Nevada Incorporation Tax Advantages – Deductible Employee Benefits Incorporating in Nevada usually provides tax-deductible benefits for you and your employees. Even if you are the only shareholder and employee of your business, benefits such as health insurance, life insurance, travel and entertainment expenses may now be deductible. Best of all, Nevada incorporation usually provide an increased tax shelter for qualified pension plans or retirement plans (e.g. 401K’s). Easier Access to Capital Funding It’s easy to raise capital for a corporation through the sale of stock. Investors are much harder to attract to sole proprietorships and partnerships because of personal liability. Investors are more likely to purchase shares in a corporation, where there is a separation between personal and business assets. (Some banks, as well, prefer to lend money to corporations.) This is not as common at the small business level as it sounds, because the process can be complicated and requires the proper attorneys to make sure you are not violating any security laws. Unfortunately, many small businesses seek investors and never consult with a securities attorney. Nevada Incorporation – An Enduring Structure A Nevada corporation is the most enduring legal business structure. Corporations may continue on regardless of what happens to its individual directors, officers, managers or shareholders. If a sole proprietor or partner dies, the business may automatically end, or it may become involved in various legal entanglements. Corporations can have unlimited life, extending beyond the illness or death of the owners. Easier Transfer of Ownership Ownership of a corporation may be transferred through the sale of stock without substantially disrupting operations or creating the need for complex legal documentation. Below are a few other reasons for Nevada incorporation: Anonymity Corporations can offer anonymity to its owners. For example, if you want to open an independent small business and don’t want your involvement to be public knowledge, your best choice may be to incorporate. But if you open as a sole proprietorship, it’s hard to hide the fact that you’re the owner. As a partnership, you’ll probably be required to register your name and the names of your partners with the state and/or county officials in which you’re doing business. Centralized Management With a corporation’s centralized management, all decisions are made by the board of directors. Shareholders cannot unilaterally make binding agreements on behalf of the business simply because of their investment. With partnerships, each individual general partner may make binding agreements that may result in serious financial difficulty to you or the partnership as a whole. Marketing Advantage of Incorporating This is perhaps the biggest overlooked advantage of them all! We live and do business in a competitive world. You already know that 95% of businesses fail in the first five years. When starting off in a new business, the first impression you make on new prospects is critical. One mistake could cost you your entire business. In fact, many great “could have been” businesses were only three to five new customers short of reaching the next level of success. What message do you send as a sole proprietor? First, let’s get a marketing perspective on sole proprietorships and the image that they project. The typical CPA recommends that if you don’t have over $40,000 in net profit, incorporating in Nevada may not make sense for you and may not reduce your taxes. That’s no secret. Knowing this, what message are you sending when your business card bills you as “Owner/Operator”? New prospects know that you didn’t incorporate, and they probably assume that they know the reason why – that you probably don’t earn $40,000 in profits, and your CPA recommended for tax reasons that you remain a sole proprietorship. Worse, you didn’t believe in yourself enough to invest the money to incorporate. Are those the messages you want to convey when trying to attract new business? For Nevada Incorporation, you send a very different message : “This is John Smith, CEO of ABC, Inc.” That “foot in the door” strategy is far superior to “This is John Smith, Owner/Operator of ABC.” Bottom line? From a purely marketing point of view, incorporating in Nevada makes sense 100%.
