Corporation General Motors Nevada – And The Advantages Over Delaware

September 9, 2004
By Richard Smith

Probably more famous for being a Delaware corporation, General Motors’ Nevada operations have taken a significant step forward since it decided to open a 404,000 square foot parts distribution center (PDC) facility in Stead (Reno) in 2002. At the time, General Motors went on record as stating that one of the primary reasons that it had decided to set up its PDC operations in Nevada was due to “local, state and federal considerations for funding support of employee training programs, infrastructure improvements and tax incentives were also instrumental in providing a favorable business case.”

In the case of the former, i.e. training programs, General Motors now runs a joint ASEP Program with the Community College of Southern Nevada, designed to provide instructions and practical experience to entry level technicians. However, interest sometimes lies in how Nevada could offer more potential tax incentives for corporations incorporating and undertaking business in Nevada than would otherwise be the case if they were incorporated and undertaking business in the State of Delaware. To assist you here, the following are a few of the pros that Nevada has over Delaware:

• no state personal income taxes;
• no state corporate income taxes;
• no tax on dividend payments;
• no tax on corporate shares;
• no franchise tax;
• stockholders and directors need not be residents in the state – corporate meetings, both for stockholders and directors can be held anywhere in the United States (indeed, the world);
• Nevada has minimal reporting requirements – merely the requirement, each anniversary of incorporation, to submit to the Secretary of State an annual list of officer and directors;
• stockholder details are not a matter of public record;
• corporations can issue bearer stocks;
• Nevada acknowledges the single member LLC concept;
• Nevada has no usury laws;
• Nevada does not share information with the IRS;
• Nevada state law has consistently shown that it is virtually impossible to breach the corporate veil;
• Nevada allows nominee stockholders;
• Nevada corporations may hold their own stock;
• Stockholders and directors of a Nevada corporation need not be US citizens.

Although Delaware shares a number of the benefits enjoyed by Nevada incorporated corporations, such as no tax on corporate shares and single member LLCs, Delaware state law does impute both state corporate income tax and franchise tax. Moreover, Delaware state does share information collected in relation to income with the IRS. Finally, Delaware doesn’t allow bearer stock to be issued, nor does it accept the concept of nominee stockholders.

Thus, whilst Delaware enjoys significant advantages over other US states, the move towards incorporating in Nevada, with its additional tax incentives, certainly seems to be a growth industry.