For those unfamiliar with the ins and outs of starting a business, starting a Nevada limited liability company is one of the less complicated routes to take.
The process is simple and straightforward with the help of an attorney. This guide will provide you essential knowledge on how to start an LLC in Nevada. What is an LLC?
An LLC, or limited liability company, is a business structure that provides the benefits of corporation structure – pass-through taxes, flexibility of organization – while providing the limited liability protection of a corporation.
State governments provide this legal structure to businesses and owners for consideration. This is important to understand because it means states have specific rules and regulations that an LLC needs to follow in order to maintain its legal status.
Create Your LLC in Nevada
There are several reasons why forming a Nevada LLC is beneficial. A limited liability company is a hybrid of two business structures – a partnership and corporation – in one business entity. This typically means lower start-up costs and less liability for owners compared to the same type of business structure.
Businesses that start an LLC in Nevada have more flexibility to structure their affairs as they see fit. LLCs offer the same benefits of an S-corporation, but without the stricter rules that limit corporate stock ownership to a single individual.
This means a business owner can form an LLC in Nevada by being either the sole proprietor, limited partner, or having two or more owners. LLCs are also tax-advantaged compared to corporations and require only minimal paperwork to maintain its status.
The 5 Steps to Form an LLC in Nevada:
To form an LLC in Nevada you must follow these 5 basic steps:
Step 1: Name your Nevada LLC
The very first step to starting a business in Nevada is to choose a name for your new LLC. The name must be distinguishable from other names already being used by businesses and individuals. It should be easy to read and be easy to remember.
For example, ‘Lite Aircraft Maintenance’ or ‘Forensics Detective Agency’ are not names that will be easily identifiable as an LLC, while ‘Nevada Limited Liability Company Inc.’ or ‘Nevada LLC Inc.’ are.
Find the perfect name for your business
The name you choose will have consequences for your business for the foreseeable future. If you do not choose something that provides legal protection to your business, there may be a possibility that someone else can file a lawsuit and change your name to their choice.
This is illegal, of course, but if it’s not in your name anymore, then you’re at the mercy of a judge.
In short, a name chosen by you will be easier to protect. Choose wisely when naming your LLC or Nevada corporation.
In addition, the name doesn’t have to be trademarked or registered. The name is not public record until after you create the LLC by filing Articles of Organization in Nevada. In order to get the best legal protection, it is important to use a trademark for your name.
The U.S. Patent and Trademark Office will register your trademark so that you have exclusive rights to its use from the date of registration.
Step 2: Appoint a registered agent in Nevada
Once you have an LLC name, you need to appoint an agent. This person is the designated representative of the company in Nevada and is legally required to receive official notices and process required documents.
The name and address of this person should be printed on the Certificate of Formation which will be filed with the Secretary of State in order to form your new LLC. It is important that this person is a resident of Nevada and works in Nevada so they can provide service to your company as needed.
Step 3: Prepare and file Articles of Organization
The third step to form an LLC in Nevada is to prepare the certificate of formation. This document tells the Secretary of State who helped you create your LLC and details how you will be managing its affairs.
The Articles of Organization form has two sections, “General Information” and “Membership Information.” In the General section, you must provide information like how much money your company has raised, if it’s been designated as a limited liability company, and how many owners it has.
In the Membership section, you must list the names and addresses of people who are LLC members of the company.
The Articles of Organization documents are available for download from the Nevada Secretary of State website in MS Word format. This is also where you can make payments for your Certificate of Formation. The fee to form a Nevada LLC is $125 plus a one-time $175 renewal fee every two years. This $200 will be sent to the Department of Taxation with your formation documents.
Step 4: Create an LLC operating agreement
The next step in starting a business in Nevada is to create an operating agreement. This agreement will define the way your LLC will be run and it must be signed by all of the members. This document is required for any LLC because it outlines the structure and operations of your company.
Many states require you to have an operating agreement, but Nevada does not require one yet. In many other states, only limited liability companies are required to have an operating agreement that describes their management structure and role of officers.
