All you need to do is read the newspapers to determine that we live in a very dangerous environment for conducting business, or doing much of anything. The risk of getting sued today, especially when conducting your own business, is greater than it's ever been. There are now more practicing attorneys in the United States than everywhere else in the world. While the U.S. has barely 7% of the world's population, we have 94% of the world's lawyers. American attorneys work under a system which is not found anywhere else in the world, and that is the contingency fee system. Under the contingency fee rules, attorneys will file lawsuits without their clients having to put up any money. The successful attorney then takes a percentage of anything he is able to get from the defendant. This percentage, or contingency fee, will typically run in an area of 30-40% of everything that is collected. Is it any wonder then that attorneys press for very high awards in lawsuits? Only a few years ago, a jury award of a million dollars or more was unusual. Nowadays, however, a jury award of a million dollars is the norm. As a result, lawsuits are more and more common, making this a very dangerous climate in which to do business.

Incorporating one's business is certainly a good answer to protect you from those business lawsuits that come around so often. One need only read the newspaper any day to realize how serious this situation is. Looking at the number of million dollar plus jury awards would lead us to conclude that those on the losing end would now only wish that they had incorporated. You cannot wait until it's too late -- after you have been sued. The time to incorporate is while your legal seas are calm.

Another problem business people experience is ever-increasing taxes. Sometimes it seems that just when you make a little profit, the taxman is there to take it away from you. The government provides benefits to taxpayers who are smart enough to take advantage of them. No one is required to pay more taxes than the law requires, and it is through incorporating that one can take advantage of many deductions and advantages that the law provides for.

In the end, incorporating can save a business person or entrepreneur quite a bit of money and provide that person with personal protection -- both highly desirable in today's business environment. In short, incorporating will benefit you.

Why Nevada?

In deciding which state is the best state in which to incorporate, several factors must be analyzed. What is a state's regulatory climate? What is a state's tax situation? What is a state's stance on individual privacy? Which state will allow you the greatest stability to run your business the way you see fit? Which state has the best body of statute? Which states have the lowest filing fees?

For years, Delaware has been the leading state of choice for businesses wishing to incorporate. Delaware drafted an excellent body of statutory law. Delaware was very, very, flexible and allowed ease of operation throughout the United States. But over the last few decades, a new state has risen and has taken Delaware's place as the preferred state for new businesses, and that state is Nevada. Let's consider several points and after we do, I am certain you will agree that Delaware is no longer the best state in which to incorporate.

First, Delaware has a franchise tax, Nevada does not.

Secondly, Delaware has an income tax, Nevada does not. While it is true that this 8.7% income tax applies only to revenue earned within Delaware, this may change. In any event, that also means reporting, public disclosure, forms, red tapes, etc., you do not need.

Third, Delaware is now regulated by a corporation commission, Nevada is not. You should be aware that any time a state or federal bureaucracy is created it immediately begins to make rules and regulations to promote, enlarge, and enhance itself and make itself indispensable and necessary at your expense and inconvenience. No, you don't need added regulation.

Fourth, Delaware, like every one of the other states, except Nevada, reports tax data to the Internal Revenue Service. Again, the state of Nevada does not report your tax data to the IRS.

Fifth, some states make a major item out of the fact they recognize S-Corporations. The status of a corporation as an S-Corporation really has no significance to the corporate owners if the state has no income tax. In Nevada, whether you have an S-Corporation, or not, really doesn't matter to the Department of Taxation since allocation of taxable income from corporations to the individual has no effect on the state's revenue. Delaware, however, does recognize S-Corporations and therein lies the rub. A Corporation can get S-Corporation treatment to the extent its owners are Delaware residents. If there are shareholders who are not Delaware residents, the corporation is taxed on the level of that non-resident ownership. But that's not all, consider these other points:

First, in Delaware you must disclose the date appointed for the next annual meeting of stockholders for election of Directors. You do not have to divulge any information like this in your Nevada corporation.

Second, in Delaware you must disclose in your annual report the location of principal places of business outside of Delaware, this is not required in Nevada.

Third, in Delaware you must list the number and value of shares of stock actually issued. This could be dangerous to you, financial, and it is not required in Nevada.

Fourth, in Delaware you must report the transfer of stock. Not so in Nevada. There is maximum flexibility regarding stock ownership and transfers in Nevada.

Fifth, the annual cost to maintain your corporation with 25,000 authorized shares, as active, in Nevada is the modest sum of $85. This is the fee for filing your annual list of officers and designation of registered agent. For a similar Delaware corporation, the annual fee is more than $200.

Sixth, in Delaware you must pay tax on income earned in Delaware. The state of Nevada has no income tax either on the corporate or individual level. In fact, Nevada's constitution prohibits personal income tax. In Nevada none of these problems apply, you're free from the regulating hassles which afflict corporations in Delaware.

Clearly the best place to incorporate is Nevada, the state of the future, the frontier state with new horizons. The smart move is to keep in step with progress, to turn from the old to the new. The state of Nevada offers maximum flexibility, maximum privacy, and a minimum of regulation and red tape. Why did Madonna, Prince, Michael Jackson, Chevy Chase, Paul Simon, Rodney Dangerfield, Kevin Nealon and Diane Keaton all incorporate in Nevada? These are people who can afford the best legal and tax help available anywhere, and their advisors all advised them to incorporate in Nevada. You, too, can have this advantage. You, too, can take advantage of the same opportunities that they have taken advantage of. You, too, can gain the benefits of incorporating in Nevada, and when you do incorporate in Nevada you will find that you have a corporation which will allow you to accomplish all of your goals and objectives.

If you have any questions, please feel free to call us at our toll free number at 1-877-MYCPA-99 and ask to speak with one of our Certified Public Accountants.