What information is necessary?

For corporations, there is an annual requirement that the corporation submit a list of the current directors and officers for each corporation. For LLCs, the requirement is to list the manager or members (we almost always use manager-managed LLCs). For LPs, the general partner is listed. The registered agent must also be contained on this “Annual List.” The list must be signed by an officer of the corporation, manager of the LLC or GP of the LP (and accompanied by a fee). Once this information is filed, there is no other required information.

How does the nominee fit in?

The nominee is simply elected by the shareholders, members or partners (depending on the type of entity) to perform a very limited service; namely, to file the necessary documents with the Nevada Secretary of State to keep the business in compliance. Because the nominee is given temporary control of the business to perform this limited task, the nominee is listed as the director and officer of the corporation, manager of the LLC, or on behalf of the GP of an LP (again, this depends on the type of business).

What about updating the information?

As far as the annual list is concerned, updated information is not necessary. Thus, even though a nominee may be temporary, as far as the sparse public records are concerned, the nominee is still sitting on the board and running the businesses.

Why is this important?

This is important because the only available public information relating to the corporation lists the nominee’s information, not yours. You now have control over who has this information. This is a very effective way to keep your affairs private.

What about the IRS?

The IRS is sometimes an unintended beneficiary of states that require corporate tax returns and extensive business owner information. Nevada simply does not require such information. So long as a Federal corporate tax return is filed each year, the IRS is happy. Also, when your business applies for its federal tax number (EIN), it must disclose a responsible party and their social security number.

What about banks?

Some people worry that the bank will disclose your information. Banks need some information from you for internal security reasons. This information is not made public and does not show up on an asset search. Banks simply do not provide this information to the public unless required to do so by a court order or subpoena.

Why use a nominee?

The nominee service is beneficial for those people who either want to keep their business affairs private or who are concerned that if the public knew of their assets, lawsuits, solicitations, or other nuisances may arise. For many, the use of the nominee is an easy and effective way to keep their information private and to make them look like an unattractive target for lawsuits or other nuisances.

Will the nominee service prevent lawsuits? 

While certain lawsuits are inevitable (i.e. you run someone over in a car), the use of a nominee will greatly reduce your attractiveness as a potential defendant. In other words, when the plaintiff’s lawyers run an asset search on you to see what assets you may have to satisfy a potential judgment, they will not see the business assets.

This is a very effective tool to either keep lawyers from taking cases against you or to allow for a favorable settlement negotiation. Your financial condition is typically irrelevant in a lawsuit, so you do not have to disclose your financial situation (i.e. what does your account balance have to do with whether or not you were negligent when operating a vehicle?). Lawyers generally work on a contingency, so the risk of recovering nothing is more than most lawyers are willing to take.

How does the nominee service work? 

Each year, your business will have the opportunity to hire a nominee officer to handle the annual state paperwork. As a shareholder, manager or partner, you simply replace your board, officers, manager or GP with the nominee for a very brief period of time.

The nominee only accepts the position for the limited purpose of handling the paperwork with the State. Once the state filings are completed, you can then elect a new board, officers, manager or GP. You do not have to worry about the nominee having any authority to transact business. Further, when we file, we put “Nominee” on the filing so the public, if they come across your entity, is not mislead. We want people to know a nominee is involved.

Who handles the nominee service?

Anderson Corporate Services, your resident agent, handles the annual nominee paperwork.

The nominee service is not about hiding things from others. It is really about keeping your private business matters private. If you want people to know what your financial picture is, then tell them. Otherwise, use the nominee service to keep spying eyes out of your affairs.

Speak with one of our Corporate Advisors today to learn if nominee services are right for you.