How to File LLC Taxes in Nevada? (A Complete Guide)
Nevada's federal and state governments require you to disclose specific standard income taxes if you operate a limited liability company (LLC).
We collaborated with our qualified LLC accountants with more than twelve years of expertise to assist you in taking the appropriate steps.
To get the most recent information on tax filing, we have spent the last five weeks reviewing the Nevada State Tax Department websites.
Quick Summary
- To file LLC taxes in Nevada, you must identify the structure of the business whether it's a single or a multi-member LLC, then submit the correct tax forms to the IRS.
- There's no corporate income tax for LLCs taxed as C-Corps in Nevada.
- Nevada LLC pays a sales and use tax rate of 4.6%.
- From my perspective, the favorable tax conditions in Nevada make it an attractive location for entrepreneurs to establish their LLCs.
How Are LLCs Taxed in Nevada?
LLCs are taxed in Nevada according to the number of members or shareholders it has.
A single-member Nevada LLC is taxed like a sole proprietorship, while a multi-member LLC is taxed like a partnership for tax purposes.
LLCs are pass-through structures, meaning all the income and losses flow to the members who file a federal income tax on their reports.
There’s no Nevada state income tax; however, LLCs can be subject to modified business tax if they report their gross wages to the Nevada Employment Security Division.
In Nevada, limited liability companies can also decide to have their entities taxed like a C or S corporation by filing special forms with the Internal Revenue Service (IRS).
State Taxes for Nevada LLCs
Different LLC structures in Nevada dictate the type of state taxes the entity will be liable for.
Here's how:
1. Single-Member LLCs
A single-member LLC in Nevada has one partner or shareholder and is treated like a sole proprietorship for tax purposes.
As the sole proprietor, you are responsible for obtaining one Federal Tax Identification Number that you'll use to file LLC business taxes.
Nevada doesn't levy taxes on the entity level, but the LLC owner must submit federal income taxes on their revenue because Nevada doesn't have a personal income tax.
Additionally, all such entities are liable for paying the 15.3% self-employment tax and withholding tax.
Read our article and learn how to avoid and reduce self-employment tax.
2. Multi-Member LLCs
A multi-member limited liability company in Nevada is taxed like a partnership, meaning the entity doesn't pay taxes.
Instead, the partnership's annual profit or loss "passes through" to the individual partners in shares.
The Nevada LLC members then deduct this passed-through gain or loss from their tax filings.
For our company, all the LLC owners also pay a quarterly 1.17% Nevada modified LLC business tax and 15.3% self-employment tax on their tax returns.
3. LLCs Taxed as S-corp
An S Corporation passes through its annual profit or loss to each shareholder according to their ownership proportion of the issued shares.
After accounting for this passed-through profit or loss and applying their tax rates, the shareholders subsequently pay federal taxes on their returns.
The shareholders file federal Form 1120S, an informational document that shows the number of shares, income, and deductions [1].
One benefit of an S-corp is that the stockholders' tax returns are not subject to self-employment taxes.
4. LLCs Taxed as C-corp
In Nevada, you can choose to tax your limited liability business as a C-corp. Compared to conventional LLCs, a C-corp offers higher eligibility for tax deductions.
From our experience, Nevada C-corps must submit IRS Form 1120 and pay the state's 21% federal income tax return.
Federal Taxes for Nevada LLCs
The Nevada LLC tax submitted to the federal government includes the following:
Federal Self-Employment Tax
Self-employment tax includes Social Security and Medicare. Drawing from experience running an LLC, the 15.3% tax is filed on the net profits, or profit, for the year, less business expenditures.
For federal tax purposes, this Nevada business tax is distributed as follows:
- Medicare (2.9%)
- Social Security (12.4%)
Other Taxes
Other taxes that your Nevada limited liability company (LLC) may pay include the following:
1. Commerce Tax
The Nevada Legislature enacted the annual Commerce Tax in 2015 [2].
Businesses subject to the tax must have at least $4,000,000 in gross Nevada revenue during the tax year.
If your annual gross revenue is less than this amount, you're exempted from paying the Commercial Tax Return.
The Commerce Tax return is due 45 days after the fiscal year's end.
However, other entities are automatically exempted from paying the tax, and they include:
- Governmental entities
- Non-profit organizations
- Credit union
- Grantor trust
- Certain Real Estate Investment Trusts
"A commercial tax is imposed on an LLC as a way of paying for the privilege of transacting business in Nevada."
- Delina Yasmeh, J.D./Tax LL.M, Distinguished Expert in Mergers & Acquisitions
2. Nevada Annual List and Business License Fee
Nevada mandates yearly reports and demands updates on firm ownership and contact information and the state business license for an annual fee.
For our Nevada LLC, we were required to pay $350 for this filing, including $150 for the listing fee and $200 for the license.
You can apply for an LLC business license and the annual list online or send mail to the Nevada Secretary of State.
3. Sales Tax
In Nevada, all companies must register with the state to receive a sales tax permit and pay sales tax. This applies to all companies that sell, transfer, barter, license, lease, rent, use, or consume taxable tangible personal property.
For our company, the current sales and use tax rate that we pay is 4.6%.
However, it can increase to 8.375% because some jurisdictions impose local income taxes on products and services.
4. State Employer Taxes
If you’re an employer, the Nevada Department of Taxation requires you to pay these two taxes:
Unemployment Insurance Tax
Employers are subject to unemployment insurance taxation on each employee's basic salary up to $40,100.
The unemployment tax rate is 3% for the first three years that the legislation governs an employer.
After that, the Nevada Employment Security Department will impose an annual rate on the employer from 0.25 to 5.4%.
Workers' Compensation
Drawing from our professional experience, all employees must have workers' compensation insurance, according to the Nevada Department of Taxation.
Depending on claim history and the risk associated with your workers' work, rates might vary. Still, the estimated average cost in Nevada is $0.94 for every $100 of payroll.
5. Local Taxes
Certain counties and towns in Nevada have their own taxes; for example, Las Vegas has a 13% hotel tax.
6. Industry Taxes
The industry-specific taxes that your LLC may be subjected to include the following:
- Cigarette Tax
- Other Tobacco Products Tax
- Liquor Tax
- Wholesale and Retail Marijuana Excise
- Tire Tax
- Live Entertainment Tax
- Bank Branch Tax
- Gold and Silver Excise Tax
- Net Proceeds of Minerals Tax
- Insurance Premium Tax
What Is Tax-Deductible for an LLC in Nevada?
Tax-deductible for an LLC in Nevada include health benefits, auto expenses, start-up costs, travel expenses, employee salaries, liability insurance, and fire and flood insurance.
Maximizing these tax-deductible opportunities can significantly contribute to reducing your LLC's overall tax burden.
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FAQs
Do Foreign LLCs in Nevada Pay Taxes?
Yes, foreign LLCs in Nevada pay taxes as long as they conduct business within state lines. These taxes include commerce, self-employment, sales and use, and industry taxes.
What Are the Tax Advantages of a Nevada LLC?
Tax advantages of a Nevada LLC include the absence of corporate income tax and franchise tax. This makes Nevada an appealing choice for businesses seeking favorable tax conditions and liability protection.
References:
- https://www.irs.gov/pub/irs-pdf/f1120s.pdf
- https://tax.nv.gov/WelcometoCOM/
