If you are an entrepreneur looking for a business structure, the LLC (Limited Liability Company) may be your best option.
Unfortunately, there's no hard and fast rule about what type of company should be incorporated in Nevada; it all depends on your needs.
For example, some people prefer to start an LLC in Nevada because they want to limit their liability. In contrast, others find there are too many hoops to jump through with this form of incorporation.
Read on to see which option is right for you as a future business owner.
What is & How to Get a Nevada LLC?
First off, we need to explain what an LLC is. The LLC stands for limited liability company, which means that its owners are not personally liable for the business's debts.
This type of legal structure allows you to have pass-through taxation with taxes filed under your individual income tax return instead of a separate one for the business itself.
An LLC can be started by a single person and does not require minimum capital.
What's more, this type of business structure is easy to set up: all you need to do is file articles of organization and operating agreements with the Nevada Secretary of State.
Why Start a Limited Liability Company?
There are many advantages to starting an LLC, including limited liability protection and pass-through taxation.
There are also many different options if you want to create a single-member LLC or multi-member management with active members and managers.
There are several reasons someone would choose to incorporate in Nevada, but the most common include personal liability protection and tax benefits.
One of the things we should mention here is the term Foreign LLC. You will think that LLC is formed in another country outside of the USA when you hear that.
But you would be wrong! Any LLC formed in another state that is not Nevada is considered Foreign LLC.
So, for example, if you have an LLC formed in Texas and you want to do your business in Nevada, your LLC will count as a Foreign LLC category for the state of Nevada.
Start an LLC in Nevada
By following the steps we will outline for you, you can start a Nevada LLC in no time.
This is a simple process but does require some preparation before filing the articles of organization with the Nevada Secretary of State's office.
To get started, make sure that you have all the information and documents required by Nevada to form an LLC ready so that no time or money is wasted.
Let's go over what information and documents you will need in order to start a limited liability company in Nevada:
- Registered Agent
- Articles of Organization
- Operating Agreement
Let's start your Nevada LLC today by choosing the company name.
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)
- No special characters are allowed, like "Ã©" or "â€¦". You can use numbers, though, as long as they don't look too much like letters.
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.
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.
In other words, 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.
This registered agent services requirement ensures that you always have a person or company to receive official documents on your behalf.
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. However, suppose you are not comfortable sharing your personal information or giving it out over the phone.
In that case, hiring a registered agent service is probably not for you.
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 include your LLC's name, the business' location, whether it is managed by managers or members (you can also choose not to decide this until later), physical address for service-of-process, the name and physical address of your registered agent for Nevada, as well as a few other details.
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.
Nevada articles of organization are sent to companies and government agencies with the name of your LLC's registered agent and other public information such as articles' effective date, business location (street address), and formation type.
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."
Put Together an Operating Agreement
An LLC operating agreement is a legal document that establishes your LLC's operating rules, which Nevada LLC laws require.
An operating agreement helps you avoid disputes with other LLC members by clearly defining what everybody agrees on when starting up and throughout the LLC's lifetime in terms of operating procedures and financial contributions.
An operating agreement covers how much LLC owners will pay for the business and what percentage each person has in it when these payments are due if they must be made regularly (such as monthly), along with other essential details that can affect your LLC's operations.
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 startup costs as well as what percentage of profit they can expect yearly.
You need a Nevada LLC operating agreement for your Nevada limited liability company because it is a legally binding contract that governs your business.
Identify Your Business with the IRS
Suppose you are running a business in the United States. In that case, it is important to file your employer identification number (EIN) with the Internal Revenue Service.
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. 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.
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.
Business License - Do You Need One?
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 more often than a regular LLC.
Professional services include, but are not limited to, accounting, architecture, design, lawyers, and doctors.
Every state has different requirements for getting business licenses, and it's crucial that you know what those are beforehand so as not to run into any problems with your municipality or the state.
The general rule is to have a business license if your LLC provides professional services.
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.
Nevada LLC Tax Requirements
When it comes to Federal Income Taxes, they are filed with the IRS. However, in the case of LLC, we are looking at something called pass-through taxes.
This means that the owner files all the income and losses in their personal income return. So, technically speaking, LCC is only a "tax-reporting" entity to the IRS. But, at the same time, the business owner is the one who pays them.
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.
Besides those, there are also sales taxes and employer taxes. 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. But, please, make sure first that you belong to the category that needs to pay sales 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.
Just do not forget that all of this is just too much for you; you can always seek legal advice or find some professional who can help with any question you have.
Keeping Private and Business Assets Separate
It's good business practice during LLC formation to keep your business assets separate from your personal ones.
This can help you maintain limited liability protection and protect against business-related liabilities, too.
The business is responsible for its own debt.
Therefore, you should ensure that your business assets are adequately protected so as not to put personal ones at risk, which can lead to losing them if the business goes bankrupt or shuts down.
Business owners who keep their business and personal affairs separate can maintain personal asset protection fully.
Advantages of Nevada LLCs
There are many advantages of starting a Nevada LLC over other business entity types.
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.
Your LLC will take the worst part, and your personal finances will stay untouchable.
As long as you are not actively exploiting your business funds for your personal gain, you are personally fully protected by LLC.
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.
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 Organisation.
The same would cost you in Minnesota between $135 and $155, for example.
Other disadvantages are actually tied to the Annual Report. While at the same time, the private information of members is protected, it is only in case they are not managing the business.
On the other hand, 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.
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 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.
How Much Does It Cost to Start an LLC in Nevada?
The cost of starting Nevada LLC is $425 if you do it online. You are required to pay this when you are filing Articles of Organization through the Nevada Secretary of State.
Do LLCs Pay Taxes in Nevada?
Yes, there are many different types of taxes you can pay depending on which kind of business you are doing and many more factors.
However, the Nevada Department of Taxation made a guide that may be helpful. It has a lot of information and forms that you will need to pay your taxes.
How Long Does It Take To Get an LLC Approved in Nevada?
The process of getting an LLC approved in Nevada takes between three and four weeks. However, it can take longer if your company name has already been taken.
Can I Get an LLC for Free?
No, you can't. The initial filing fee for the paperwork you need depends on the state you are trying to start your LLC but is never free.
What Is Better LLC or Sole Proprietorship?
If you want to establish a business in Nevada, it's better for you to incorporate your company. This means that the best option is an LLC.
Can I Form an LLC in Nevada on My Own?
Yes, you can. It's very easy to form an LLC in Nevada, but it takes time and costs money if you want the company name to be available.
How to Form an LLC in Nevada: Conclusion
The process of starting an LLC in Nevada is straightforward.
However, if you feel like you are stuck, you should get the help of a professional 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.