It’s Extremely Difficult for Anyone to Pierce Your Nevada State Corporate Veil First, what exactly does “piercing the corporate veil” mean? When you form a corporation, whether it’s in Nevada, California, Texas or wherever, you must follow certain corporate formalities. Remember, a nevada state corporation can do everything you can do except act or think, so it does those things through your board of directors, officers and shareholders. If your corporation does not keep accurate records of meetings by minutes, and if the corporation commingles funds, it makes it easier for someone to pierce your corporate veil if the corporation is involved in a lawsuit. Low capitalization is another reason why corporate veils get pierced. In some states, like California, we recommend that you capitalize your corporation with at least $1,000. If you don’t, it’s easier for someone to prove that you are simply the alter ego of the nevada state corporation (one and the same as the corporation), and then pierce your corporate veil! How does Nevada feel about this? Nevada is called a “thin capital state,” meaning you can form a corporation in Nevada for as little as $100. Also, Nevada has a certain attitude about piercing the corporate veil, which is why major corporations domicile in Nevada. Let’s explain. The Nevada State Test – Trying to Pierce the Corporate Veil First, in Nevada, anyone trying to sue you must pass a three-prong test. They must prove all three parts to pierce your corporate veil: The corporation must be influenced and governed by the person asserted to be the alter ego. There must be such unity of interest and ownership that one is inseparable from the other. The facts must be such that adherence to the corporate fiction of a separate entity would, under the circumstances, sanction fraud or promote injustice. The burden of proof for all three “general requirements” is on the plaintiff who is seeking to pierce the veil, and a failure to prove any of the three will result in your veil not being pierced! Essentially, Nevada says that unless they can prove fraud, your corporate veil will not be pierced. That is awesome protection. Nevada State Corporation – Case In Point The landmark case that proves this point is the case of Roland vs. Lepire (1983). We recommend that you keep accurate corporate records to protect your corporate veil, and make sure you have adequate capitalization as well. In Roland, the corporation had a negative net worth at the time of the trial so it was clear it was inadequately capitalized. On top of that, the corporation never held formal directors or shareholders meetings, never started or kept a corporate minute book, never paid dividends, and didn’t pay salaries to the officers or directors. On the other hand, the corporation managed to secure a corporate checking account, as well as a general contractor’s license and a framing contractor’s license, “both in its name”. What happened? The court concluded that, “Although the evidence does show that the corporation was undercapitalized and that there was little existence separate and apart from [the two key shareholders]evidence was insufficient to support a finding that appellants were the alter ego of the corporation.” The Nevada Supreme Court has made clear that unless the plaintiff acting against you is able to meet the burden of proving that “the financial setup of your corporation is only a sham and caused an injustice, ” your veil is unlikely to be pierced. The Nevada state corporation appears as an “Iron Fortress” to creditors. In fact, the corporate veil has only been pierced two times in Nevada in the last 23 years! And that was a case where the corporation was actually doing business in Nevada and had committed fraud against a Nevada resident.
Owning a house is often one of the most prized possessions for any individual, as it is much more than simply a roof over your head. It is a secure haven for you and your loved ones and when the need arises it can also act as one of the bets investments that you have made during your active, service life. Most of the other investments of an individual are usually locked away in various funds that are generally on a long term basis. In times of financial emergency, it may therefore, be a big hassle if you require instant funds and cannot encash your long term investments for instant liquidity. A house can then be your biggest asset, which can easily secure a decent amount of loan for you at whatever time you need it. So, if you are sixty five years of age or above, are retired and living in Nevada in a house of your own, then the Nevada reverse mortgage is the most feasible option to ensure financial security for yourself.
The Nevada reverse mortgage option has been steadily increasing in popularity due to the multiple advantages which it offers to any senior, retired house owner residing in Nevada. One of the major advantages of opting for a Nevada reverse mortgage is that the house ownership remains with the original owner, who is the borrower and hence he can continue to use the property as his primary residence for as long as he desires. Also, the loan amount of the reverse mortgage need not be repaid by the borrower for as long as he is residing on the mortgaged property as the house itself is the collateral for the loan and the amount will be repaid in full by the house itself. The lender will recover his loan amount form the sale of the house once the borrower expires or decides to sell off the house and move on, so there is no financial constraint on the borrower of a reverse mortgage loan.
The burden of the Nevada reverse mortgage loan does not pass on to the heir of the borrower for the same reason, which is that the house itself will pay off the loan through the sale proceeds itself. The borrower of the loan only needs to pay the regular costs and charges for the house which would be the house tax and the cost of repair and maintenance. Also, the borrower could opt for a lump sum payment of the loan amount or maybe get the loan money in monthly installments. Many retired citizens prefer the installment mode of payment as it implies that there is a regular inflow of cash into the household even after retirement.
So, if you are an individual, who has enjoyed an independent financial existence during your entire work life, you would not like to ask any family member or friend for any financial help post retirement. In these circumstances the Nevada reverse mortgage is the most feasible option for you to get easy and convenient financial security and assurance of a roof over your head for as long as you live.
I am discussing here five easy tricks to get a quick refund.
1. Collect all the details
You should get your papers in hand by the end of January 2008. These include your W-2s and statements from your broker, from your bank. You should look for Forms 1099 for any interest or dividend that you have received and for any sale of stock.
You should also look for Form 1098 which will be issued by your mortgage company for any interest and real estate tax payments. Please check the figures. They may not be correct always.
2. Put the numbers against appropriate categories
You need to do this to get final numbers. IRS or your CPA cannot do it for you. If you give your CPA all this instantly, it will minimize your bill. To do this easily, get all receipts (including checks) stored in a file or box during the year. Then after December, make separate envelopes for each category – like charitable contributions, medical expenses etc. Put all your receipts and vouchers in appropriate envelopes. If you are staying in a state having no income tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming), then look for the figures for a deduction of sales taxes.
