Corporate Stocks and Bonds
Shareholder Governance and Liability
Forming a Corporation
Attorney Las Vegas - Business Lawyer Las Vegas
LLC vs Corporation vs Partnership vs Sole Proprietorship
What are they - How do they differ?
Limited Liability Company (LLC)
- The LLC is a hybrid form of doing business that combines
characteristics of the corporate structure and the partnership structure. It
is a separate entity like a corporation and therefore carries liability
protection for all of its' members, but (if structured properly) is taxed like a partnership
which has the benefit of flow through taxation. The business lawyers at
Adams Law Group are well versed in the formation of LLC's and other
business entities, as well as the drafting of all documents for the created
and ongoing operations of LLC's.
The LLC's owners are called members and can be virtually any entity including
individuals (local or foreign), corporations, other LLCs, trusts,
pension plans etc. Nevada permits one member LLC's. An LLC is formed by filing
the Articles of Organization with the Secretary of State. The Corporations Division of
the Nevada Secretary of State's office handles LLC's. Like Nevada, most states require an annual
report be filed to keep them apprised of the LLC's current status.
However, other than
that, there are no other on-going Secretary of State reports or forms to
file. The LLC is generally not a tax
paying entity. Profits and losses generally flow directly through to
the individual owners and are reported
on the individual owners tax returns.
It is generally advisable that the LLC have an
Operating Agreement. The business lawyers at Adams Law Group
will draft a carefully crafted Operating Agreement specific to the
needs of the client's organization. The Operating Agreement is the
agreement between the members as to how the LLC will be managed and contains
provisions that will qualify it for the beneficial partnership
Corporations (including Subchapter S)
- The corporation is a separate entity and therefore carries with it limited
liability protection for its owners or stockholders. It has perpetual life
and is a tax paying entity. Double taxation is a potential negative feature
as earnings are taxed at the entity level and then taxed again when
distributed to the stockholders as dividends.
A corporation is formed by filing Articles of Incorporation with the
Secretary of State. Shares of stock are issued to the shareholders, bylaws
are adopted, and a board of directors is elected. The board of directors
manage the corporation and appoint officers (president, secretary,
treasurer) to maintain the ongoing daily affairs. The laws require regular
director and shareholder meetings be held, minutes of those meetings be
kept, and any decisions made at those meetings be formalized in the form of
written resolutions. Failure to maintain these records will jeopardize the
corporate status and leave the stockholders vulnerable to personal attack
and responsibility for tax liability and corporate debt.
The Subchapter S corporation is formed by making a special IRS election.
When properly made and maintained, this election allows the flow-through
taxation treatment similar to that which partnerships and LLC's enjoy.
WHY INCORPORATE IN NEVADA?
- No Corporate Income Tax
- No Taxes on Corporate Shares
- No Franchise Tax
- No Personal Income Tax
- Nominal Annual Fees
- Nevada corporations may purchase, hold, sell or transfer shares of its
- Nevada corporations may issue stock for capital, services, personal
property, or real estate, including leases and options. The directors may
determine the value of any of these transactions, and their decision is
- No Franchise Tax on Income
- No Inheritance or Gift Tax
- No Unitary Tax
- No Estate Tax
- Competitive Sales and Property Tax Rates
- Minimal Employer Payroll Tax - 0.7% of gross wages with deductions for
employer paid health insurance
- Nevada's Business Court
- Developed on the Delaware model, the Business Court in Nevada
minimizes the time, cost and risks of commercial litigation by:
- Early, comprehensive case management
- Active judicial participation in settlement
- Priority for hearing settings to avoid business disruption
- Predictability of legal decisions in commercial matters
Partnership (including Limited Partnership)
- The partnership form of doing business is noted for its simplicity and
ease of formation. A general partnership can be formed with nothing more
than a verbal agreement (although it is advisable to draft a written
agreement). Nothing has to be filed with the state and freedom
of contract is the governing principle. The down side is that the partners
are joint and severally liable for the debts of the partnership. This means that each partner is fully liable
for the actions of the other partner.
A limited partnership offers more protection in that the limited partners are
generally not liable for partnership debt and only their investment is at risk.
A general partner must be appointed who is responsible for the limited
partnership's operations. A limited partnership files a document
with the secretary of state and is governed by a limited partnership
A limited partnership is limited to 35 owners. Both general and limited
partnerships enjoy the benefits of partnership taxation.
- Operating as a sole proprietor is certainly the easiest and cheapest form
of doing business. After getting proper state and local business
licenses, a sole proprietor can basically open the doors and be in business. The temptation to
operate this way is great and many succumb. The shortcomings of this form of
business are great also. There is absolutely no protection between you and
your business and there are no tax benefits. While there are no particular record-keeping requirements, this may lead to sloppy bookkeeping. Sloppy business creates poor decision making and sets up failure. Planning, at the beginning, can save
the sole proprietor money on an ongoing basis and
protect the assets that the sole proprietor has worked so hard to accumulate.
The business formation attorneys at Adams Law Group, in Las Vegas,
Nevada, will form the correct business entity for its clients, draft the
articles, bylaws, and minutes, prepare and issue stock or membership
certificates, and act as the registered agent. Fees for simple corporations and
LLC's start from $1,250.00. The business lawyers at Adams Law Group can also assist in
corporate record keeping and the drafting of resolutions for corporate minutes.