S companies, often known as S corps, are pass-through entities that allow business owners to avoid double taxation. Unlike a typical company, where the business itself pays taxes on its profits, a S corp distributes its income, deductions, and credits through to its shareholders’ personal tax returns.
One of the few states without a corporate income tax is Nevada. As a result, S corporations in Nevada are not subject to state-level income taxes. S corporations must still submit state tax returns, pay a variety of fees and taxes, including the Modified Business Tax (MBT), a payroll tax imposed on specific types of enterprises, in Nevada.
Nevada not only has enticing tax regulations, but it also accepts S corporations as legitimate corporate forms. To incorporate a S corp in Nevada, a firm must first file as a corporation with the Nevada Secretary of State, then apply for S corp status with the Internal Revenue Service (IRS). Once accepted, the company can continue to operate as a corporation while taking advantage of a S corp’s tax advantages.
Yes, you can incorporate in Nevada even if you live in California. Nevada has been a popular jurisdiction for out-of-state enterprises to incorporate due to its favorable tax rules and business-friendly atmosphere. However, incorporating in Nevada does not mean you may escape paying taxes in your home state. For instance, if you conduct business in California, you will continue to be governed by its laws and taxes.
No, a Nevada address is not required to incorporate in Nevada. You do, however, require a registered agent who can accept legal and tax paperwork on your company’s behalf and has a real location in Nevada. To meet this requirement, many businesses use a registered agent service. These services normally have a price and might give your company a Nevada physical location.
In conclusion, Nevada’s lack of a corporate income tax makes it a great state for S corporations. In Nevada, S corporations must still submit a state tax return, pay a variety of fees and taxes, including the Modified Business Tax. S corporations are recognized as a legal business structure in Nevada, and you can incorporate there even if you reside in another state. However, incorporating in Nevada does not mean you can escape paying taxes in your home state, and you will require a registered agent with a physical location in Nevada to incorporate in the state.