Nevada has always been on top of the list for being the most business-friendly states in the USA. In fact, it is one of the best places to start your Nevada LLC or a corporation. But keep in mind that a Nevada LLC and corporation are two different kinds of business entities. To start off, an LLC is a great choice but if you want to grow an empire that would go public, then the Nevada corporation is a great choice.
For those who want to start a Nevada LLC, this article will help you understand all about how to form a Nevada LLC and why you should form one. Keep reading!
A limited liability company, also known as the LLC, is a form of business organization that offers limited liability to the owners of the company. One of the other benefits of Nevada LLC is that it offers the pass-through tax structure to the business owners. This means that the company does not have to pay the corporate tax like the corporation for the profits earned. All the dividends offered the owners are taxed at the personal level.
And every LLC is governed by the state laws in which it has been formed. Nevada offers a lot of rules but it also offers a lot of benefits to those who start a Nevada LLC. The state has many tax friendly obligations and company formation fee is just $125. And that is not all; it also has a low annual corporate fee of just $85. For you to form an LLC, you will have to sign the Nevada articles of incorporation that are then submitted to the Secretary of State of Nevada.
Along with this, the Nevada LLC do not have a subjection to tax on corporate shares or stock transfer. It also does not have personal income tax, gift tax, occupation tax, business tax and franchise tax. Moreover, there is no specific minimum number of members needed to start a Nevada LLC. But for the LLC to gain all the tax benefits, it is important to have a registered agent who has a physical address in the state. And in case you are running an LLC that is out of Nevada, you will have to weigh the cost of establishing a non-local entity against the tax advantages of being considered a state resident.
Benefits of Nevada LLC
Although the above shares a lot about why Nevada is a great choice to start your LLC in, let us talk more about it. Just so you know, Nevada is the fifth state with the most favourable business tax treatment. Not just that; the residents too enjoy a lot of great tax benefits on their personal returns which is why starting a Nevada LLC is a perfect idea.
Here are some of the main benefits that make Nevada a great choice for your LLC:
- No state level taxes: As shared before as well, a Nevada LLC would not be subjected to unitary tax, corporate income tax, estate or gift tax, admissions tax, personal income tax, and franchise or inventory tax on the income earned by the company.
- Noneconomic members: As per the law in Nevada, an LLC can have noneconomic members. This means that Nevada permits the inclusion of LLC members who do not own any part of the LLC enjoy voting and managerial rights.
- Single-member LLCs: Just like every other state, Nevada also permits the opening of a single-member LLC. This means that the LLC can be run and operate easily with just one member in it.
- Extra Protection: Nevada also offers another benefit where the state erects a limited liability shield around the LLC, where the details of the members or owners would not be listed on the public records. Due to this, the owners can be safe from any creditors who are searching for a way to sue the members personally.
- Series LLCs: Nevada also allows you to form a “Series LLC.” This means that if you own a real estate LLC that has many properties, you can set up a Series LLC. This would prevent one property from being foreclosed to satisfy the debts of another property.
- Residency Benefits: Another great benefit that Nevada offers is that if you are located in another country or state, you can still create a Nevada LLC. It makes this an ideal choice for those who want to take advantage of the benefits Nevada offers.
Steps to form Nevada LLC
If you want to start a Nevada LLC, the process is quite simple. Here are the steps to do it:
#1 Choose Nevada LLC Name
The very first thing that you need to do is choose the name of the company. You need to make sure that the name you choose is the one that complies with the Nevada LLC naming requirements and that is easily recognizable by the customers.
Here are the rules you will need to follow:
- The company name needs to have the phrase “limited liability company” or one of its abbreviations (LLC or L.L.C.).
- The name cannot have words that would confuse the LLC to be a government agency like the State Department, Treasury, FBI and so on.
- Some other words that cannot be used include University, Attorney, and Bank. In case you want to use such words, you will need additional paperwork and a licensed individual under the concerned industry to be a part of your LLC.
- The name of the company should be different from the other Nevada limited liability companies, corporations, limited liability partnerships, limited partnerships, or limited liability limited partnerships out there. You can search to see if the name is taken on the Secretary of State’s website.
#2 File Article of Organization
The next step to start your Nevada LLC is to file the Articles of Organization with the Secretary of State. To be clear, a few states refer to the Articles of Organization as the Certificate of Formation or Certificate of Organization. This document is a legal document that officially forms your business. You will need to share the name of the LLC, the name and address of the registered agent, the state filing fee and the starting date.
When filing this, you will also have to state if your Nevada LLC is a manager-managed or member-managed company. With this, you will also need to file the initial list of members or managers with the file the Articles of Organization.
#3 Prepare Nevada LLC Operating Agreement
Although it is not legally required to have an operating agreement, it is a good idea to make one for your Nevada LLC. An operating agreement is a legal document that outlines the operating procedures and the ownership of the LLC. It would help avoid conflicts and give you a road map of how the things in the company can move or should move. Basically, a comprehensive operating agreement helps the owners in the company to be on the same page and also reduces the risk of any future conflict.
#4 Appoint Registered Agent for Nevada LLC
You also need to get a Nevada registered agent for your LLC as per the law. A registered agent is a company or an individual whose role is to receive all the legal documents, important tax forms, notice of lawsuits, and official government correspondence on behalf of the business. They are basically a company’s business point of contact with the state.
The registered agent has to be a resident of the state or a corporate in the state and should have a physical address. They also need to be available during the business hours at the physical address to receive all the needed documents. One of the recommended registered agents is IncParadise.
#5 Get EIN for Nevada LLC
EIN means Employer Identification Number, which is a 9-digit number given by the IRS (Internal Revenue Service) to identify the businesses for tax purposes. Also referred to as the Federal Tax Identification Number (FTIN) or Federal Employer Identification Number (FEIN), you need it to:
- Open a business bank account
- Hire employees
- File and manage State and Federal Taxes
You can file for the EIN for free with the IRS. Get on their website and apply for it as soon as you have your Nevada LLC set up.
IncParadise Can Help You To Form Nevada LLC
IncParadise is one of the leading incorporation and registered agent service providers in the state of Nevada. We can help you with the complete process of starting your Nevada LLC from the registrations to offering you with virtual office services.