Benefits of a Corporation
Often, the most important reason to form a corporation is to protect your personal assets from liability in case your business is sued. A corporation has a separate legal existence from its owners, and therefore its liability is limited to the assets owned by the corporation. This means that creditors cannot come after the owners’ houses, personal bank accounts, or other personal property. In addition to this personal protection, there may also be other benefits to forming a corporation, such as tax savings and increasing your company’s appeal to investors.
Requirements for Incorporating in Nevada
Preparing Your Articles of Incorporation
Your corporation’s existence begins when you file articles of incorporation with the Secretary of State and pay a filing fee. The articles of incorporation must include the following:
- Name of the corporation
- Names and addresses of incorporators
- Names and addresses of directors
- Registered agent
- Stock structure
A corporation can offer different types of stock, called classes or series. These classes can offer different rights to their shareholders, for example some classes of stock may offer voting rights while others do not. Regarding stock structure, the follow applies:
- The total number of shares the corporation is authorized to issue
- If there is more than one class or series of shares, the articles must state the classes or series, the number of shares each is authorized to issue and the voting powers, designations, preferences, limitations, restrictions and relative rights of each class or series of stock. Alternately, the articles may state that the directors are authorized to determine these matters.
- The articles must also state the number and value of shares with par value and the number of shares without par value. Par value is the minimum value a share can be sold for and is used to compute the filing fee.
Naming Your Corporation
The first step in naming a corporation is to make sure the name you want is available. You can do this by searching the Secretary of State’s records online.
You can reserve a name for 90 days by submitting a name reservation form to the Secretary of State.
When choosing a name for your corporation, keep in mind the following requirements:
- If your corporation’s name appears to be the name of a person (such as “Mary Smith” or “M.R. Smith”), you must place a corporate suffix such as “corporation,” “incorporated,” “company” or “limited” at the end of the name. Otherwise, you are not required to use a word that identifies your business as a corporation.
- Your corporation’s name must be distinguishable from the names of other business entities on file with the Secretary of State’s office, unless you file a written consent signed by the entity using the similar name.
The person responsible for signing the articles of incorporation and filing them with the Secretary of State is known as an incorporator. The incorporators’ duties end when the articles of incorporation are filed.
When specifying incorporators, you must meet the following requirements:
- Incorporators’ names and addresses must be listed in the articles of incorporation.
- There must be at least one incorporator.
- An incorporator must be a person.
Corporate directors set the corporation’s long-term goals and strategies and oversee management of the corporation’s business affairs. Directors have a duty to place the interests of the corporation ahead of their own personal interests.
The following requirements apply when specifying your corporation’s directors:
- Directors must be at least 18 years old.
- A corporation must have at least one director. Nevada does not place an upper limit on the number of directors allowed, but a number can be specified in the articles of incorporation or bylaws.
- The initial directors’ names and addresses must be listed in the articles of incorporation.
Specifying a Registered Agent
A registered agent is a person that receives legal documents and notices that are addressed to the corporation. The following requirements apply when specifying the registered agent for your corporation:
- If a corporation has a commercial registered agent, the articles of incorporation must list the agent’s name. If the corporation does not have a commercial registered agent, the articles must list the name and street address in Nevada of the corporation’s noncommercial registered agent or the title of an officer or other person at the corporation who will act as agent, together with that person’s business address in Nevada.
- The registered agent must sign a certificate of acceptance that is submitted with the articles of incorporation.
- The registered agent may be any person or entity with a physical address in Nevada or a corporation that has registered with the state as a commercial registered agent. A corporation with a physical address in Nevada can act as its own registered agent by specifying the job title of the person at the corporation who will serve as agent.
Stating a Corporate Purpose
Although some states require you to specify a corporate purpose in your articles of incorporation, Nevada has no such requirement.
Determining Incorporation Bylaws
A corporation’s bylaws specify its rules and operating procedures. Bylaws are optional for Nevada corporations, but it is strongly recommended to have them because they provide written guidelines for the corporation’s directors, officers and shareholders.
Bylaws usually include such provisions as the number and qualifications of officers and directors, the manner in which directors’ and shareholders’ meetings are held and the way shareholder votes are taken.
Costs of Incorporating in Nevada
The Nevada Secretary of State requires a fee when filing articles of incorporation or reserving a corporation name. Corporations are also required to pay federal income taxes. Nevada does not have a state corporate income tax.
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