Forming an S Corporation In Nevada - How To Qualify
S Corporations - Why And How They Work For You
December 30, 2004
By Tom SeFack
An S corporation is a corporation with a special
tax status with the Internal Revenue Service. The
income of S corporation is treated in similar manner
as the income of partnerships or sole proprietorships
- it is passed through to the shareholders. They then
file their tax returns for the income (or loss) coming
from an S corporation individually, and are taxed
at their individual rates at both federal and state
level (in the state where shareholder lives). Forming
an S Corporation in Nevada is easier than you
think, though there are some rules to follow.
Not everyone will qualify for an S corporation tax status. It must
be a United States corporation with only one class of stock (though
different voting rights are allowed) with total number of shareholders
less than 75. All shareholders must be individuals, qualified trusts,
or estates.
Foreign non-resident aliens cannot become shareholders in S corporation.
S corporations also cannot be owned by C corporations, other S corporations,
many trusts, LLCs or partnerships. Moreover, S corporations are
not allowed to own eighty percent or more of another corporation's
shares.
The shareholders of an S corporation enjoy the limited liability
and protection under liberal laws of the State of Nevada. To enjoy
the benefits of a Nevada S Corporations, you must file an election
on time, otherwise it will not go into effect until the following
year. The stock can be transferred freely.
As with other corporations in Nevada, there are many benefits to
incorporating in Nevada's business-friendly state:
- one person can hold all offices (director, president, secretary,
treasurer).
- there is no information sharing agreement with the Internal Revenue
Service
- bearer shares are allowed
- no state income taxes, neither corporate nor personal
- minimum reporting and disclosure requirements
- stockholders are not public record
- directors have final say in determining the value of stocks issued
against for capital, services, personal property or real estate
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