For many years, Delaware ruled the incorporation landscape. Over half of the public companies and the Fortune 500 companies are incorporated in Delaware. The perception was that Delaware was THE place to incorporate a business. A few states have set their sites on Delaware, and are trying to attract business owners to form corporations and LLCs in their states instead. One such state is Nevada.

Some of the potential advantages often cited for forming a corporation or LLC in Nevada include:

• Nevada has no state corporate income tax.
• Nevada imposes no fees on corporate shares.
• There is no Nevada franchise tax for corporations or LLCs (however initial and annual statement fees apply).
• There is no personal income tax in Nevada.
• Shareholders, directors and officers of a corporation or members or managers of an LLC need not be residents of Nevada.

Another factor to consider if you are evaluating forming your corporation or LLC in Nevada is whether you will need to foreign qualify your company in another state. Corporations and LLCs are considered "foreign" in every state other than their state of formation. Foreign qualification registers a company to transact business in a state other than the home state.

Corporations and LLCs formed in Nevada but not located there often need to foreign qualify in their home state, since they have a physical location and employees there. If you are considering Nevada as the state of formation, you should include the initial and ongoing costs of formation and also foreign qualification costs in any other state(s) in your evaluation.

For questions on which state is best for the formation of your business, please seek the advice of an attorney or an accountant.

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