Did you know, forming an LLC in Nevada has many benefits. This type of structure is a hybrid business that provides personal liability to its business owners should they be faced with a lawsuit. However, forming and maintaining an LLC is a huge responsibility. It requires various steps to be taken in a certain order. If you will be starting an LLC in Nevada and are in need of guidance and direction, below are some detailed steps that are involved in forming an LLC in Nevada.
Before Diving In What's the Differences Between Wyoming vs Nevada LLC
Before we dive into the steps that are involved in how to set up a Nevada based LLC, first let’s address a common question that many people ask before forming their LLC. Many people ask about the best state to form their LLC: Wyoming vs Nevada LLC? For the most part, both Wyoming and Nevada have multiple tax advantages. Neither of them has corporate income tax, franchise tax, personal income tax. Nor are they taxed on corporate shares. Neither of the states has unitary nor gift tax. Wyoming has estate taxes, whereas Nevada does not.
One of the major advantages associated with incorporating in the state of Nevada is asset protection. In fact, Nevada has been known for having one of the highest standards as it relates to having “the strongest corporate veil protection in the US”
Now that you have more information and more direction about setting up an LLC in Nevada versus Wyoming, let’s proceed with the steps involved in setting up your own LLC in Nevada.
1. Name Search
If you are ready to form an LLC in the state of Nevada, the first thing that you need to do is select a name for your new business. Before doing so, however, you need to make sure that no one else is using the name that you’d like to use for your new business. This process requires that you first search Nevada’s database to compare the name that you’ve selected to the existing businesses that are registered in the state of Nevada. If no one else is using the name that you’d like to use for your business, then it is available for you to use.
This process is referred to as being “distinguishable upon the records” with the Nevada Secretary of State.
When selecting your name for your new Nevada LLC, It must be unique and easily distinguishable when it’s compared to other businesses that are registered in the state of Nevada. To that end, the state of Nevada has a law NRS 86.171 that requires you to add the proper LLC Designator to the end of your business name.
The following LLC designators are allowed by the state of Nevada:
• Limited Co.
• Limited Company
• Limited Liability Co.
• Limited Liability Company
Many business owners aren’t certain about which designator they should use. However, the most commonly used designator is LLC. It’s also very easy to recognize.
Another common error that many business owners make when forming an LLC is selecting the wrong designator. According to Nevada law, as a business owner, you are not allowed to use a designator that seems to be associated with a different type of legal entity.
Some designators to avoid include the following listed below:
7. P.A. or P.C.
8. Professional Association or Professional Corporation
9. Non-Profit Corporation
To search for a name for your new Nevada LLC, just visit the Nevada business name search page.
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Forming LLC Series
Some business owners may decide to form A Nevada series LLC as opposed to just one individual LLC. A Nevada series LLC is what one would consider a cluster or a group of LLCs. Most of which have their own owners, their own set of operations And their own assets. But each of the LLCs within a series is also referred to as a unit and is owned by a Parent Company or the Parent LLC. The Parent LLC is also referred to as the Master LLC or the Umbrella LLC and the units are considered the subsidiaries.
The way it works is that one Articles of Organization is filed, however, a large holding group or subsidiaries are formed under the one Master or Umbrella LLC.
There is no limit to the number of LLC subsidiaries you can have. However, it’s not clear what the liability protection or the taxation and other compliance requirements are that are associated with the Series LLC.
If a Series LLC sounds like the structure you’re interested in forming, please talk to an attorney or an accountant to get more clarity on the tax ramifications and other issues concerning forming a Series LLC in the state of Nevada.
2. Selecting a Registered Agent
Like most states, the Nevada Secretary of State also requires that businesses registered in the state of Nevada must elect a registered agent when forming your LLC’s Articles of Organization.
If you are not familiar with what a registered agent is, it is an individual person or a company that has been designated to receive information that will be sent to your LLC on your behalf. The information consists of notices from the state of Nevada as well as other legal documents to include legal mail that is served during a Service of Process.
Although many people use a post office box when setting up their LLCs, your registered agent that represents your Nevada LLC must have a physical street address in the state of Nevada. That way any service of process or other documents can be received at that designated location.
Who Can Act as Your Registered Agent
When selecting a registered agent for your LLC, you have five different options to choose from.
I. You can become your own registered agent
II. Your LLC can be its own registered agent
III. You can list an office or a position that is within your LLC to become the registered agent
IV. You can select a family member or a friend to be your LLC’s registered agent as long as they have a physical address in Nevada
V. You can hire a commercial registered agent which is beneficial for those who prefer to keep their address private and out of the public records.
Hiring a commercial registered agent has its benefits. It takes the pressure off of you having to be responsible for receiving mail and other legal documents.
3. Steps for Setting up an LLC in Nevada
Now that you have taken care of the fundamentals, the next thing that you need to do is officially set up your LLC in Nevada. To do this you need to submit three documents to the Nevada Secretary of State:
a) Your Nevada Articles of Organization,
b) Your Nevada business license, and
c) Your initial list of managing members or managers.
You have two different filing methods that you can use to form an LLC in Nevada. You can either set up your LLC by mail or file online. It is recommended however that you file online because it is a lot faster than filing by mail. Both the approval time and the overall process are a lot easier.
