Nevada's business incorporations on rise

Nevada's 3,777 filings last year were only surpassed by Florida's 4,155 filings, according to the report by Dun & Bradstreet, a financial information services provider.

Nevada's filings last year represented a 16.3 percent increase over 1996. Only Montana and Arkansas reported a greater increase.

The filings also pushed Nevada's total number of incorporations to 26,999, the 10th highest in the nation. Only more populous states like California, Texas, New York and Florida have more corporations.

Experts said lax incorporation laws have prompted hundreds of out-of-state businesses to incorporate in Nevada. Even foreign businesses and stars like Kevin Costner and Madonna have formed Nevada corporations.

Unlike other states, Nevada businesses are not required to reveal the identity of shareholders. Other reporting and disclosure requirements are minimal.

Nevada also has no personal income tax and is one of only four states that have no corporate tax.

Some business owners said Nevada is stealing the thunder from Delaware, long considered the nation's leader in drawing out-of-state business because of its flexible requirements.

"More and more companies, instead of going to Delaware, are going to Nevada," said Lang Elliot, an ex-Hollywood executive who formed Reno-based Sierra Entertainment Corp.

Delaware's corporate income tax rate is 8.7 percent and its personal income tax rate can be as high as 7.7 percent.

California's corporate tax rate is 9.3 percent.

Many companies have nothing to do with Nevada other than filing forms at the Secretary of State's office and hiring a Nevada resident agent.

The filings have been a windfall for the Secretary of State's office. In May alone, new filings generated $343,034 for the office compared with $235,755 the previous May.

Establishing a Nevada corporation is popular among high-tech start-ups in the Silicon Valley and Seattle area, said Reno lawyer Garret Sutton.

Experts expect Nevada to have more incorporations than Georgia and Michigan in a couple of years, which would give Nevada the eighth highest number of corporations nationally.

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