend money
before they pay taxes while individuals pay taxes prior to spending money.
Corporations are also great for estate planning. Because stock can either be voting or
non-voting, you can gift non-voting stock to your family and keep the voting
stock for yourself. By doing this, you
can reduce your estate while still remaining in control of your corporation.
Finally, your corporation can be established in a state that
provides the most favorable corporate law.
Nevada is undisputedly the best state for incorporation. It provides excellent officer, director and
shareholder protection. It provides for
extreme secrecy. And it is a tax free
state. No corporate tax. No franchise tax. No income tax. No taxes. Nevada is a great place to incorporate.
The reasons to incorporate are enormous. Both you and your business benefit from incorporation. Don’t put off incorporating another day.
NEVADA
Nevada has become well known
as a U.S. corporate haven among business planners, attorneys and
accountants. Nevada is a haven because
of the asset protection, privacy and tax strategies that the state
provides. It is the preferred state of
incorporation.
Corporations are given preferential tax treatment. Corporations can earn up to $50,000 and
still be in the 15% tax bracket. An
individual can only earn $26,250 and still be in the 15% tax bracket. The difference is staggering. This means that between you and your
corporation you can earn $76,250 and still be in the 15% tax bracket.
Another big difference between corporations and individuals is
that individuals earn money, pay taxes, and then spend what is left. On the other hand, corporations earn money,
spend, and then only pay taxes on what is left.
Individuals: earn
– tax = spend
Corporations:
earn – spend = tax
|
|
|
|
$0 to $26,250 |
15% of taxable income |
|
$26,250 to $63,550 |
$3,938 plus 28% on excess over $26,250 |
|
$63,550 to $132,600 |
$14,382 plus 31% on excess over $63,550 |
|
$132,600 to $288,350 |
$35,787 plus 36% on excess over $132,600 |
|
$288,751 and above |
$91,857 plus 39.6% on excess over $288,350 |
|
Married Taxpayer |
|
|
$0 to $43,850 |
15% of taxable income |
|
$43,850 to $105,950 |
$6,578 plus 28% on excess over $43,850 |
|
$105,950 to $161,450 |
$23,966 plus 31% on excess over $105,950 |
|
$161,450 to $288,350 |
$41,171 plus 36% on excess over $161,450 |
|
$288,350 and above |
$86,855 plus 39.6% on excess over $288,350 |
.
|
Corporate
Tax Rates for 2000 |
|
|
$0 to $50,000 |
15% of taxable income |
|
$50,001 to $75,000 |
$7,500 plus 25% on excess over $50,000 |
|
$75,001 to $100,000 |
$13,750 plus 34% on excess over $75,000 |
|
$100,001 to $335,000 |
$22,250 plus 39% on excess over $100,000 |
|
$335,001 to $10,000,000 |
$113,900 plus 34% on excess over $335,000 |
|
$10,000,001 to $15,000,000 |
$3,400,000 plus 35% on excess over $10 million |
|
$15,000,001 to $18,333,333 |
$5,150,000 plus 38% on excess over $15 million |
|
$18,333,334 and above |
$6,416,667 plus 35% on excess over $18,333,333 |
Studying the above tables you can see the preferential tax
treatment that corporations receive.
Additionally, corporations have more deductions available under the
Federal Tax Code than individuals have available to them. Therefore, after you incorporate, your
corporation can pay for things like medical insurance, pension contributions,
and education with pretax money. This
will save you thousands of dollars a year.
Additionally, it is not subject to restrictions like the 2% to 3%
of adjusted gross income exclusion for itemized deductions and the 7.5% of
adjusted gross income exclusion for medical expenses that individuals are
subject to. In contrast, the corporation gets to deduct 100% of these
expenses. This means that a corporation
can earn a lot more gross income than you can as an individual and still pay
less tax.
Invasion of privacy is an increasing problem. When you incorporate in most states, they
require that you disclose the names and addresses of the president, secretary,
treasurer and/or director(s) of the corporation. You may not want to be listed
in the public records in connection with the corporation. This is an invasion
of privacy that you not want.
Nevada provides that you may have nominee officers on
record with the state of Nevada.
Additionally, Nevada does not require that shareholders be listed with
the state. This keeps your name of
public records and provides you with privacy.
LIABILITY PROTECTION
Liability protection has become
increasingly necessary as more and more individuals are suing for frivolous
reasons. Courts view a corporation as a
legal artificial person, both separate and distinct from you. It is separate from its employees, stockholders,
directors, or officers. Therefore,
although you may be the only shareholder, and be the president, secretary,
treasurer and director, the corporation is viewed as separate for the purpose
of lawsuit liability.
You as a stockholder, as an owner of the
corporation, are not individually liable for the acts of the corporation. You as an officer and director of the
corporation are not personally liable for the acts of the corporation. As an employee of the corporation, you are
not personally liable for the acts of the corporation. You are separate from the corporation.
In this litigious oriented society where
everyone wants to sue you and attach every asset that you connected with, it is
comforting to receive asset protection from incorporation. This allows you to pursue business ventures
without fear of personal liability.
Who should incorporate? Every individual
who runs a business needs a corporation. Every person who wants asset protection needs a
corporation. Every person who values
their privacy should have a corporation. Every person who wants corporate tax benefits and deductions
needs a corporation. Every person who
wants preferential treatment by the IRS needs a corporation.
It is easier to look at who
shouldn’t incorporate. Who shouldn’t
incorporate? If a person doesn't have a
business, and is not going into business then they shouldn’t incorporate.
People who have no assets, and have no plan or desire to accumulate assets
don’t need a corporation. In contrast,
anyone in business, going into business, or anyone with valuable assets or
working to acquire valuable assets, should consider incorporating