Step 5: Apply for an EIN
The final step to filing the Articles of Organization is to apply for an Employer Identification Number from the IRS. This number will make it easier for you to collect taxes paid by your employees and the Department of Labor.
This number is issued electronically by the IRS and must be attached to all federal tax forms that are filed so they can be matched with your business information.
A lot of people have never heard of an EIN. If you do not have an EIN, you cannot collect any taxes from your employees. An EIN is a 9 digit number assigned to businesses by the IRS.
The IRS assigns your new company a number based on their records and then puts it into a database that will be available to the IRS. A business owner can be fined for not having an EIN when they file taxes.
To apply for an EIN, go to the IRS website and find the “Employer ID Numbers” page. Once there, click on “Obtain an EIN”. You will be taken to a new page where you will have to answer several questions about your business.
You then have the option of sending in a signed application or picking one up at one of the IRS offices. Once you have an EIN, you are ready to start your LLC.
Pros and Cons of Running a Nevada LLC
Now that you have a better understanding of the steps to start your business in Nevada, let’s take a look at some of the advantages and disadvantages.
Like Sole Proprietorships, LLCs are generally exempt from most state and federal taxes. However, certain types of operations, such as rental properties, may be subject to income and property taxes and the owners of an LLC will have to pay separate federal taxes on their income.
Taxation of the business profits is handled at the individual level. That means that profits are distributed to each member of the LLC and they can decide what to do with them. Once a member pays taxes on their share, they can use it however they see fit.
Nevada LLCs are referred to as “flow through entities” because they pass whatever tax benefits to their owners.
If you are a member and request a distribution from your profits, the company will make it directly to you. This means that you can hold on to the money or reinvest it in your own property and will not pay income taxes when you do so.
Creating an LLC in Nevada is relatively simple and straightforward. The process takes a small amount of time, and you can use your own templates to prepare your documents. This will save you money and help you stay organized. However, the complexity is in the details.
If you are new to Nevada, be sure to research the laws because there are some important rules for forming an LLC in this state that can be confusing if you don’t know about them.
One advantage of forming an LLC in Nevada is the low cost of registration. The initial cost is less than $200, and if you plan to operate your business as a corporation in Nevada, LLCs are often the best choice because they have the lowest registration fees.
Ability to Raise Capital
Although it is not common for LLCs to raise capital through long-term debt, LLCs in Nevada can take out normal debt to finance their operations. This means that you can easily get loans from banks, credit unions or other financial institutions to get started.
The state specifically allows this kind of financing, so there are few restrictions on the types of loans that you can get.
From a tax standpoint, you do pay capital gains taxes if you sell your business within a few years after starting the LLC.
However, it is important to note that you have the same rights to sell your company as you do a corporation. That means that if the company is earning $10,000 in a month and you want to take out some money for personal use, it is perfectly legal to do so.
If you are creating an LLC in Nevada, you will be able to open a business outside of the state and run it as a Nevada LLC. This means that if you move back to your home state or another state, you can still run your business as a LLC that is registered out of state.
Limited Liability Protection
As stated above, Nevada LLCs may be more limited than LLCs in other states. While it is true that you cannot be sued for the company’s debts or obligations, it is also true that you are not protected from your own decisions as a member of the LLC.
You have the same liability as a sole proprietor because there is no such thing as “limited liability.
The best way to think of this is that an LLC protects your personal assets from any business debts. That means that it is your responsibility to make sure that you do not take out loans or make other decisions that put your property at risk.
This is not the case in all states, so it is important to understand how LLCs work in Nevada before you decide to incorporate this way.
IRS Forming Status
One of the main disadvantages of starting a business as a Nevada LLC is the way that it looks on IRS tax forms. It is important to pay attention to the “Forming Date” on all your tax documents. This is the date on which your new LLC becomes a separate business entity from its owners.
If you do not have an EIN, this means that you are starting an LLC without being current with IRS tax filings. It also means that your business will not be able to collect employment taxes for several months.
Be sure that you are aware of all the steps of creating your company and applying for an EIN before starting operations in Nevada. Doing so can help you avoid fines and penalties and in the long run may save you money.
