Thinking about incorporating your business or investment in Nevada? Consider these seven tips to make the process easier, to minimize mistakes, and to avoid trouble.

Tip #1: Don't choose Nevada unless you operate in Nevada

Let's get this first tip out of the way right up front. Nevada incorporation makes sense for businesses and investments located in Nevada. Nevada incorporation does not make sense for non-Nevadan business.

Here's why: If a Nevada corporation operates in another state, the corporation owes income taxes and franchise taxes to that other state. Anybody who tells you different doesn't understand how multi-state taxation works.

Tip #2: Consider both an LLC and a corporation

Here's another quick tip: A traditional corporation isn't always the best model for your small business. Nevada businesses actually have two great options for minimizing their legal liabilities. Businesses can go with a traditional corporation. Or businesses can use a limited liability company--which you can think of as a "lite" version of a corporation.

Many lawyers and CPAs recommend the limited liability company option over the corporation option. An LLC requires less paperwork and lets the business owner choose how the entity will be treated for federal income tax purposes.

Tip #3: Get Free Forms from the State of Nevada

Even if you're going to employ an outside professional or work with an incorporation service, you should grab the free forms and instructions available directly from the state of Nevada web site at:

http://sos.state.nv.us/business/forms/all.asp

You may not choose to complete the forms yourself. But the free forms let you ask the right questions if someone else prepares the paperwork.

Tip #4: Pick a Multi-State Friendly Name

If there's a possibility that you'll operate your corporation or LLC outside Nevada, be sure you pick a name that works in other states.

A corporation name that ends in "Corporation," "Corp," "Incorporated," or "Inc." works pretty much everywhere, for example. An LLC name that ends in "Limited Liability Company," "LLC," or "L.L.C." also works pretty much everywhere. Not all of the other allowable Nevada corporation and LLC names always work, however.

Tip #5: Don't Forget About the EIN

You may be required to get an employer identification number (EIN) for your new LLC or corporation. In fact, the only time this won't be the case is if you're setting up a one-owner limited liability company that won't have any employees.

One easy way to get an EIN is by downloading a paper copy of the Form SS-4, "Application for an Employer Identification Number," from the www.irs.gov web site and then filling out and mailing the form to the appropriate address.

Tip #6: Remember to Make Any Relevant Tax Elections

Both limited liability companies and corporations may make elections with the Internal Revenue Service that save the business substantial amounts of income and payroll taxes.

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