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A Nevada limited liability company (LLC) can be an excellent option when forming a new business entity. This business structure offers numerous benefits, including some exclusive to the state. LLC formation can seem daunting, but reading the step-by-step guide below can help make the process easier to understand.
Starting a Nevada LLC: Key Takeaways
- An LLC is among the most popular business structures due to its limited liability protection and flexibility.
- Filing for an LLC includes several essential steps, from choosing a business name to submitting Articles of Organization.
- Business owners who seek a streamlined LLC formation process can utilize Block Advisors’ Business Formation service to help them accomplish this important task.
What is an LLC?
LLCs are often confused with other business structures and even concepts like “doing business as” (DBA) names, which aren’t legal structures to begin with. So, let’s start by defining an LLC clearly and concisely.
An LLC is a business structure that allows you to take advantage of some of the upsides of other business structures. It can offer limited liability protection like an S corporation or C corporation, yet is also easy and flexible to manage, similar to sole proprietorships and partnerships. This blend of positive features makes LLCs popular with entrepreneurs.
However, this choice isn’t one-and-done. You see, there are several types of LLCs to choose from. The most common types differ in the number of owners and the specific business needs they serve.
LLC options in Nevada include:
- A single-member LLC: This limited liability company is formed and run by one person or “member.” This LLC type offers a good deal of flexibility for filing tax returns.
- A multi-member LLC: As the name suggests, multiple LLC owners form and run this LLC type.
- A PLLC: A professional LLC is designed for licensed professionals like architects and accountants. These LLCs must also obtain a Nevada state license before practicing.
Additionally, each LLC type above has two management options. An LLC can be member-managed –all members participate in managing the business. In contrast, an LLC could also decide to be manager-managed – that is, a manager is appointed to run the business.
Though there are a few LLC types, one thing remains the same in virtually all cases — their taxation method. In Nevada, LLCs are generally taxed as pass-through entities. This means that each member only pays taxes on their share of income passed through from the LLC. The only exception to this are LLCs that elect C Corp taxation status.
Benefits of forming an LLC in Nevada
Nevada is among the most appealing states for forming an LLC for several reasons.
Limited liability safeguards
When you form a Nevada LLC, you generally aren’t personally liable for any debts incurred by the business in most cases, including debts resulting from lawsuits. A creditor usually can’t seize your personal assets like your home, car, and bank account. It is worth pointing out that limited liability partnerships (LLPs) offer similar liability safeguards. However, keep reading to see additional advantages that make LLCs an attractive business structure to many small business owners. Learn more about LLC protection.
Exceptional privacy protection
Another Nevada LLC benefit is that Nevada is one of four “anonymous LLC” states. The others are Wyoming, Delaware, and New Mexico. Nevada is one of the few states that guarantees total privacy during business formation and operation. How? Well, LLC owners aren’t obligated by state law to publish personal details into public record. This allows you to enjoy anonymity while running your Nevada business.
Favorable tax laws
An LLC is a flexible business structure when it comes to taxes. Namely, owners have the ability to choose how their LLC is taxed. Single-member LLCs can be taxed as a sole proprietorship, C corporation, or S corporation. Many small business owners may even find they save significant money at tax time when they elect S corp taxation. The freedom to choose opens the door for different ways of saving money during tax season.
Nevada itself, however, offers specific tax advantages for LLCs. Nevada is widely known to be a business-friendly state because of its low business taxes. There’s no personal income tax, corporate income tax, or franchise tax, allowing LLC owners to keep significantly more of their profits. So, for tax purposes, many consider Nevada a favorable place to form an LLC.
Flexible ownership structures
Nevada LLCs can have either one member or many, with few limitations. The only caveat is that you may only have up to 100 members if you elect S Corp taxation. They say many hands make light work – keep that in mind as you form an LLC!
Proximity to major markets
Located in the western U.S., Nevada is close to major markets in California, Arizona, and Utah. This makes the state an excellent choice for business owners who want to tap into these thriving markets and serve a broader customer base in these geographic areas.