So you have envelopes ready by end of January. You can just add the receipts and checks and arrive at the number which you should use on your tax return.
If you follow this system, you will never fear about tax audit. In audit, IRS will ask you to prove the figures which you have entered on your return. And you have done just that in advance!
3. Check the numbers
It is possible that you make some mistakes in arriving at the numbers. For example, on the income side, you need to ensure that all the interest and dividend is reported, even though you may not have Form 1099 for some of them. Also, you need to check the statement given by your broker for sale with the actual cost of the stock. Remember, you are not taxed on sale, but on profit. So you need to determine the cost, including the fees of the broker. And if you have not sold the entire stock, then you have to allocate the cost on per-share basis.
Same principle applies for the deductions. Check your online payments with the statement by the mortgage company. Your cancelled checks also should be seen once to ensure that all the expenses are counted.
4. Fix appointment with your accountant well in advance
Once you take an appointment, you make a commitment to prepare before that date. Then prepare the details of each category and keep them ready to show up.
5. Mail your return
A completed return with a refund due is a heavenly idea. Its your money. Don’t delay. Just mail it across. The best is e-filing, which IRS also likes. You just pay a small fee to your transmitter to convert it into IRS code and then click to send it.
Whether e-filing or mailing, give the option of direct deposit. Its much faster. Theoretically you should see the refund within 24 hours in your bank. You can check the website “Where’s my refund” and that will tell you whether your refund is processed.
Just follow these simple tips and whew! You can see your refund check in record time.
Can You Avoid Paying The California Franchise Tax By Incorporating In Nevada: How Is This Possible?
Starting a new business venture is an exciting occasion. Striking out on your own and being your own boss is a dream that millions of American aspire to everyday. After the initial euphoria of developing a business plan, picking a location and choosing a business name, the work really begins.
The only two things in life are certain, death and taxes. The state of California is known for taxing and regulating businesses more aggressively than the national norm.
Many budding entrepreneurs and small start-ups are keen on minimizing operating expenses and tax liability. California is unique in the sense that it applies a minimum franchise tax on all corporations and LLC’s based in California.
What Is The Minimum Franchise Tax?
The Minimum Franchise Tax is tax assessed on businesses located and or conducting intrastate transactions on a regular basis. The minimum franchise tax assessment is $800 regardless of the size of the corporation or LLC.
The other unique feature of the minimum franchise tax is that it can be assessed even if your business is inactive, operating at a loss, or filing a short period tax return (less than 12 months). So the burning question that everyone wants answered is, can you avoid paying the California minimum franchise tax by incorporating in Nevada?
The short answer is NO, but there are four ways to avoid the tax nonetheless if you fall into one of these categories.
Newly Incorporated Business
A newly formed business does not have to pay the minimum franchise tax in their first taxable year.
Qualified Corporation Exemption
The state of California does offer an exemption for military members. For tax years 2010-2018 a corporation will not be subject to the minimum franchise tax if it meets the following criteria:
The corporation is solely owned by a member of the United States Armed Forces
The owner is deployed during the tax year
The company operates at a loss or ceases operation
If you operate you business as a sole proprietorship you don’t have to pay the minimum franchise tax. Income from your business will be distributed to your personally so the state personal income tax would be applied.
Dissolving Your Corporation or LLC
If your business venture falls through before it gets off the ground or didn’t generate income, you can still be assessed the minimum franchise tax if you don’t file the right paperwork with the Secretary of State. You can avoid the minimum franchise tax if you complete the following steps:
A Form LLC-4/8 Certificate of Cancellation is filed within 12 months from the date the Articles of Organization were filed with the California Secretary of State
Your corporation or LLC has no debts
The final tax return or a final annual tax return has been or will be filed with the Franchise Tax Board
Your corporation or LLC has not conducted any business from the time of filing the Articles of Organization
While trying to mitigate your tax liability is a noble goal, complying with the law in the long run is going to save you time, money and will be less stressful for you. We can help you chose the right structure for your business to minimize your tax liability. Please contact us today; we look forward to hearing from you.
When it comes to determining the most RV friendly states, the typical criteria includes weather, attractions and accommodation for maintenance. Each individual RV traveler may have some additional criteria, but generally, these are the big concerns. However, a state can be friendly to RV owners without those owners ever having to set foot, or in this case put wheel to gravel, in them. How can this be? Well some states have designed tax policies that should appeal to the full time travelers. There are a lot of benefits of being a full time traveler. The open road is your address. However, the United States government does not recognize the open road as a street address. Now, having the government not know where you are certainly has its benefits. But when it comes to your taxes, not having a listed place of residency starts to be a little tricky. When you’re using your golden years to tour America’s interstate system, you may be free of your 9-5 schedule, but you’re still not free of Uncle Sam. Thankfully, as a full time traveler, you can list any state as your place of permanent residence. So what states are the most advantageous for RV travelers looking to catch a break during tax season?
