An S corp. in NV or Washington state?

**tscrap2010** · 01-20-2010 06:24 PM

I was wondering if it were more beneficial to set up an S corp in Nevada rather than my home state

of Washington? Which one provides me more protection? As far as privacy of members and taxes.

can somebody help?

Thank you,

Tscrap

**GlobalWealth** · 01-25-2010 12:45 PM

Hands down, NV. But why an Scorp? You can get the tax benefits of an Scorp with an LLC taxed as an Scorp. Plus the LLC offers much better privacy and asset protection. Almost all of my clients use an LLC and we almost always file LLC's in NV.

**abergmanesq** · 01-28-2010 04:50 PM

Use an LLC - no advantage of using an S Corp. I would form the LLC in state you reside so you are not required to pay dual filing costs (costs of filing in Nevada and then the cost of registering as a foreign LLC in Wash). Check out - FormLLCDirect to learn how to form your own LLC for free - aside from state fees.

**Privateer** · 02-18-2010 09:41 PM

Hey Bobby, do your clients choose to file in NV over WY? If so why? I've been looking into filing in one or the other for a while now and it seems to me that WY offers the better deal in terms of cost and tax protection.

**GlobalWealth** · 02-19-2010 04:55 AM

Originally Posted by Privateer

Hey Bobby, do your clients choose to file in NV over WY? If so why? I've been looking into filing in one or the other for a while now and it seems to me that WY offers the better deal in terms of cost and tax protection.

I do all the LLC formation and filings for my clients, but I do use both WY and NV. Both are good with very little difference in cost and taxwise, no difference. Usually I go with NV because they are faster. You can file electronically vs WY you must mail hard copies to the state.

**thomas_smith** · 03-10-2010 08:38 AM

You can incorporate your business other than your home state. But there are various issues those have to be considered before approaching this concept. If you are planning to incorporate your business in other state to avoid paying taxes, then it is technically a wrong concept.

For example, you are a resident of New York state and starting retail business in New York but willing to incorporate your business in the State of Wyoming to avoid taxes. Following steps must be followed:

Incorporate your Business in the state of WyomingIncorporate the Wyoming Company in the state of New York as “Foreign Entity” to transact business.

Practically it is not a right approach, because you will maintain two states same time.

**GlobalWealth** · 03-13-2010 10:38 AM

Originally Posted by thomas_smith

You can incorporate your business other than your home state. But there are various issues those have to be considered before approaching this concept. If you are planning to incorporate your business in other state to avoid paying taxes, then it is technically a wrong concept.

For example, you are a resident of New York state and starting retail business in New York but willing to incorporate your business in the State of Wyoming to avoid taxes. Following steps must be followed:

Incorporate your Business in the state of WyomingIncorporate the Wyoming Company in the state of New York as “Foreign Entity” to transact business.

Practically it is not a right approach, because you will maintain two states same time.

Actually, this can be the exact correct approach depending on what you are trying to accomplish. If you are trying to avoid taxes, this is not the right approach as an LLC is a flow through entity and you will pay state tax based on your residence. The only way to avoid state tax is to physically move to a no-tax state like FL, TX or NV. However, there are significant asset protection benefits to registering your LLC in the correct state. For example, in IL if you are sued, the courts can grant membeship interest in your LLC to your creditors to satsify the judgment. Your creditors could then legally liquidate your assets go pay themselves. In CA if you are sued the courts can foreclose on business assets to satisfy your creditors. This cannot happen in NV. There are a few states where these things are not possible and NV is one of them. So you can register your LLC in NV and the register as a foreign entity in your home state, ie NY, but your business would be subject to NV state law as it pertains to your business assets. This is much, much better than NY state law. You will incur additional fees of registering your NV LLC in NY, but the benefits can be enormous for some. The operating agreement is your next critical component of your LLC and most of them I see are sorely inadequate to protect your in the event you are sued. This is why LLC formation isn't really a DIY project unless you are intimately aware of these issues. You may save some money on initial set up, but it will cost you in the long run.

**jmandgroup** · 03-22-2010 09:55 PM

Originally Posted by GlobalWealth

Actually, this can be the exact correct approach depending on what you are trying to accomplish. If you are trying to avoid taxes, this is not the right approach as an LLC is a flow through entity and you will pay state tax based on your residence. The only way to avoid state tax is to physically move to a no-tax state like FL, TX or NV. However, there are significant asset protection benefits to registering your LLC in the correct state. For example, in IL if you are sued, the courts can grant membeship interest in your LLC to your creditors to satsify the judgment. Your creditors could then legally liquidate your assets go pay themselves. In CA if you are sued the courts can foreclose on business assets to satisfy your creditors. This cannot happen in NV. There are a few states where these things are not possible and NV is one of them. So you can register your LLC in NV and the register as a foreign entity in your home state, ie NY, but your business would be subject to NV state law as it pertains to your business assets. This is much, much better than NY state law. You will incur additional fees of registering your NV LLC in NY, but the benefits can be enormous for some. The operating agreement is your next critical component of your LLC and most of them I see are sorely inadequate to protect your in the event you are sued. This is why LLC formation isn't really a DIY project unless you are intimately aware of these issues. You may save some money on initial set up, but it will cost you in the long run.

GWP who do use as a registered agent for NV? Do you partner with a company, have employees, or do you have them find one? This was the one thing that stopped me from going with NV. I had trust issues.