If you are an entrepreneur looking for a business structure, starting a Limited Liability Company (LLC) in Nevada may be a good option. You simply have to follow the business protocol and file the necessary requirements.
Since I’ve gained a decade of experience as a business consultant, I helped countless clients with LLC formation and organization.
I had also consulted legal experts in the field of business to provide you with a comprehensive guide on how you could start a limited liability company in Nevada.
Quick Summary:
- To start an LLC in Nevada, simply follow the state protocol regarding the steps and corresponding documents.
- After establishing a Nevada LLC, it is advisable to open a business bank account and obtain the licenses that apply to your business.
- A limited liability company can be taxed based on the preferred classification of its members.
How To Start an LLC in Nevada
To start an LLC in Nevada, prepare all the documents and follow the steps provided by the Nevada Secretary of State.
Here are the following information and documents you will need in order to start a limited liability company in Nevada:
- Name
- Registered Agent
- Articles of Organization
- Operating Agreement
- EIN
1. Name Your Nevada LLC
The name you choose for your LLC needs to be distinguishable from other business names in the state.
It is not enough that you are differentiating your business name by using special characters or including numbers; it needs to be unique among all businesses registered with the Nevada Secretary of State office.
To check if a business name is available, search for it on the official website of the Nevada Secretary of State.
There are a couple of rules you need to follow for business names:
- The business name must end with the words "Limited Liability Company" (i.e., XYZ LLC)
- The name should not include terms like Incorporation, Corporation or its equivalent abbreviations.
- Avoid using government related terms such as federal, agency or revenue service to prevent confusion as to the nature of your business.
You can also apply for a DBA (doing business as) name, different from the official business name.
This can be helpful if you want to use a business name that's easier for customers and clients to remember (such as your personal last name).
DBA doesn't have to contain the LLC abbreviation in the name.
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2. Get a Registered Agent
LLC's registered agent is an individual or business entity the LLC designates to receive legal documents on its behalf. They can also help with other documents, such as the operating agreement.
Your registered agent is an individual or business that agrees to accept official communications from companies and government agencies for you when you are not available.
The Nevada Secretary of State requires all businesses in their state to have a registered agent.
Companies and government agencies will send you important legal notices, summonses, complaints, subpoenas, and other official papers through registered mail to the address of your LLC's registered agent.
The registered agent is legally required to accept them for you before forwarding those letters to you.
You can also hire one of the best registered agent services in Nevada to do this job for you.
3. File Nevada Articles of Organization
Nevada LLC Articles of Organization is a business formation form that you must file with the Nevada Secretary of State's office to start a Nevada LLC in their state.
The Articles of Organization must include the following information:
- LLC's name
- Business location
- Management structure
- Registered agent contact information
A filing fee must accompany the articles.
Once filed, articles are effective within 60 days from their date of submission to the state agency unless you file an application for expedited processing, which will guarantee that your articles become active in 24 days.
As soon as articles become active, they will be available for viewing on the official website of the Nevada Secretary of State's office under "Business Entity Search."
4. Draft an Operating Agreement
You need a Nevada LLC operating agreement for your Nevada limited liability company because it is a legally binding contract that governs your business.
An LLC operating agreement is a legal document that establishes your LLC's operating rules, which includes the following:
- An operating agreement covers how much money each member will contribute to the Nevada startup costs and what percentage each person has in it when these payments are due.
- It defines operating procedures and financial contributions.
- It outlines the managerial structure of the company.
Operating agreements need to outline operating procedures and the operating authority of managers or members in charge of the LLC's daily activities and responsibilities.
An operating agreement filed by you or a registered agent should also include how much money each member will contribute to the Nevada startup costs as well as what percentage of profit they can expect yearly.
5. Identify Your Business with the IRS
It is important to file your employer identification number (EIN) with the Internal Revenue Service.
IRS employer identification number is necessary to open business bank accounts, sign up for employer-sponsored benefits, and file taxes.
EINs are also needed when you want to hire employees or independent contractors in some cases.
You can quickly get an EIN online from the IRS website, which only takes about five minutes to complete.
It costs nothing and will be active immediately when you submit your application.
What To Do After Establishing Your LLC in Nevada
After establishing your LLC in Nevada, you have to open a business bank account and acquire the required business licenses and permits.
1. LLCs Need a Business Bank Account
Before your business formation is complete, you will need to open an LLC bank account.
A business bank account is a bank account that you set up with your LLC's name. This means it can be used to receive business income and make business purchases, but members cannot withdraw the money for personal use.
The business owner needs to open an LLC bank account because it offers features such as checks which will allow the business owner to keep track of business expenses.