HOW MUCH DOES IT COST TO FORM AN LLC IN NEVADA
Forming a new LLC in Nevada is relatively simple. You can use any company forming kit to do so and you can form your company with just a few minutes of time and minimal cost.
To find out how much it will cost, start by looking at the kits currently available on the market. The majority of these kits are easy to use, contain step-by-step instructions, and are very affordable.
- ZenBusiness co LLC Formation Packet:
The Zenbusinessco LLC Formation Packet is a kit that costs $150 and includes all the necessary forms for preparing an LLC. This makes it the easiest kit to use in Nevada.
The instructions are thorough and the kit includes all of the government forms that you need. You will also get support from a business formation expert who will answer any questions you might have. You can find the kit on the Zenbusiness website. http://www.zenbusiness.net
MyLLCK is a very simple Nevada LLC kit that you can use to form your company. Their site is as straight-forward and easy to navigate as their software and all you have to do is type your business name, choose an EIN, and enter how many owners you have.
You will then be able to choose the remaining options, including the price of your membership, LLC documents, and a file check option.
MYLLCK does not offer any kind of customization to their program, but what you choose in the program will be immediately available when you create your LLC. The process is very straightforward and simple, and once you complete it, your file will be sent directly to your email address.
NevadaShop is a more unified kit that includes all of the forms you will need to create your company and open a bank account. Their site is easy to use and their software will take care of all the required information for you.
All you have to do is enter your name, address, and information about your business, and the rest is handled by their software. You can even fill out the information on your own if you prefer, but the site provides many different templates for various types of businesses.
The process to create your LLC is very straightforward and simply requires that you pay a flat fee of $99. This includes all the forms for your company, bank account information, and more.
The forms are generally very standard and easy to use, so all you have to do is fill them out as needed. Once you have finished creating your LLC, the process takes about two weeks before your company is officially formed.
Nevadacorp is one of the cheaper kits available and provides the basic forms that you will need to create your LLC. They provide an easy-to-use website that allows you to create your LLC in just a few steps. You will be able to enter your name, business type, and information about yourself, as well as your EIN information. There are no additional fees if you choose “online” membership.
- Deluxe Business Forms
Deluxe Business Forms is a step-by-step process that takes around 15 minutes to complete. Before you create your LLC, you will have the option to choose between a “single” or “multiple” membership plan.
A single membership costs $150, while multiple memberships range from $300-400 depending on the amount of signers. Also, there is a six-month “trial period.
This is just a general overview of the pricing and services that are available when creating your Nevada LLC. You can find several other companies online that are able to meet your needs. Be sure to thoroughly look over the options available to you and make sure you understand all of the fees before you choose a company.
Filing the Articles of Organization
Once you have created your LLC online, you will need to file the Articles of Organization with the Secretary of State. This is a fairly simple and straightforward process that will cost about $30-50 dollars.
You will then need to print out the certificate of organization and write up your Articles of Organization inside.
The actual cost on your state’s website is different than what you see on TurboTax or other sites, but this fee includes most of the forms and paperwork that prepare it for publication in your state. On top of the state fee, you should also not expect to pay any other fees when filing.
There are a few other costs that you may need to consider while creating an LLC in Nevada:
- Filing fees for California – Nevada will allow you to file online for this, however, you will need to order a CA-form from the Secretary of State’s website. You can find the CA-form in the “Forms” section on their website. This costs $200 and is required before you can file for your EIN. This form includes case information and all of the necessary forms that you will need when creating your company. Before you can publish your Nevada LLC, you will need to have your CA-form sent to the California Secretary of State. You will also need to mail them a certificate of publication with your name, address, etc. A few months after creating your LLC online, you will receive an EIN from the IRS via email.
