CRA of America, LLC.™

Section 1

ADVANTAGES OF A NEVADA CORPORATION

An incorporated business has many more advantages for its owners than a sole proprietorship or partnership. One of the primary reasons to consider incorporation is the limited liability aspect not found in some other forms of business enterprise. An owner in a corporation is known as a stockholder. A stockholder's personal liability is limited to the amount of capital invested in the corporation. Shares of stock are issued and represent the corporate owners' interest in the business.

While there have been cases where the Internal Revenue Service or creditors of a corporation have successfully pierced the corporate veil, the stockholder's personal liability is protected–if the corporation is properly organized and operated–from corporate lawsuits and subsequent financial losses. The fact that a great percentage of new businesses go bankrupt within a short time should be enough incentive for a new business owner to seriously consider the advantages of incorporation. When starting a new business, you would be foolish not to take into consideration the possibility of failure.

This risk factor should be taken into account far in advance and not as an afterthought that comes too late. New entrepreneurs really do not want to believe ventures will fail, but statistics tell us otherwise. The larger the venture the more reason to incorporate. Other advantages to incorporating your business follow.

1. Shares of stock may be used for estate and financial planning, including ownership by an offshore corporation or asset protection trust (APT).

2. Distribution of stock to family members or transfer of ownership to others can be transacted smoothly without interruption or dissolution of business. Stock certificates are personal property. To initiate a change of ownership, simply endorse the back of the certificate, unless restricted by articles of incorporation, bylaws or shareholder agreement.

3. Investors prefer investing in a corporation.

4. Corporate profits can be accumulated for business purposes as permitted by the Internal Revenue Service. This way profits do not have to be distributed immediately, and shareholders can postpone paying taxes on the money, if they choose to do so.

5. The corporation is a legal entity, the same as an individual, but created by statute. It can sue and be sued in the name of the corporation.

6. A corporate entity is much more organized. Management is elected by a majority. Corporate meetings and major decisions are conducted by a board of directors elected by the shareholders. Officers are then appointed or elected by the directors to carry out the daily operations of the business. Frequently, the stockholders, directors, and officers are the same person or persons. However, by doing business under the formal structure of a corporation, the business can organize expansion with proper leadership and responsibilities being administered by qualified parties in orderly succession.

7. You might elect to become an S corporation; in doing so, profits are taxed essentially the same as a partnership or proprietorship.

8. The Internal Revenue Code allows shareholders to deduct stock loss from personal income, up to a specified amount, under Section 1244. Even with failure, investors can still benefit.

9. The corporation can provide health, medical, and disability insurance plans for employees and write off the cost as a business expense. The benefits of these plans are not taxable to the employee/shareholder.

10. Tax deductible medical and dental reimbursement plans can be established for employee/stockholders.

11. Pension, profit-sharing, stock-option, and term life insurance plans can be made available to employee/stockholders.

12. Some institutions will not deal with an unincorporated business.

If those are not enough reasons to incorporate, here are a few more to think about. The following is a partial list of tax deductible corporate expenses.

Tax deductions change frequently so an accountant should be consulted for up-to-the-minute information.