The LLC owners must keep business and personal money separate, which means that it is not wise to use a business bank account for personal purposes.
This will help avoid IRS penalties in case you are audited by the agency later on because they can tell if business income was used illegally for something other than business-related costs.
Keeping Private and Business Assets Separate
It's good business practice during LLC formation to keep your company assets separate by opening a business bank account.
This can help you maintain limited liability protection and protect against business-related liabilities, too.
The business is responsible for its own debt.
2. Obtain the Necessary Business License and Permits
Depending on the state you conduct business in, you may need a business license to open an LLC.
A professional limited liability company needs business licenses to legally operate in the state.
Professional services include, but are not limited to, accounting, architecture, design, lawyers, and doctors.
If the service does not fall under one of these categories, it does not mean that you do not need one.
It is better to be sure and check if your business needs a state business license or local business license.
You can do it easily online on the Nevada Department of Business and Industry website. Some of them even require special permission from local municipalities before they issue licenses.
How are LLCs Taxed in Nevada?
LLCs are taxed in Nevada depending on the taxation classification status opted by the owners – single-member, multi-member, C-Corp or S-Corp.
LLCs are pass-through entities. This means that the owner files all the income and losses in their personal income return.
Two types of Nevada Business Taxes apply for LLC. One is called Modified Business Tax and applies to all businesses paying at least $50,000 in wages quarterly.
The other is called Commerce Tax and applies to all businesses with gross annual revenue surpassing $4,000,000 [1].
Besides those, there are also sales taxes and employer taxes.
1. Sales Tax
Sales tax is not for every LLC, but if you are in the category which needs to pay it, you will require a seller's permit.
This can be obtained through the Nevada Tax Center website.
2. Employer Tax
Employer taxes are paid if you hire employees. It is necessary to register for Unemployment Insurance Tax through the Nevada Unemployment Insurance Tax Portal.
You will also need to sign up for Employer Tax through the Nevada Department of Taxation.
Why Start a Limited Liability Company?
It is advisable to start a limited liability company because the business structure offers several benefits.
There is the option of creating a single-member LLC or multi-member management with active members and managers. Any LLC formed in another state that is not Nevada is considered Foreign LLC.
1. Advantages of Nevada LLCs
The advantages of starting an LLC in Nevada include personal asset protection, pass-through taxation and flexible management structure.
The most important reason is to keep your personal assets protected from the bankruptcy of your firm.
Then, if some other Nevada business sues your Nevada limited liability company, you will be covered.
Another advantage is that you can have a limited number of LLC shareholders. There's no need to disclose the company's financial information publicly if you don't want to.
2. Disadvantages of Nevada LLCs
One of the disadvantages of business formation, specifically LLC, is that it is more expensive than in other states.
For example, the cost to start an LLC in Nevada is $425, and you have to pay it all when you file your Articles of Organization.
The same would cost you in Minnesota between $135 and $155, for example.
All the information about officers, directors, and managers becomes public when the Annual Report is processed.
Even members' information is shared if he works in his own company.
Annual Report
The Annual Report lists your officers, directors, and registered agent service. It's obligatory for all Nevada and Foreign LLCs authorized to do business in Nevada.
The Nevada LLC Annual Report is also called the Annual List. The first Report or List is filed when you are filing your Articles of Organization.
In the case of a Foreign LLC, it is an Application for Registration of Foreign Limited-Liability Company.
Since you will do this annually, the due date for every other annual Report is the last day of the month when the anniversary falls.
For example, suppose you filed your Articles of Organization in November. In that case, your due date will be the last day of November.
The filing fee is $150. It can be filed online by Silverflume, Nevada's Secretary of State's web-based business filing portal, or you can download the form and send it by postal mail.
FAQs
Can I Get an LLC for Free in Nevada?
You can’t get an LLC for free in Nevada. The initial filing fee for the paperwork you need depends on the state you are trying to start your LLC.
What Is Better to Establish in Nevada, LLC or Sole Proprietorship?
It is better to establish an LLC in Nevada because of its advantages. Having other members in the company would result in a bigger capital.
Can I Form an LLC in Nevada on My Own?
You can form an LLC in Nevada on your own by following the steps and submitting the required documents.
How to Form an LLC in Nevada
Forming an LLC in Nevada is accomplished by following the steps outlined above.
However, you can choose to employ the help of a professional service provider like ZenBusiness to walk you through the steps or answer any questions that may arise while filing your paperwork with the state.
And do not forget to ask for legal advice if you are not sure how to approach something.
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References:
- https://tax.nv.gov/Commerce/FilingRequirementFAQs/