It’s not as hard to figure this out as it sounds. There are only nine states in the union that don’t have an income tax. You’ve just eliminated 82% of the field right there! Those nine states are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. We can even eliminate a couple more on top of this. New Hampshire and Tennessee don’t have an income tax, but both states do tax interest income and dividends. Without breaking a sweat, the list has been whittled down to seven options.
Alaska, like the other states, does meet the initial criteria of tax havens for the full time RV traveler, but apart from the issue of taxes, Alaska has one big problem: It’s Alaska! RV travelers, just like anyone else, is going to have to go through the process of renewing drivers licenses and vehicle registrations. Whatever state you list as your place of residency on your taxes is a state you are going to have to at least visit, probably annually. Alaska, although a beautiful state, is a little too far removed from the contiguous states to make such a trek plausible.
So that minimizes the list to six potential states. The next natural step would be to look at the respective sales tax rates for these states, but unfortunately this measure comes to be of no use, due to the fact that the rates in each state are fairly similar. Most people not in the know would probably say that RV travelers are exempt from property taxes, and they are not necessarily wrong, but that’s just for houses. A personal property tax will affect the RV and possessions within it. Florida and Washington each have such a tax, so it’s best to take them off the list of candidates. All of a sudden, we’re left with a final four of Nevada, South Dakota, Texas and Wyoming.
We didn’t even need an NCAA bracket to come up with that final four. Statistics suggest, that most full time travelers list South Dakota and Texas, but Nevada and Wyoming are states that will prove to be tax friendly as well. Texas provides other benefits for RV travelers, including the fact that it Texas absentee voting laws are some of the most lenient in the country. But these are the four states that accommodate RV owners the most on tax issues. You will never be able to fully shake Uncle Sam on the open road, but you don’t have to invite him in to your vehicle. He can hang onto the tailpipe.
Nevada is unfortunately on the list of states with the highest Medicaid spending and this can be attributed to the big number of uninsured Nevadans who are depending solely on the said federal health insurance program for their Nevada long term care.
It can be recalled that in the second quarter of 2011 a proposal to cut back Medicaid funding to Nevada nursing homes was opposed by the non-profit organization Nevada Health Care Association (NVHCA), as the proposal would’ve affected the quality of services which Medicaid beneficiaries in nursing homes are receiving.
Residents of Nevada nursing homes who are receiving long term care (LTC) through Medicaid are lucky that an organization such as NVHCA stood up for them. However, the government continues to work out effective ways which will enable the Medicaid program to bounce back from its budget deficit.
Anyone who is completely dependent on Medicaid for his or her LTC needs is like a mouse that constantly has to be on the lookout lest it loses whatever it has gained to the cat.
To enjoy your life after retirement and be absolutely free from all forms of financial worries or threats, there is only one thing that you have to do and that is to come up with a personal LTC plan. Planning your LTC can be done in many ways as there are innumerable options that you can choose from.
You can consider reverse mortgage especially if you’re 65 years old or older. This will spare you from worrying how to pay back your lender because the moment your time in this world is up, your house will automatically go to him.
Meanwhile, if you hope to pass your ancestral home to your children and grandchildren in the future, you’re better off with a long term care insurance (LTCI) policy.
Benefits of Nevada Long Term Care Insurance
Do you want to receive more than just topnotch long term care? Then get yourself a tax qualified LTCI policy and fast.
If you’re wondering why you should hurry in purchasing a policy, the answer is quite simple. Older LTCI buyers pay higher annual premiums while the younger ones can enjoy an annual premium that is less than a thousand dollars.
Others think investing too early in a policy is illogical and a waste of money because you’ll be spending so much money on your policy’s premium. They think this because you’ll be paying for more years but what they don’t see is the fact that the premium of your coverage is chicken feed compared to those of 60-something or 70-something individuals.
Apart from a miniscule amount of premium, purchasing a policy at a young age will increase your tax deductions over the years as the Internal Revenue Code treats LTCI premium as a medical expense which is deductible from one’s income tax return.
Looking beyond your personal benefits, you will come to realize that having a Nevada long term care insurance policy will also protect your family from possible impoverishment which many American families are currently experiencing.
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