VEGAS INC Magazine - Latest Las Vegas business news, features and commentaries about gaming, tourism, real estate and more
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VEGAS INC C OV E R STO RY protections in 2001 with the goal of attracting new businesses to Nevada to boost revenue from incorporation filings. They planned to spend $30 million of the projected revenue on salary hikes for public school teachers. But there were vocal critics. Sen. Terry Care said lawmakers were being asked to protect "corporate crooks." Sen. Bob Coffin said that because of the changes, reputable companies would avoid Nevada and "scoundrels" would move here. Sen. Dina Titus said Nevada should hang up a sign reading, "Sleazeballs and rip-off artists welcome here." "Nevada has sold its soul, tarnished its already shaken reputation today, in exchange for a $30 million Band-Aid," Titus said at the time. Nevertheless, she and other opponents ultimately voted for the bill. Many companies that incorporate in Nevada are far from unsavory. But others lean in that direction. In September 2011, Reuters published a special report highlighting three men who built thriving businesses helping people set up shell companies in Nevada. Each also served time in federal prison for committing financial felonies. Aaron S. Young spent 14 months in prison for using Nevada shell companies to help clients avoid taxes, Reuters reported. Wayne Andre McMiniment served three years for wire fraud in a theft and tax-evasion scheme. Richard C. Neiswonger spent 14 months in prison for wire fraud and money laundering. Nevada often attracts publicly traded companies from states with relatively weak executive protection laws, as well as companies that have a significant likelihood of being forced to restate their reported financial results, Barzuza and Smith said. The companies are led by executives who are willing to take bigger risks, work aggressively to make themselves look good and sometimes play "fast and loose," Smith said. They like Nevada because they're protected in court against potential liability if their actions create problems. For instance, they are more likely to report revenue as optimistically as possible and to underreport costs in an effort to boost their earnings, Barzuza said. "I think there is a concern that some shady companies are taking advantage of this law," Barzuza said. ••• On the fourth floor of a Henderson office building, one floor above VEGAS INC, it looks like a year-round party at the headquarters of InCorp Services. Streamers hang from the ceiling, balloons hover near cubicles, and walls are decorated with brightly colored murals. You wouldn't know it walking in, but InCorp is one of the biggest players in Nevada's incorporation business. "It's not the sexiest of industries, so we try to make the company fun," said Gayle Clauges, formerly known as the director of client services, now called the "empress of first impressions." Founded in 1998, InCorp employs about 75 workers and has more than 125,000 clients worldwide. In Nevada, more than 31,300 entities list InCorp as their registered agent, state records show. The company says it is the fourthlargest national registered agent in the country. Its employees remind clients of due dates for required filings and accept documents on their behalf. InCorp also provides customers with a layer of secrecy and anonymity, as clients can list InCorp's address as their own on publicly available documents. "No business owner wants to be served with lawsuit papers in front of customers or employees, and you probably don't want to deal with tax and other legal communications in your (everyday) operations," the company's website states. "As your Nevada registered agent, we can handle all of that for you." The company, which is privately held, does not disclose its financial performance, but Clauges said InCorp regularly hits monthly revenue records. While InCorp touts its services online, it doesn't mention the perks of incorporating in Nevada. That's not the case with other registered agents, many of whom are con artists who inflate Nevada's secrecy laws, Miller said. One registered agent, Corporate Service Center, offers a $100,000 guarantee that the "corporate veil" guarding its Nevada clients will never be lifted. "You can live anywhere and still incorporate in tax free, lawsuit proof, private Nevada!" the company's website reads. Founder and President Cort Christie did not return a call for comment. LLCs vs. Corporations: What's the difference? To the average person, the designation "LLC," "Corp." or "Inc." after a company's name likely means nothing. For the company's owner, though, it can have significant financial implications. The vast majority of the more than 50,000 new business entities that are incorporated each year in Nevada are limited liability companies and corporations. LLCs accounted for 62 percent of new filings last year, while corporations comprised 30 percent, according to Las Vegas research firm Applied Analysis. What's the difference between the two? Here are some tips from the | 2 2 J U LY 2 0 1 3 20130722_VI01_F.indd 15 | Nevada Co., a registered agent. LLCs • Like a corporation, an LLC is considered separate from its owner, who typically wouldn't be held personally liable for the company's debts and obligations. • An LLC does not pay taxes directly. Its income passes through to its owner, who is taxed individually. • Unlike a corporation, an LLC can distribute profits regardless of ownership stakes. • An LLC does not have stock and therefore can't issue stock options or raise money from the public. Corporations • There are no limit to the number or type of shareholders. • Corporations include three tiers of power. Shareholders own the company and elect directors, who in turn elect officers, who in turn manage the company's day-to-day operations. One person can hold all three positions. • Profits are not automatically distributed to shareholders and can be socked away as retained earnings. • Shareholder profits can be taxed twice, once at the corporate level and, if a dividend is declared, again at the individual level. What's in a name? Business owners often pick hohum names for the companies they incorporate – ABS Capital Corp., for instance, or Mortgage Alliance LLC. But, with more than 50,000 new entities being formed every year in Nevada, some are bound to have more colorful names than others. There's Ass Industries LLC, 2 Old Farts Entertainment LLC, $hi Dolla$ Cartel LLC and the Office of President for Kingdom of God Helpers and His Successors, a Corporation Sole. Ass Industries sells snowboard wax. 2 Old Farts says it offers web design, bookkeeping and virtual assistant services. $hi Dolla$ belongs to Honey Belshe, a female rapper from Texas whose stage name is "Hi Dolla Honey." It's unclear what the Kingdom of God Helpers' offers. Its business filing lists James and Karie Best, of Abilene, Texas, in the officer category, but James Best, a former State Farm Insurance agent, said he had "absolutely nothing" to do with choosing that name for the company. Here are some other companies that have incorporated in Nevada. Because of the state's lax incorporation laws, it is unclear what field they're in or service they offer. • Artsy Fartsy Art Gallery LLC • Shooting Puppies LLC • Greek Gangsta Princess Enterprises LLC • God Loves Everything About Me Inc. • Aryan Brotherhood of Texas Inc. • All American Strippers Las Vegas Style LLC • Porn Game Show Inc. • $hamele$$ Mu$ic LLC • Chapel of the Mid-Night Sun Inc. The Light in the Darkness Proclaiming: Glory to Thee, Almighty God in Highest, In (Cont'd) • Office of the Presiding Overseer of the Grand Lodge of Luxor, and His Successors, a Corporation Sole (GLL International) 15 7/18/13 2:04:53 PM