Fast, Professional Nevada Corporation
Why Choose Nevada to Incorporate Your Business?
Nevada has recently passed laws to serve a particular type of corporation. The laws in question shield officers and directors from liability for certain acts and omissions that they would be liable for in other jurisdictions, including deriving improper personal benefit, not acting in good faith, or breaching a duty of loyalty. Nevada has acknowledged that the purpose of passing this legislation was to create an environment more conducive to a certain type of business incorporating in the state.
- Nevada Law Limits Your Liability More to Protect Your Assets Better From Stockholders
There are many unique provisions in Nevada corporate liability law, which are all tailored to make directors and officers less liable in Nevada. First, the law in Nevada extends liability protection for breaches of the duty of care to officers, whereas other states only removes liability for these breaches from directors if a firm opts to remove such liability in its Certificate of Incorporation. In other states, directors and officers are liable for breaches of the duty of care (unless the firm opts-out), breaches of the duty of loyalty, actions done in bad faith, improper personal benefit, and intentional fraud, misconduct, or knowing violation of the law.
Nevada firms must only make directors and officers liable for behavior that is both a breach of the duty of loyalty and intentional fraud, misconduct, or knowing violation of the law. These firms can opt-in to make officers and directors liable for other violations such as breaching a duty of loyalty or improper personal benefit, but the current Nevada law does not mandate liability for things such as self-dealing with the company or conflicts of interest.
Additionally, firms in Nevada can choose to indemnify officers and directors from all actions, as well as indemnifying their legal expenses, which most other states do not allow. This decreased Nevada liability is seen as the main benefit of incorporating in Nevada.
- Less Liability Means Fewer Stockholder Lawsuits in Nevada
One benefit to incorporating in Nevada that arises from the lowered liability is lower cost of litigation. Nevada’s law is fairly clear on the limits of liability for corporate officers and directors, meaning that much less litigation will be required. This will benefit firms that either would not want to go through this extensive litigation or firms which already have strong internal controls in place to combat breaches which would lead to litigation.
- Family Businesses and Insider Boards with Outsider Stockholders Benefit from Nevada Incorporation
The incorporation statutes of most states are written to benefit stockholders, while Nevada’s law is more tailored to suit the wants and needs of directors and officers. As a result, institutional ownership of corporations tends to be lower in Nevada relative to other states.
This preference for wants and needs of directors in Nevada also makes the composition of the board of directors for Nevada firms different than most. Boards of directors in Nevada tend to include many more insiders than their counterparts elsewhere, which could either be for private benefit though self-dealing with the company or to maintain more control on the operation of the firm, depending on the motivations of the board of directors.
This board of directors structure would lend itself much more to a smaller, family corporation, which appears to be one of the types of firms that incorporates in Nevada. Family firms would also benefit from a lower cost in Nevada because they are not required to have independent directors.
How Do I Form a Nevada Corporation?
- Choose a Corporation Name
Before drafting any organizational documents, you must choose a name for the corporation. Nevada law requires that corporation names be distinguishable from the name of any other entity on official state documents. No marks, symbols or other stylistic differences can be used to differentiate corporations from similarly-named entities. Instead, the words of the corporation’s name must clearly distinguish it from every other company by adding or changing letters or words that distinguish the name. The name cannot include any terms that are restricted professions, such as engineer, architect, or accountant. If a potential name does not satisfy these requirements, then the Nevada Secretary of State will reject the name, requiring an alternate name to be submitted prior to formation.
- Find a Registered Agent
It is not necessary for a corporation to have a physical office in Nevada in order to incorporate. The only required physical presence is a registered agent, who must have a street address in Nevada. A registered agent is required by Nevada to receive service of process for lawsuits and state notices. Incorporation services, such as Incnow, can be the registered agent for your corporation, in addition to creating your corporation.
- Filing Articles of Incorporation
When a name has been chosen, the incorporator needs to file articles of incorporation to bring the corporation into official existence. In Nevada, articles of incorporation must include:
- The name of the corporation;
- The name and address of the corporation’s registered agent. The registered agent must also sign the articles of incorporation prior to filing;
- The number of shares of stock the corporation will issue. We recommend 1,500 shares, as it is easily divisible, reduces costs, and the amount of shares can always be amended;
- The name and address of each incorporator who signs the articles of incorporation;
- The initial board of directors for the corporation, as well as their addresses.
The articles of incorporation may also include provisions of corporate governance or a statement of the corporation’s purpose. The articles of incorporation are then filed with the Nevada Secretary of State. The filing fee for corporations varies with respect to the value of authorized shares. Many corporations will choose to value their shares so that the filing fee is $75.00, which is the minimum. When the Secretary of State approves the articles of incorporation, a file stamped copy is returned to verify the corporation’s official existence.
- Nevada Business License and Initial List of Directors
Before the end of the month following incorporation and every year thereafter, a Nevada corporation must file a list of directors, along with the signature of a director and a filing fee. The filing fee is also based on stock value, although many corporations will pay the minimum $150.00 fee. Nevada corporations will also file annually for a business license on the same document as their board of directors list, which is accompanied by a $500.00 filing fee (for a combined $650.00 business license and initial list filing fee). These both apply no matter where the company conducts business. We suggest this be filed at the time of formation to ensure compliance and good standing for the entire first year following the incorporation.
- Creating Corporate Bylaws
Nevada law requires that a corporation keep a set of bylaws in accordance with record keeping requirements. These bylaws can be created and amended by the board of directors, unless certain provisions thereof give the stockholders power to amend the bylaws. The bylaws typically set forth the governance of the corporation, and include provisions dictating requirements for annual meetings, officers, voting, and anything else that will differentiate the corporation from the statutory defaults. In the event of a conflict between the articles of incorporation and the bylaws, the articles of incorporation will be given authority. Incorporation services such as Incnow will provide a set of bylaws that can be customized to serve the corporation’s individual needs.
- Do I Need an Incorporation Service?
Many corporations choosing to incorporate in Nevada will hire an incorporation service to help form their corporation, as well as act as the corporation’s registered agent after formation. Years of professional experience have given Incnow a strong handle on the incorporation process.