- Other paperwork – When you are finished with all of the state forms and federal forms, there is a few additional paperwork that is required from you. For example, you will need to file the following forms with the Secretary of State:
- Nevada Business Entity Registration Form (EIN-12) – This form is simply a computer generated form and will have a bunch of information that is necessary for your filing. This includes your name (Full legal name), address, and the type of business you have. You will then need to file thisNYS Entity Initial Report/Information Form (NY-FORM) with the NYS Department of Taxation and Finance. This form specifically needs to be filed by the entity name. This means that it will have your name, address, and type of business you have, as well as the EIN on it. The NYS Entity Initial Report/Information Form (NY-FORM) will cost about $5 – $10 to file with the state of New York.
Nevada LLC Annual Costs
In Nevada, you will be required to pay an annual fee of $200. This payment is due on the anniversary date of when your company was created. This fee is required by the Secretary of State’s office and is required for your LLC to stay active and in good standing.
Filing a Statement of Information (Form LLC-12)
You will also need to file a “Statement of Information” every year with the Secretary of State. This is a document that needs to be mailed to you by the state of Nevada and will need to be completed by you.
This document will have information about your business like how much money it has made and what type of business you are, among other things.
LLC Content Disclosure Statement (Form LLC-13)
This is another preliminary form that needs to be filled out by you or a designated representative when filing with the Secretary of State’s office. This form will give information about the company, and will be needed to get your business approved.
It is not required when you are registering as an LLC in Nevada, but if your company is a public one, they may request it.
LLC Annual Report (Form LLC-21)
This must be filed in the state of Nevada with the Secretary of State annually. This report needs to be signed by you or another designated representative and can be completed online for a few dollars. There is no specific form for the report that you create.
Nevada Business Report (Form LLC-24)
This report needs to be filed every year and contains information about your business. You will need to fill it out online and mail it to the Secretary of State’s office, but it will cost $25 dollars.
Annual Statement of Liability Insurance (Form LLC-43)
If your company has employees, you will need to get liability insurance in Nevada. This form will need to be filled out by your insurance agent and filed with the Secretary of State’s office. This form must be filed each year.
LLC Annual Statement of Information (Form LLC-44)
This is another form that needs to be filled out by you or your designated representative each year. This form is also online and will cost $25 dollars.
Separate Your Personal and Business Assets
You should consider separating your business assets from your personal ones. This can prevent you from running into taxes or having to go through the IRS when you want to sell one of your businesses.
IRS Form 8832 – This form is used for you to complete and send in with your information. It needs to be filed with the IRS each year. It will have a bunch of personal information that you need about yourself, among other things.
1. Opening a business checking account:
You will need to open a business checking account to pay your bills and have money in place. You should consider opening a business checking account before you start working on any of the paperwork for your company.
You will need to transfer all of your personal funds into these bank accounts so that you do not make any mistakes.
2. Getting a business credit card:
You will also need to get a business credit card despite the fact that you will have a business checking account. These cards can be useful when paying for large expenses like filing fees and advertising costs.
Business credit cards are different from personal ones because they can only be used for company related expenses. Before you apply for one, though, make sure that your company has the funds for these monthly expenses.
Business Credit Card Tip: If you are not using your card frequently, try not to use it. When a business card is not being used, it will carry a large interest rate that can be extremely expensive.
3. Hiring a business accountant:
In order to make your life easier, you should think of hiring a business accountant. This can help you get all of the paperwork and things in order.
Get Business Insurance for Your Nevada LLC
If your Nevada LLC employs anyone, it will be required to get a business insurance policy. This will protect the employees from any accidents that they may have while working. It will also protect you in case anything happens to an employee while they are on the job.
You can get this through an insurance agency or through your bank. Business insurance policies are different than personal ones because they have more coverage and it is easier to get if you qualify for it.
Nevada LLC Business Permits and Licenses
Nevada is very flexible in terms of which licenses and permits your company will need. However, you should always check with the county that you are located in.
You should also check with the state regarding whether or not your business needs a license to operate. If you are located in a county that is governed by a city, you should check with the city as well, as they may have even more requirements for your business:
- The most common license or permit that you will need to get for your company is an occupational license. This is a license that needs to be applied for, paid for, and scheduled. You can get this through the state of Nevada’s office. However, if you need more than one license for your business, you will have to apply for them separately.
