It is true that Nevada does not impose corporate income taxes. This and the fact that Nevada also does not impose personal income tax makes it a very business-friendly state. However, this does not mean that you can escape taxation simply by forming a corporation or limited liability company in Nevada. First, regardless of where you incorporate, the Fed’s are always entitled to a piece of the action, whether that is recovered through corporate taxes or personal taxes. Second, if you are doing business in another state, you may be required to register to do business in that state, which may mean paying annual registration fees as well as state corporate income taxes or other taxes imposed by that state. Third, if you are not a resident of Nevada, you may be obligated to pay state personal income tax in whichever state you do reside.
So what constitutes “doing business” in another state? Here is a lawyer answer for you – it depends. Every state has a different statutory definition of what constitutes doing business in that state. It is fairly safe to say that if you repeatedly conduct activities in a state, like shipping goods from a warehouse or having salespeople visiting customers on a regular basis, that is likely to be considered “doing business” in that state. This may mean that you need to register your business to do business in that state.
While Nevada is one of the most business-friendly states around, which is one of the many reasons we love our beautiful Silver State, forming an LLC or corporation here, if you are not actually conducting business in our fair state, is not necessarily going to help you avoid taxes in another state. The solution, of course, is for you to bring your business to Nevada. We would welcome you with open arms. But short of that, you should consult with an attorney and/or CPA before electing the state in which you incorporate your business