IMPORTANCE OF ENTITY PROTECTION – LIMITED PERSONAL LIABILITY
TYPES OF PROTECTION AND THE IMPORTANCE OF YOUR NEVADA BUSINESS LAWYER

Limited Liability Companies (LLC)

A limited liability company (LLC) is a legal form of business entity that provides limited liability to its owners. It is a combination business entity maintaining certain characteristics of both corporations and partnerships. However, it is often more flexible than a corporation and is an excellent tool for companies with a single owner.

Members of an LLC are the owners of the LLC in the same vein as shareholders are owners of a corporation or partners of a partnership. These owners hold membership interests in the LLC entitling them to a right to receive distributions of capital from the LLC and retain proportionate rights over the LLC based on their membership interests. Prior to making any decision regarding the formation of an LLC we highly recommend that you contact a Nevada business lawyer to ensure that your rights are protected and that the entity you choose best suits your business goals.

TYPES OF PROTECTION AND THE IMPORTANCE OF YOUR NEVADA BUSINESS LAWYER

 Corporations (continued)

 Yet another advantage to the corporate structure is that the corporation can exist perpetually. This allows for stability and accumulation of capital creating investment in projects of larger sizes and accumulation of corporate assets of greater value, leading to greater value for shareholders. This perpetual lifetime feature indicates the boundless potential duration of a corporation’s existence, and its coterminous accumulation of wealth. Prior to making any decision to incorporate in Nevada we highly recommend that you contact a Nevada business lawyer to ensure that your rights are protected and that the entity you choose best suits your business goals.

TYPES OF PROTECTION AND THE IMPORTANCE OF YOUR NEVADA BUSINESS LAWYER

Corporations (continued)

In order to incorporate in Nevada a firm, or its shareholders must submit its articles of incorporation with the Secretary of State. The articles of incorporation establish the general nature of the corporation, the amount of stock it is authorized to issue, and the names and addresses of its directors.  Nevada does not require the identity of the corporation’s shareholders to be publicly disclosed.

Most corporations are registered as either a stock or non-stock corporation. Stock corporations sell stock to generate capital and are usually for-profit. Non-stock corporations do not have stockholders, but may have members with voting rights in the corporation. In addition, corporations can take the form of for-profit or non-profit, publicly traded, privately held, closely held, or closed altogether. The wide variety of ways and the ease with which a corporation can be formed in Nevada is one of the many reasons for Nevada’s popularity as a corporate domicile. Prior to making any decision regarding incorporation we highly recommend that you contact a Nevada business lawyer to ensure that your rights are protected and that the entity you choose best suits your business goals.

TYPES OF PROTECTION AND THE IMPORTANCE OF YOUR NEVADA BUSINESS LAWYER

Corporations

A corporation is a legal entity separate from the individuals that form it. The defining feature of a corporation is its legal independence from the people who create it. If a corporation fails, or dissolves, shareholders (in general) only lose their investment, and employees their jobs, but neither will be further liable for the debts owing to a corporation’s creditors, unless they made an agreement to be personally liable.

Corporations require a special legal framework that grants a given corporation legal personality. As such, corporations have the ability to sign binding contracts, pay taxes in a capacity separate from shareholders, and own property. In addition, a corporation’s legal personality grants creditors priority over corporate assets upon liquidation (or insolvency) and corporate assets cannot be withdrawn by shareholders, nor can assets of the firm be removed by creditors of a shareholder. Prior to making any decision regarding incorporation we highly recommend that you contact a Nevada business lawyer to ensure that your rights are protected and that the entity you choose best suits your business goals.

WHY IS IT IMPORTANT TO LIMIT PERSONAL LIABILITY?

By reducing the risk of personal liability in running the business, a business owner is able to focus on business operations, competition and profit, rather than the risk of personal ruin through some unfortunate event. Forming a valid Nevada business entity provides that comfort.  In addition, entity protection comes in varied forms, each with the ability to lend itself to the specific needs of the business. This flexibility allows businesses to grow and become more competitive in an increasingly global market. There are also significant tax advantages to entity protection.

Although upcoming discussions may suggest that entity formation is relatively simple, it would be a mistake to form an entity without first consulting your Nevada business attorney because selecting the right entity that provides your business with the most liability and asset protection can be complex.

ENTITY PROTECTION PROVIDES LIMITED PERSONAL LIABILITY

Introduction and the Importance of Your Nevada Business Lawyer

Operation of a business through the formation of a valid Nevada entity is important because it significantly limits one’s exposure to personal liability (especially in Corporations, Limited Liability Companies, and Limited Partnerships). In general, shareholders, officers and directors in a corporation; members of an LLC; and limited partners in a limited partnership are shielded from personal liability for the debts and obligations of the entity, which is legally treated as a separate “person.” This provides that unless there is misconduct, the owner’s own possessions are protected by law, if the business does not succeed or incurs liabilities itself. Prior to making any decision regarding entity protection contact your Nevada business lawyer to ensure that your rights are protected and that you choose the entity that best suits your business goals.

INCORPORATING IN NEVADA

Businesses that are involved in international trade can benefit from Southern Nevada’s Foreign Trade Zone #89, which is operated by the Nevada International Trade Corporation.  In addition, Northern Nevada is home to Foreign Trade Zone #126.  Foreign Trade Zones were created by Congress in 1934 and are sites within the United States in or near a U.S. Customs port of entry, where foreign and domestic merchandise can be considered as being in international commerce.  A business can use these Trade Zones to defer or eliminate duties on merchandise brought into the United States.

INCORPORATING IN NEVADA

The officers and directors of Nevada corporations enjoy substantial asset and liability protections.  In general, Nevada law protects directors and officers from personal liability from acts committed on behalf of the corporation or by the corporation itself.  In Nevada, in order to “pierce the corporate veil” to seek the personal liability of officers or directors, one must show fraud or manifest injustice – a very significant burden of proof.  Generally speaking, the Nevada corporate veil protects officers and directors from any personal liability for acts committed in those capacities on behalf of the corporation.

INCORPORATING IN NEVADA

Shareholders, officers and directors of Nevada corporations need not be residents of Nevada.  Further, they are not required to be U.S. citizens.  Nevada also does not require that shareholders or officer and directors meetings be held in the state.  Additionally, all corporate offices and director positions may be held by a single person. In contrast to Delaware, Nevada does not require the shareholders or directors of Nevada corporations to report the dates and times of their annual meetings.  Finally, entities formed in other states may be converted into Nevada entities so they can benefit from the advantages and flexibility offered to Nevada corporations.

INCORPORATION IN NEVADA

Entity flexibility is one of the great features of incorporating in Nevada.  With respect to stock, Nevada corporations may issue stock for capital, services, personal property, or real estate, including leases and options.  Further, in contrast to Delaware, Nevada allows unlimited stock of any par value.  In addition, Nevada corporations may purchase, hold, sell or transfer shares of its own stock.  Finally, Nevada entities may purchase, hold, mortgage and convey personal or real property anywhere in the world.