FAQ

What is a corporation?

As defined by a typical Law Dictionary:

1. An artificial person or legal entity created by or under the authority of the laws of a state or nation, composed, in some rare instances, of a single person and his successors, being the incumbents of a particular office, but ordinarily consisting of an association of numerous individuals, who subsist as a body politic under a special denomination, which is regarded in law as having a personality and existence distinct from that of its several members, and which is by the same authority, vested with the capacity of continuous succession, irrespective of changes in its membership, either in perpetuity or for a limited term of years, and of acting as a unit or single individual in matters relating to the common purpose of the association within the scope of the powers and authorities conferred upon such bodies by law.

As generally understood:

A corporation is a separate and legal "person" in the eyes of the law. The corporation is distinct and different from its directors, officers, members, or shareholders. A corporation can only take action through its officers, directors, members, or agents. As an artificial person, a corporation has its own set of rights, duties, and liabilities not unlike a natural person. The activities of the corporation are recorded in the corporate minute book. When a corporation is formed, you receive a corporate charter which operates like a corporate birth certificate. Natural persons are issued a social security number by the government. A corporation is issued an employer identification number (EIN) for identification purposes. A corporation must file tax returns. It can be charged with a crime. And it can be a party to a lawsuit.

What is a resident agent?

The words resident and registered are interchangeable. Some states use one name, some use the other. In Nevada, each corporation must maintain a registered agent for the corporation in a registered office within the state. A registered agent may be a natural person over eighteen years of age or another corporation. The registered office may not be a mailbox or post office box, it must have an actual street address. The primary purpose for a registered agent is to maintain a continuous corporate presence in the state of incorporation. Specifically, it provides for a physical address for any legal papers to be delivered in the event the corporation is involved in any litigation or needs to receive a verifiable notice of any kind. In Nevada, the registered agent must keep a copy of the articles of incorporation, a copy of the corporate bylaws, and the stock ledger of the company or a statement that provides the name and address of the actual custodian of the stock ledger.

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Do I need a resident agent to have a Nevada corporation?

Simply stated, "Yes." The Secretary of State of Nevada requires that a resident agent be listed for any corporation.

What is a nominee officer?

A nominee officer is a person or entity that acts in place of another. In the case of a Nevada corporation, this officer is the only one listed with the Secretary of State. As such, all other parties owners and operators of the corporation are not publicly available. The nominee officer is also a contact point for any legal paperwork or proceedings whom often, but not always, is also the registered agent. To allow this, Nevada leaves a key officer out of the required filings, the Vice President. With a nominee officer, you become the Vice President with full control of the corporation but without the liability of having your name on public file.

Can a nominee take control of my company?

In a word, "No." A binding contract is entered between your company and the nominee officer that enforces the nominee status. Only a person with control of the stock of a company has control of that company. In other words, if you have the stock, the control is yours.

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What is the difference between a "C" and an "S" corporation?

A C corporation is the standard corporation. It is required to pay federal income taxes and if it pays dividends to its stockholders, they are required to pay taxes on their dividends. This is where all the hype about "double taxation" comes from. The S corporation is in reference to Subchapter S of the Internal Revenue Code that qualifies a C corporation to be taxed differently. The S status is not automatic. Form 2553 must be filed with the IRS to request that a corporation be given Subchapter S status for taxation purposes. Once this qualification is given, the corporate structure becomes a hybrid offering limited liability for its stockholders, but the corporation is no longer a taxable entity. Any income the corporation generates, whether distributed or not, is transferred directly to the stockholders who then pay taxes on this income at the appropriate personal income tax rate. Unfortunately, stockholders in an S corporation are subject to tax on the income of the corporation even if they receive no benefit, therefore, each shareholder must disclose his name, address, number of shares, when the shares were acquired, and his social security number.

What is "double taxation"?

Double taxation occurs only when paying dividends. Dividends are paid to stock holders after the corporation has paid taxes on its profit, then the stock holder pays taxes on the already taxed dividend. This is easily overcome by paying officers and owners wages, bonuses, or benefits which are expenses for the corporation, thus lowering its tax because profits are lower, and allows tax to be paid once by the officer or owner.

Do I need an office in Nevada?

In order to remain a legitimate Nevada corporation, you must have a Nevada address and phone line. A resident agent or nominee officer usually fulfills this requirement. The address should not be a PO box, as you will often see advertised, and the phone line should be answered by a live receptionist who is actually in Nevada, otherwise a corporation may be pierced easily with the thought that it was never intended for legitimate purposes.

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Do I need a bank account in Nevada?

As above, you should have a bank account located within Nevada. An account can easily be set up without ever having set foot in Nevada.

Can I own a Nevada corporation if I live in another state?

You can live anywhere and still own a Nevada corporation. In fact, you need not even be a citizen of the United States.

Do I need to register my Nevada corporation in my home state?

You may need to register in your home state, especially if doing business in that state. Contact your Certified Asset Protection Consultant for details for your state.

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