Over the years, we have received several questions regarding what we refer to as "Myths" about Nevada Corporations and LLCs. For this reason, we wanted to take a minute to address these myths and provide an explanation behind them. Our goal here is to ensure you are fully informed about what Nevada corporate entitiies can and can't do for you.
- Myth 1: Nevada Corporations do not have to pay Corporate Income Taxes at the State level
- Myth 2: The Secretary of State does not share my information with the IRS
- Myth 3: In order to be official, my Nevada Corporation needs a mailbox or virtual office in Nevada
This is true if and only if your Nevada Corporation or LLC is operating in the State of Nevada.
For Example: If you have a Nevada Corporation that is located and conducting business in California, you wont have to pay corporate income tax to the State of Nevada, but the Corporation will still be responsible for paying California corporate income tax.
A Brief Explanation:
This myth has come about primarily because of the fact that Nevada does not impose a corporate income tax at the State level. At this point in time, the majority of Nevada's tax revenue is actually collected from the Gaming Industry. This has afforded the State of Nevada the ability to provide a favorable income tax structure to companies operating within it's borders.
Unfortunately, these are tax laws and are only applicable to businesses operating in Nevada. To clarify, in the legal sense, tax laws and corporate laws are two completely different animals. When you incorporate in Nevada and operate in another state you inherit Nevada's corporate law structure only, not its tax laws.
As with most laws, there are of course many "ifs, ands, or buts." In our experience, most business operations do not fall into these categories. We're not CPAs, Tax Attorneys, or Lawyers, so we cannot tell you whether or not you fall into one of these categories. If you believe your company does, we highly recommend confirming this with your CPA or Tax Attorney prior to forming a corporate entity in the State of Nevada.
Not True. What this should say is "The Nevada Secretary of State does not directly share information with the IRS"
A Brief Explanation:
It is true that the Nevada Secretary of State does not directly hand Corporate/Officer information over to the IRS. That being said, just because the Secretary of State is not giving the information directly to the IRS does not mean the IRS is not able to get the information they want. For example, the names and addresses of Corporate Officers are public records and they can be accessed by anyone, at any time, on the Nevada Secretary of States website.
Myth 3: In order for my Nevada Corporation to be official, I need a mailbox or virtual office in the State of Nevada
This is not true. The only law relating to a corporate entity maintaining a physical presence in the State of Nevada is the law that requires each entity to have a Registered Agent located in the State to accept Service of Process. There are no laws that require a mailbox or a virtual office to hold board meetings.
A Brief Explanation
There are many companies out there which provide Nevada Incorporation and Registered Agent Services. Many of these companies also offer a wide variety of other products and services. Unfortunately, some of them want you to purchase these other products and services so bad that they are not going to be fully up front and honest with regarding whether or not you actually need this service.