There are two major reasons
why someone from another state would establish a Nevada corporation:
1. To reduce your home state taxes.
2. To protect your assets.
We are sure you will agree that the best
way to assure that you are judgment-proof is to appear to
be poverty-stricken and destitute. Even if you are sued and
a judgment is obtained against you, you have nothing to lose.
Although none of us want to be poverty-stricken,
we can arrange our affairs to appear so. One of the best asset
protection strategies you have is to be dirt poor. Do not
own anything. (At least make it appear that you do not own
anything.) You then will be free from encumbrance.
Our best strategy for accomplishing this
is to have two companies doing business together. For example,
we have clients who have their business in the home state
which can be a corporation filed in that state or a sole proprietorship.
In addition, they have a Nevada corporation, which is used
to protect their assets by filing a lien on any real or personal
property. (Either a mortgage or deed of trust on real property
and a UCC-1 filing on personal property.) If someone sues
you (personally) or the home state company, they will be unable
to collect because of the previous lien that was placed on
In Nevada, you do not have to reveal the
stockholders of a corporation. The only thing revealed is
the identity of the officers. If you have nominee officers
for your corporation, your name is not revealed. You, therefore,
have privacy. No one knows who owns your corporation. If done
properly, this can be a very valuable strategy for protecting
Another way to accomplish the same thing
is to have your home state corporation lease the property,
equipment, etc., from the Nevada Corporation that files the
lease in your home state showing it as the owner of record.
You can have nominee officers for this corporation, therefore
assuring your privacy.
The above illustration shows how to protect
assets. You can also use multiple corporations to reduce taxes
in your home state. The Nevada Corporation would enter into
contracts to do business with your home state corporation.
For example, you may pay a bookkeeper $10,000 per year to
keep your books. Let's transfer that responsibility to the
Nevada Corporation and increase the amount paid to the Nevada
Corporation to $14,000. You still pay the bookkeeper as an
independent contractor the same $10,000. Your Nevada Corporation
now has a $4,000 profit, which is not taxed in Nevada, and
your home state corporation has an additional $4,000 deduction
on your home state income tax. Let your imagination go to
see what other kinds of legal activities you can transfer
to Nevada and reduce your home state taxes. Nevada does not
have a personal or corporate income tax! Any bill you pay
to your Nevada Corporation will be tax-deductible in your
home state, and there will be no Nevada state taxes.
You can pay many bills through your Nevada
Corporation. Mark up the bills by 25% to 30% to your home
state corporation, take the deduction in your home state,
and give your Nevada Corporation the profit while at the same
time reducing the profit in your home state. This legal strategy
is called "up streaming". We help you open a Nevada
bank account through which you can pay these bills.
You can enter into contracts with your Nevada
Corporation for any legitimate business purpose, such as consulting
services, thus transferring income into Nevada where it will
not be taxed by the State of Nevada. There may also be many
products that the Nevada Corporation can supply to your home
state corporation. Think of the possibilities.
It is extremely important that every transaction
has a paper trail. Make sure that your Nevada Corporation
has contracts, invoices, and other records to document the
business transactions just like any other supplier or professional.
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