Asset Protection

The economy sure has done a 180 in the last year. People are not only losing their investment homes but they are losing the homes they live in. Retirement accounts are being wiped out faster then you can sell the stock and pull the money out. Our personal belief is that before this gets better it is going to get much worse. So what should you be doing? You should be at work enacting (or setting up) your plans to protect the assets that you have and that you may get in the future. Give us a call at 775-577-4822 so that we can help you before it is to late!

Corporate Havens

CORPORATE HAVENS

What is a corporate haven? A corporate haven is a jurisdiction that provides a favorable climate for forming corporations. It is a pro-business state that provides flexibility in the management and structure of the company, and usually provides a measure of tax-favored treatment. A corporate haven is attractive to individuals located outside that specific jurisdiction, who live in places that don’t provide the same advantages.

It is pretty easy to spot a corporate haven. A corporate haven will form an unusually large number of corporations in comparison to the population of that state. That is a sure sign that the jurisdiction is attracting corporations from a much wider base.

Most people who incorporate do so for one or more of the following reasons:

Ø Protection from personal liability,
Ø Tax advantages,
Ø Financial privacy, and
Ø Flexibility in management and control.

All corporations provide advantages in these areas to a degree, but certain states do it better than others. There is an economic incentive for states to establish themselves as a corporate haven. The more corporations a state files, the more revenue it brings in through initial filing fees and the annual renewal fees necessary to maintain corporate status. In addition, a state with favorable corporate laws attracts economic development and growth, in other words, it brings in new jobs. Some states raise better cattle, some states grow superior potatoes, some are proud of apples, but the following states specialize in corporations.

At the top of the list is Nevada for closely held companies, while Delaware heads the list for publicly traded corporations.

Nevada's Pro Business Attitude

In 1996, Nevada made its first appearance in the Top Ten List of states with the highest number of incorporations. That’s not bad considering there are 36 states with larger populations than Nevada, and testimony of the filing efficiency of the State. Over 2,400 corporations are formed every month in Nevada, which is a 500% increase over 1985 filings. By 2004 over 200,000 entities were domiciled in Nevada and by 2008 well over 300,000 entities are domiciled in the State.

Because of Nevada’s pro-business attitude, Nevada has ranked highly in a number of studies comparing the business climate of various states. The 2004 Small Business Survival Index, published by the Small Business Survival Committee, (and includes such factors as taxation, health care costs, unemployment, crime rate, bureaucracies, etc.) has rated Nevada # 2 among all States for having a favorable policy environment for entrepreneurship. Nevada ranked in the top 10 in the Site Selection Magazine survey of business executives ranking business climate. The Tax Foundation ranked Nevada # 6 in their 2004 State Business Tax Climate Index. While other factors are used in each of these studies, they all consider the management features of each state’s business law as heavily weighted components.

In the last decade, Nevada has clearly established itself as the “Corporation Capital of the West,” and has shown significant annual growth in the number of new businesses that incorporate there each year. In addition, Nevada’s legal system has naturally grown to accommodate the need for establishing legal precedents that support the state law.

Nevada Corporation Statistics

In 1996, Nevada made its first appearance in the Top Ten List of states with the highest number of incorporations. That’s not bad considering there are 36 states with larger populations than Nevada, and testimony of the filing efficiency of the State. Over 2,400 corporations are formed every month in Nevada, which is a 500% increase over 1985 filings. By 2004 over 200,000 entities were domiciled in Nevada and by 2008 well over 300,000 entities are domiciled in the State.

Because of Nevada’s pro-business attitude, Nevada has ranked highly in a number of studies comparing the business climate of various states. The 2004 Small Business Survival Index, published by the Small Business Survival Committee, (and includes such factors as taxation, health care costs, unemployment, crime rate, bureaucracies, etc.) has rated Nevada # 2 among all States for having a favorable policy environment for entrepreneurship. Nevada ranked in the top 10 in the Site Selection Magazine survey of business executives ranking business climate. The Tax Foundation ranked Nevada # 6 in their 2004 State Business Tax Climate Index. While other factors are used in each of these studies, they all consider the management features of each state’s business law as heavily weighted components.

In the last two decades, Nevada has clearly established itself as the “Corporation Capital of the West,” and has shown significant annual growth in the number of new businesses that incorporate there each year. In addition, Nevada’s legal system has naturally grown to accommodate the need for establishing legal precedents that support the state law.

Bailout, Recession and Taxes

State governments are currently dealing with a strong recession which translates into lower revenues from sales and other taxes. In addition, they have to deal with federal mandates to provide services with a dramatic reduction in federal aid. The resulting budget deficits have forced the lay off of state employees, reduced spending and increased the need to find new or additional sources of tax revenue. Because the corporation is viewed by state politicians as a nonvoting resident of the state, they are often the first to be targeted.


Recent, and in most likelyhood future tax reform has and will have a tremendous impact on the significance of state corporate taxation. Currently, 41 of the 46 states that have state corporate income tax use federal corporate taxable income as the starting point in computing the state tax. So, when the federal tax laws disallows lobbying expenses, or a greater portion of meal and entertainment expense, it effects the amount of income tax the corporation will have to pay at both the state and federal levels.

"Nexus" describes the degree of business activity that must be present before a taxing jurisdiction has the right to impose a tax on the corporation's income. Although most planning techniques are used to separate a corporations activities from an undesirable state, they can also be used to create a nexus in a corporate haven such as Nevada. Such activities could include maintaining bank accounts in Nevada, maintaining an office address, a corporate Yellow Pages listed telephone, obtaining appropriate business licenses, etc.

For details on tax saving strategies please contact Silver Shield Services, Inc. at staff@shieldcorp.net or call (775) 577-4822.

Controling Your Corporation

Through broad empowerment allowances, Nevada law specifically provides for a corporation's principals to be given control over such things as the establishment of stock privileges, voting rights, the issuance of shares, etc. These powers infuse the directors with tremendous flexibility and control over the affairs of the corporation, since major changes in policy and procedure can be accomplished through an amendment to the articles rather than relying solely on statutes.

In addition, Nevada has also taken the lead in the area of liability protection with regard to being among the first states to adopt the Limited Liability Limited Partnership, as well as limiting the remedy of a judgment creditor of an LLC member or limited partner to a charging order.

Limited Liability

A Nevada Corporation may be formed for the express purpose of limiting a person's liability in a lawful business venture. Unlike many states, and as an added dimension to the indemnification of corporate principles, Nevada law allows for the establishment of alternate financial arrangements to protect corporate officers and directors. Nevada law requires no minimum initial capitalization at the time of start-up, thereby removing this as a means of piercing a corporation's protective shield.