How to Raise $1 Million in a Year

Also, when a company registers in Nevada, it can advertise its stock in the state and hold seminars to introduce itself to investors, which is barred in most states. In Nevada, some companies stage investor-education meetings at top Vegas hotels and casinos, hoping to attract high-rolling tourists to sink a little cash into their business. Companies registered in Nevada can sell shares directly to any Nevada resident, as well as visitors who sign affidavits saying they did not come to the state to buy stock.

In other words, companies can't advertise outside of Nevada hoping to bring investors to the state for the sole purpose of buying stock. In contrast, most other states require companies to sell state-registered stock through a broker-dealer like Merrill Lynch, rather than issuing it directly, Apenbrink says.

Taxes and timelines also distinguish Nevada's program from those of other states. "Taxes are a lot lower in Nevada as opposed to [California]," says Robert Chang, CEO of Walnut, Calif.-based Najaro, a fruit beverage company, adding that the auditing and approval processes are also a lot faster in Nevada.

Developing a user-friendly state registered offering program was no accident for Nevada's policymakers. "We're very cognizant of the need to strike a balance between regulation and accessibility of [capital] markets, to minimize the burden and expense to businesses while also ensuring the integrity of the capital market," says Nevada Secretary of State Ross Miller, whose office oversees the program.

"There's a tradition of independence in Nevada, and we want to respect that tradition. Too often, people and businesses view regulators as an impediment, but I want my office to be a resource for those who want to grow their business."

Making It Work

To file for an NSRO, your company must first be incorporated in the state. The filing requires significant paperwork, including a thorough business plan and an in-depth audit. "Getting through compliance is pretty grueling," says Mike Murphy, CEO of MK Automotive, a Las Vegas-based chain of auto repair shops. He plans to franchise with the money he raises through the NSRO. "You undergo the same scrutiny a very large company would, and the challenge is taking a small company and making it fit into rules designed for large companies."