- The process of applying for an occupational license can be very tedious. You will need to fill out a long form that will contain your personal information. You will also need to apply by mail, and you can do this by going to the county government’s website.
- After you have submitted all of your information, the county will send you a decision after several weeks. If your business qualifies as an “occupational business,” then they will give it to you in the mail.
If something happens with your license, you should contact the county government immediately so that they can help you out.
Business License vs. Occupation Business License:
When you are trying to decide which license you should apply for, you should consider the difference between a state business license and an occupation license. The two are very similar but there is a slight difference between the two.
An occupation license can be used for any type of corporation and it is not dependent on the business that you are trying to run. In order to qualify for this license, your company must have less than $2 million in gross revenue each year. If your company makes more than $2 million a year, then you will need to apply for a license field by field.
Another difference between an occupation and business license is how much they cost. Occupation licenses are $25 each, while business licenses are as low as $77 each. You can get up to six occupational licenses for the same price that it would cost you to get one business license.
When you apply for an occupation license, you will have to fill out the same application that a business would. You will have to bring in a number of documents and records, but the process is very short and easy.
Nevada LLC Tax Filing Requirements
Nevada does not have any requirements when you are filing your own LLC. However, if you are going to be hiring any employees, then you will have to fill out a W-4 and send it to your employer. You will also need to fill out an I-9 form. Your company may have additional rules that need to be followed, so make sure that you check with your state’s government.
When it comes time for your employees to file taxes each year, they will need to fill out IRS Form SS–4. Then they will need to send their tax forms and W-2 or 1099s to the government.
You should also file your own taxes in order for your business to get the necessary information that it needs.
For both businesses and employees, those who are receiving money for their salary, company dividends, or profit sharing will need to get an ITIN number so that they can file their taxes.
If you are going to be getting paid through a company that has been around for a long time, you should look into getting an EIN.
Nevada Sales Tax
If your company is required to charge customers sales tax, then you will need to get a sales tax permit from the state. This will be used when you are selling a taxable product or service to a customer.
Your business will also need to pay the taxes that they collect upfront and then they can get a refund from the government.
Contractors should consider charging their customers either 6 percent or 8 percent for sales tax. The rest of the money can be claimed as an income tax credit from the state of Nevada at the end of each year.
Nevada Sales Tax Exemptions
There are some products and services that are exempt from paying sales tax in Nevada. These include:
- Newspapers, periodicals, and books
- Medical services that have been prescribed by a physician
- Firearms and ammunition sales that are going through a licensed gun dealer
- School supplies for K–12 students from the state of Nevada or its counties or cities
- Telecommunication services for your business from the state of Nevada or its counties or cities.
When the state of Nevada taxes a product or service, then they will place an additional 3.75 percent tax onto any taxable items that have been imported from another country.
In some cases, your business may be able to get a sales tax exemption on products or services that are sold to certain areas in the state of Nevada. You may qualify for these exemptions if you are selling to a government agency or for educational purposes or if your product or service is going towards the promotion of tourism in the area.
Nevada Employer Taxes
If you are an employer, you will be responsible for paying various taxes for your employees. These include unemployment payments and worker’s compensation insurance.
If you are considering hiring employees, it is important to run the numbers first and make sure that you can afford to do so. This will help ensure the success of your business in the long-term.
The only time that an employer can deduct money from their employee’s paychecks without them knowing about it is if they have gone over their allotted hours on a project. However, the time has to be recorded and the work orders have to be signed.
If an employee is getting a bonus or commission from their company, then they will need to fill out a W-2 form and send it in. This same type of form needs to be filled out for each employee that you are paying with a check.
When you have hired an independent contractor, then he or she will use their own tax id number instead of filling out a W-2 form.
Now you know what you need to do whether you are a business owner or an independent contractor. In the end, the most important thing is to be sure that you are being careful with your money and not losing it.
You can do this by being as careful as you can be and making sure that you pay all of your taxes on time. This way, you will ensure that your business will be successful in the long run.