Incorporating in Nevada??

Question

Hey BP family,

I attended a real estate workshop a few weeks ago and was told that I should setup my LLC in Nevada because the benefits of incorporating in Nevada are amazing.  Is this true?  A company based out of Nevada  has reached out to me and is stating that I should use their incorporating services.  Please advise.

Thanks

Account Closed · Answer

Why do you think you need an LLC before you invest in real estate?

• Are you taking advice from someone in a real estate workshop or seminar who is teaching you concepts and he is teaching you in a motel room and he does not live in the area?
• How valuable do you think his advice is? Does this person have a substantial net worth, do you really believe this person has valuable information? Have you investigated the guru?
• How much did you pay for this useless information?
• I am sorry to be so negative in this answer to yourpost, in my opinion, YOU DON'T NEED an LLC. You need education on creative financing, power prospecting, contract engineering. You need a deal that will make you a financial profit!
• Ask for your money back (smile)

Matthew Kreitzer · Answer

Thank you for tagging me Edward. You appropriately spotted the issue. Generally speaking, most states will not enforce "choice of law" provisions in contracts unless your business has something to do with a particular state. For instance, if I were to sell you my car and say "this transaction is governed by......Alaskan law, the Judge would probably frown at me that day and I would get in trouble.

However, as you point out, each state has their own "choice of law" rules, and I am not allowed to tell anyone exactly what those may be in a state other than Virginia. Suffice to say, your point is an obvious issue that deserves examination by a local attorney.

Can a business incorporate in any state they want? Mostly, subject to a few rules. Can that choice hurt them in a court of law? Sure, if they don't follow a few specific rules. For more information on why incorporating in a state where you do no business may be a bad idea, find local counsel.

DISCLAIMER: For any viewer in Virginia, this may be considered as legal advertising. I am not agreeing to represent anyone by virtue of responding. I always recommend someone consult local counsel prior to acting on any information online.

Edward B. · Answer

Sorry, got cut off by my kids. Typically you are better off just forming your entity in the state that you will be operating. There may be exceptions to that, I am not sure, but if you are operating in MD then you will probably be sued in MD and MD law will likely take precedence. I am not 100% sure how that works but it is one of the arguments I have heard against Series LLCs if you are in a state that does not officially recognize them. @Matthew Kreitzer can comment more but ultimately he will tell you the same thing, find a local expert. He can speak more intelligently in terms of the law than I can though, and being right next door he may know something about MD.

So the bottom line is, I would be leery of someone hawking wares, like Nevada corporations. They have there benefits and uses but they are not the end all be all. Do some more research because it is highly dependent upon you and your situation as well as your location.

Edward B. · Answer

@Tiffany Jones

Brandon is a CPA and I highly recommend you talk to one because you keep mentioning incorporating so I am not sure if you are referring to an LLC or a corporation but the type of entity you choose will have serious tax implications, especially in regards to real estate.

I highly doubt that Brandon will opine too much on asset protection though. For that you need an attorney. I am not an attorney but I will tell you what I think based off of my experience. It is a way and should only be considered that. AP laws are very state specific so a local attorney or AP specialist is required to give you the best advice. In that regards, I do not believe that $2k is unreasonable at all. After all you get what you pay for. If you file yourself and use a boiler plate operating agreement, you will very likely not have the protections you seek and will have spent all of that money and still be vulnerable. On the other hand, just because they charge a lot of money does not mean the same isn't true. Ask me how I know.

Shanina Butler · Answer

@Tiffany Jones I recommend you incorporate in Delaware and then register as a foreign entity in the state you want to do business in, this is where the most benefits are via "corporate veil". I would love to talk more with you.

Account Closed · Answer

sounds like you received some pretty good advice here. Nonetheless I actually live in Vegas and will be creating an LLC to add as the beneficiary to my land trust. Will let you know how that plays out when the time comes.

Jessica Su · Answer

Very interested how this work out. Would be appreciated if you can post some details

Russell Brazil · Answer

You should consult with @Brandon Hall

Tiffany Jones · Answer

@Heath Thomas Jr   wow thanks for the heads up.  I'm so glad I asked.

You are right I wanted to incorporate in Nevada because of the "corporate veil"

Incorporating in Nevada??

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