• Nevada law inspires small business to incorporate.incorporations articles image by Keith Frith from Fotolia.com
  
  Nevada and Delaware share the mantle as the most corporate-friendly states in the Union based on tax rates and liability protections, among other things, but for small businesses, Nevada is the preferred home. However, you should be aware that incorporating in Nevada does not relieve you of the obligation to register as a foreign corporation in your home state--potentially negating any benefits you may receive from corporate-friendly Nevada Law.
  
  

Corporate Veil

• Piercing the corporate veil is common parlance when a plaintiff in a civil suit names individual officers of a corporation in the suit rather than just the corporation itself. Limited liability laws prevent such piercing in general, but protections in most states are not as hearty as they are in Nevada. While suits filed against a corporation will go to court in the state in which the corporation does business, piercing issues are directed to the "state of domicile" which, if it's Nevada, severely limits a plaintiff's ability to sue individuals. Proponents of incorporating in Nevada claim that the veil has been pierced only twice in the 24 years since Nevada enacted stricter rules.
  
  

Taxes

• Nevada has no state corporate or franchise taxes. Most states of domicile tax the home corporation on profits earned from business conducted anywhere in the country. Delaware, for example, limits that tax to only those revenues earned in the state of Delaware. Nevada taxes no corporate earnings regardless of where they are generated.
  
  

Liability

• Most states determine liability for the director of a corporation by an objective standard of care, meaning the courts must compare the behavior of the director in a position of liability to a standard of what any reasonable director in a similar situation would have done. A few states, including Nevada, rely on a subjective standard of care. Subjective judgment allows the court to consider the state of mind of the director in question at the time the act in question was committed. By allowing the consideration of intent, subjective standards of care tilt dramatically in favor of the corporation. Nevada separates itself from the subjective states even further by extending this protection to both directors and officers.
  
  

Anonymity

• Nevada has no agreement with the Internal Revenue Service regarding information sharing as of 2010. Such agreements are voluntary and Nevada has long refused to enter one with the federal government. As a consequence, some less-than-savory businesses have used Nevada to remain anonymous, attaching a slight stigma to legitimate corporations that choose to incorporate there. Because of the lack of information sharing with the federal government and the limited amount of information the Nevada Secretary of State is required to keep on file, litigants wishing to sue a Nevada corporation will have trouble determining how much capital it has or even who actually owns it.