Ready to form your Nevada LLC?
How to start a Nevada LLC
LLC formation varies from state to step. Forming a Nevada limited liability company requires the following specific steps.
1. Choose your Nevada LLC name
Coming up with a memorable business name takes a lot of work. You want something unique yet easy to remember. Impactful yet reflective of your business. Unfortunately, the naming process becomes more challenging when you factor in Nevada naming conventions.
The first and most important requirement to keep in mind is that your chosen LLC name can’t already be in use. It must be entirely distinguishable from company names already in use.
You must also pay attention to words that must be a part of your LLC name and those that can’t. The first group refers to terms and abbreviations that designate your business as an LLC (e.g., limited liability company, limited company, and LLC). The second refers to a list of restricted words (e.g., bank, financial, and realtor) that can only be part of your name under specific circumstances.
To double-check whether your chosen name is available, you can perform a business name search on Nevada’s state business portal, SilverFlume. If your preferred name is available, either proceed to LLC formation immediately or reserve your desired name. According to the Nevada Secretary of State, name reservation requires a $25 filing fee and keeps your name safe for 90 days.
2. File your LLC Articles of Organization
Though there are a few steps to consider during LLC formation, this is one of the most important. Once you file Articles of Organization and pay the $75 filing fee, the state recognizes your business. Pay special attention to filling out this legal document.
Among other things, your Nevada LLC Articles of Organization form must include the following:
- The LLC name
- The foreign LLC name (if applicable)
- Registered agent information
- Management structure
- Principal physical address
- Records office street address
You can submit this form online or mail it to the Nevada Secretary of State’s office. For the first option, you’ll only need SilverFlume. For the second, you need the following mailing address:
Secretary of State
202 North Carson Street
Carson City, Nevada 89701-4201
Note that there are two more requirements for Nevada business owners in addition to the Articles of Organization. The first is the Initial List of Managers or Managing Members. You must attach it to the Articles of Organization. As the name suggests, the list contains your Nevada LLC’s relevant officers, managers, members, general partners, managing partners, and trustees. The second is a State Business License form. This document secures a Nevada business license for your new LLC, barring a few exemptions.
3. Choose a registered agent service
Nevada requires each LLC to appoint and maintain a registered agent. These individuals or business entities receive service of process and other crucial legal documents or state correspondence on behalf of your LLC. You must submit a Registered Agent Acceptance form with your Articles of Organization. The registered agent you choose must sign the form along with an LLC representative.
Though you can be your own registered agent, think long and hard if you want to go this route. Acting as your own registered agent will put you at risk of receiving sensitive documents and notices in front of your employees and customers. Do you really want to risk being served a potentially embarrassing lawsuit in front of your clients?
If you want to avoid this unfortunate scenario, consider hiring a Nevada registered agent service. These services ensure professional handling of legal documents, maintaining your privacy. Small business owners who use Block Advisors to form their LLC can conveniently and easily appoint a third-party registered agent as part of their formation process.
4. Prepare an LLC operating agreement
Though it isn’t technically required, you should seriously contemplate drafting an LLC Operating Agreement. This document outlines the rules and procedures for running your business, making it a key part of maintaining smooth operation. Plus, your LLC defaults to state law without it, which isn’t always in your best interest.
Some of the aspects you can cover with this document include:
- How to assign ownership
- What to do if an LLC member leaves or dies
- How to split profits and losses
- How member voting will be structured and organized
- What it takes to dissolve the LLC
This document doesn’t need to be submitted to a state or federal agency. Simply draft the agreement, have it reviewed by a lawyer, ensure all LLC members sign it, and keep it in a safe, easily accessible place. When there is an operations question or dispute, refer to the operating agreement everyone agreed to.
