Should You Form a Nevada S Corporation?
Are you looking for the right business structure for your company? Would you like to know if forming a Nevada S Corporation is the right decision? Here are a few things to consider.
The S Corporation may be an appropriate business structure for your company if you wish to have the same asset protection through limited liability as a traditional corporation. The State of Nevada describes this limit on liability that is available to corporations who are formed under state law as the inability of creditors to look to independent shareholders for payment or liability of losses incurred by the business. Instead, only the corporation itself and its business assets can be held liable.
The S Corporation may be the right choice for your business if you wish to have your company treated like a partnership when it comes to taxes. With an S Corporation, business profits and losses are “passed through” to shareholders, based on a percentage of ownership. The corporation itself pays no federal income tax, but — under California law — is subject to a 1.5 percent tax on net income.
Shareholders are another thing to consider with an S Corporation. How many shareholders do you have? What is their legal status in the United States? According to the IRS, an S Corporation can have no more than 100 shareholders. They must be U.S. citizens. While some estates and trusts may be permitted, partnerships, corporations and non-resident aliens may not hold shares in your S Corporation.
Corporate California would love to answer any questions you may have about S Corporations. For more information on how we can help you form your California S Corporation, contact us.