Is incorporating in Nevada still attractive?
Nevada has established itself as one of the best states to incorporate. It offers relatively low fees, low taxes and fast processing. In 2016 Nevada agreed on increasing fees for Business licenses and also established a Gross Receipts tax. Even without these changes, Nevada was more expensive than its main competitors Wyoming and Delaware. After these changes the gap between them got even bigger. Let’s look closer at the changes it made and whether Nevada still has something to offer to entrepreneurs looking to incorporate in a state with a friendly business environment.
Incorporation process & fees
Incorporating in Nevada is very fast – it often takes only a few days. As we mentioned earlier, the problem is their fees. The State Business License that used to be relatively cheap now costs $200 for LLCs and $500 for C Corporations. Another disadvantage is that for the Annual report you have to pay on the day of incorporation, not after one year as usual. The entire incorporation costs in Nevada is approximately $800.
Wyoming is one of the cheapest states to incorporate in. This is highlighted when it is compared to Nevada. Your total costs regarding incorporation and maintaining the corporation may get to $1000 during the 3rd year since incorporating.
Delaware isn’t as cheap as Wyoming but it’s still a much cheaper option than Nevada and the incorporation process is very quick. Similar to Nevada, the Annual report has to be submitted on the day of incorporation.
Anonymity in all 3 states is great – shareholders of the company aren’t listed in public records – only executives are listed. Delaware is known as one of the most anonymous states to incorporate in and is trusted by many wealthy and influential people, a fact which was confirmed in the Panama Papers leak. Nominee shareholders are not allowed here though.
Nevada is still a low-tax state – no State corporate income tax and also no Franchise tax.
When it comes to taxes Wyoming is very similar to Nevada which means no State corporate income tax and no Franchise tax.
Delaware is the only one of these three states that has a Franchise Tax and the amount you pay depends on your income. It is also the only state that shares corporate income tax information with the IRS.
When we look at all of the pros and cons, all 3 states are pretty much equal in terms of anonymity and taxes. The main difference is in the fees that, when compared to Wyoming and Delaware, are extremely high in Nevada. Wyoming’s Cheyenne with 60.000 or Delaware’s Wilmington with 70.000 habitants probably aren’t cities where you’d start a business like an advertising agency or a software development firm. On the other side, Las Vegas in Nevada with a population of over 600.000 is certainly a better place to start these businesses. But if you don’t want to take advantage of this, incorporate in Wyoming or Delaware will save you a lot of money without giving up any of the advantages Nevada offers (except Vegas).
This is a sponsored post from a partner of CBNation.
HI Gresham, You might want to explain Nevada’s Gross Receipts tax. They saw how they were losing funds to those LLC’s and Corporations who came in from other States. The advantage to NV is nil anymore actually. Many companies have left to set up an LLC in WY and Del. as you said and also includes Puerto Rico. It’s worth adding that if an LLC or Corporation is in NV and the State of CA finds out the legal representatives or managing member are residents of CA. The State hits the company with an $800 franchise fee as it does for in-state businesses. CA got tired of losing funds to NV.
Hi Sylvia, Thanks for the feedback. We might add that in as another post too.