Many businessmen are attracted to set up their businesses in Nevada for the benefit it offers that may at a glance be definite advantages. Business in Nevada can enjoy the following:

- Corporations in Nevada may sell, transfer, hold or purchase shares of its own stock

- Directors do not have to be Stockholders

- Directors of Corporations in Nevada has the final decision in determining transactions involving issuance stocks for capital, real estate, personal property and services

- Minimal Reporting and Disclosure Requirements

- No Franchise Tax

- No Information Sharing Agreement with the IRS

- No Personal Income Tax

- No Taxes on Corporate Shares

- Stockholders are not Public Record

- Stockholders, directors and officers do not have to be U.S. citizens or are they required holding meetings or living in Nevada

- There are Nominal Annual Fees in Nevada

- There is No State Corporation Income tax

- When the acts of the Corporation are lawful its officers and directors can be protected from personal liability.

These factors are some of the reasons why in the last few years, doing business in Nevada has attracted many businesses. The main reason is the savings of taxes when forming a Nevada corporation, whether it is a limited partnership or limited liability company. Many states do not like this especially when their citizens, still living in their states create a Nevada corporation because Nevada corporations, as we know, will file their tax through a Nevada bank and not the states where they reside.

But creating a Nevada Corporation, for the purpose of saving on taxes may eventually cause legal implications resulting to being taxed by their mother states just the same. It is in the interest of other states to review procedures to make sure that taxes due to them are being collected. This will result in having most of Nevada corporations not being able to take advantage of the tax benefits that attracted the businesses in the first place. Business people who thought that they are earning by the taxes saved in a Nevada corporation could be audited for improper procedures that have been done over the years. Note that it is very seldom that audits happen during the first year. Usually it will take two to three years before an audit is initiated. The Interest accumulated during those years can mean large in terms of back taxes and penalties. It does not mean therefore that because no audit has happened, the Nevada Corporation that was put up had been properly structured. The increase of companies that flocked to Nevada, especially when done through the profit motive alone in terms of taxes saved can suffer legal consequences.

It is always critical to do good homework when setting up businesses because of the consequences that could result. Policies that do not already work for a government is being changed or amended from time to time and that include its revenue-collecting effort.

Some strategies adopted by Nevada Corporations that could be penalized include

- Operating a Nevada corporation without a business license

- Fringe benefits that are entitled to employees go to independent contractors.

- Nevada Corporations that do not have an employee.

- Not being able to substantiate the establishing of business based in Nevada.

- Nevada Corporations that do not issue stocks

- Nevada Corporations that relies on bearer shares

- Nevada Corporations that relies on privacy as its asset protection strategy.

- Corporation that uses Nevada as an asset protection tool

Robert Thatcher is a freelance publisher based in Cupertino, California. He publishes articles and reports in various ezines and provides Nevada corporation resources on http://www.about-nevada-corporations.info