5. Obtain an Employer Identification Number
Once the state legally recognizes your LLC and you start doing business, there’s one thing you’ll likely want to get ASAP — an Employer Identification Number (EIN). You apply to the Internal Revenue Service (IRS) to receive this nine-digit number.
Confused about what an EIN is? It can help to think of it as something akin to a social security number for your business. Using your EIN, you can open a business bank account for your LLC, thus further separating your business and personal assets. You’ll also need this number for various actions, including filing federal taxes, securing loans, hiring employees, and applying for business licenses and permits.
Technically, if you are operating a single-member LLC, you may be able to use your Social Security Number rather than obtain an EIN. However, many entrepreneurs value the separation of business and personal activities that using an EIN offers.
6. Maintain your Nevada LLC
Once you go through all the steps needed to get your Nevada LLC recognized by the state, you’ll want to ensure it remains in good standing for as long as you’re doing business. In Nevada, this means a few things:
- Submit the Annual List of Managers or Managing Members – this document should be an updated version of the initial manager list you filed upon formation. It serves as your business’s annual report. Filing it costs $150.
- Pay LLC taxes —Nevada LLCs don’t have to pay state taxes, but there are federal ones to consider. For instance, your LLC must pay federal employment and payroll taxes directly to the Nevada Department of Taxation quarterly.
- Renew licenses and permits — Depending on your business needs, you might have to renew your licenses and permits annually or every few years. This pertains to documents like health department permits, professional licenses, and zoning permits.
Ready to make your Nevada LLC official?
As you can see, business owners must invest quite a lot of time and effort to form a Nevada LLC. The same goes for maintaining their business in good standing. While you decide if forming an LLC is right for you, ensure you and your company’s situation are top of mind. Laws vary from state to state. Consider connecting with an attorney to talk through the relevant details of your unique position.
If you’re sure you want to form an LLC but don’t want the stress of navigating it alone, we’ve got your back. Block Advisors can accompany you on your LLC formation journey. Begin the LLC formation process today in less than ten minutes with our Business Formation service.
This article is for informational purposes only and should not be construed as legal advice. You may want to seek the advice of an attorney to evaluate all relevant considerations.
About the Author
Carl Breedlove is a lead tax research analyst at the Tax Institute. He specializes in business, rental property, and state taxation. Carl is a University of Missouri-Kansas City School of Law graduate with a JD and an LLM in tax.
FAQs
How much does it cost to form an LLC in Nevada?
Nevada is one of the most expensive U.S. states for LLC formation. The initial formation process will cost around $425. This includes the filing fees for Articles of Organization ($75), the Initial List of Managers or Managing Members ($150), and the State Business License ($200). Want to get your LLC running as fast as possible? Get ready for an additional 24-hour expedited filing fee of $125.
What are the requirements to form an LLC in Nevada?
To form an LLC in Nevada, you’ll need a unique business name, a registered agent, correctly filled and filed Articles of Organization, an Initial List of Managers or Managing Members, and a State Business License application.
What are the benefits of forming an LLC in Nevada?
Forming an LLC in Nevada offers numerous benefits, including robust privacy protection and favorable tax laws.
Can I form an LLC in Nevada without living there?
Yes, you can form an LLC in Nevada without living there. A Nevada LLC is not required to have any in-state members.
Can I form an LLC in Nevada for free?
No, unfortunately, you can’t form an LLC in Nevada for free. In fact, it is one of the more costly states to form an LLC in. If you choose to get help with your formation from a third-party service, that will likely be an additional expense as well. However, many entrepreneurs find the peace of mind and time saved by using services like Block Advisors Business Formation tool worth the investment.
What is the best state to start my LLC?
The truth is that there is no “best state” to start an LLC in. Many factors must be considered as you weigh your LLC formation options. Many small business owners end up forming their LLCs in their home state. For some entrepreneurs, this route is the most straightforward and cost-effective option. If you already live in Nevada, you’ll be happy to know that this state is quite popular for starting an LLC. However, it’s important to research which state fits your company’s LLC needs best.
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