If you plan to file your LLC online, a SilverFlume account must be created first. Contact LLC Formations if you have any questions.
The filing fees and the forms associated with setting up an LLC consist of the following:
1. Articles of Organization – $75
2. Nevada State Business License – $200
3. Initial List of Managers or Managing Members – $150
Nevada Approval Process
Once your documents for your new LLC have been submitted, it will be approved immediately if filed online. However, it may take between five and 10 minutes before the documents will be available for you to download.
When downloading the documents, they must be downloaded into your SilverFlume account. When the documents are ready, three documents will become available for download inside of your SilverFlume account. The documents will be stamped and approved.
4. Setting up the Operating Agreement
As a new Nevada state business owner, your LLC will be required to have an Operating Agreement, which is a written contract between the members of the LLC. The Operating Agreement also provides information, such as who owns the LLC and what the percentage share will be among its members.
The operating agreement also documents how the members will manage the company, the overall profit splits, information about how taxes are paid, and other information specific to managing your new LLC.
It is required to have an Operating Agreement in place for both Multi-member LLCs as well as Single-member LLC’s that are located in the state of Nevada.
An Operating Agreement is important for your new LLC because it’s the legal document that proves your company is a separate and legal entity from you and/or your members.
The Operating Agreement is also important because it allows the members to have a level of protection should you ever have to go to court. Your personal assets are typically protected if your LLC is involved in a lawsuit.
No Filing Requirements for the Operating Agreement
Because the Operating Agreement for an LLC is an internal document, there is no need to send a copy of your official Operating Agreement to The Nevada Secretary of State, the IRS, the Department of Taxation. Are you in need of a template for your operating agreement? Contact us for more information.
5. Obtain an EIN for Your LLC
Another requirement for owning an LLC is to obtain an EIN number which is short for an employer identification number. This number can be obtained from the IRS once your LLC has been approved by the Nevada Secretary of State.
What is an EIN?
An EIN number is very similar to a Social Security Number. It allows the IRS to identify your LLC. This number is also used for tax purposes when filing taxes on the local, state or federal level.
The EIN is known by several different names. For example, it is also referred to as a FEIN, short for Federal Employer Identification Number, a Federal Tax ID number, or an EIN number. You may hear either of these terms being used, but just know that they all are referring to the same thing, your Employer Identification Number.
6. Annual Compliance and Filing Requirements
As a Nevada business owner, each year you will be required to complete various filings to keep your LLC in good standing with the state of Nevada. To meet the requirements and remain in compliance, you will need to have the following filed each year:
• You must renew your state business license annually. The filing fee is $200 per year.
• You must file an annual list of managers are managing members annually. The filing fee is $150 each year.
Although some states still base filing fees on your level of income or business activity, each of these annual requirements is mandatory to maintain your current status. Additionally, LLCs that failed to meet these annual requirements will result in being placed on a default status by the Nevada secretary of state. If the fees are not paid within a certain time after you’ve been placed on a default status, then eventually your LLC will be placed on a revoked status.
The due dates for both the Annual List of Managers and Managing Members as well as the Nevada State LLC Business License is due either on or before the last day of the anniversary of your LLC. For example, if your LLC was approved by the Nevada Secretary of State on September 15th, then your renewal date for your Annual Managers and Members List and your Nevada State Business License will be on September 30th of the following year and each year thereafter.
You can renew your Nevada state business license and your Annual List on an annual basis inside of your SilverFlume account.
7. Additional Nevada Based Regulatory and Municipal Permits and Licensing Requirements
Based on the type of business you operate, you may be required to apply for additional municipal licenses or permits on either the city or the county level. To that he and other regulatory licenses or permits may be required based on your particular industry.
There are basically two things that determine whether you need a license and a permit for your LLC. Those two things consist of:
a) the nature of your business, and
b) the location of your business.
If you want more information about determining whether or not your LLC requires additional licenses and permits, you may use the Common Business Registration tool that is located in your SilverFlume account. It provides a great deal of detail concerning which regulatory agency or municipality you may need to contact to get the licenses required by your new LLC.
After you have completed the Common Business Registration the next thing you want to do is look at the bottom of your silver flume dashboard. Look for the municipalities and the regulatory agencies that are associated with your LLC, where you can find in the External Task section of your dashboard.
Once this information has been obtained, you will need to give them a call and explain to them the type of Nevada based LLC you operate and what your primary functions are. Afterword, ask them what required licenses and/or permits are required for you to operate your business. You may also need to ask them if you need to update the filing fees and if so, how often.
If you are still unsure about whether or not you have the proper Nevada base licenses and permits for your new LLC, consider using Inc.File for more information.
8. Paying Your Business Income Taxes
There is quite a bit to be concerned about as far as paying business taxes are concerned. For example, in most cases, there are three basic income tax levels that most individuals and businesses need to be concerned about. They include the federal state and the local level. The local level consists of city taxes or county taxes. However, if you are new to Nevada, you’ll be happy to know that Nevada does not have a personal state income tax, unlike most other states.
The common type of income taxes that your business will likely be responsible for are listed in more detail below:
a) Federal Income Taxes: An LLC is a pass-through entity by default. What that means is that all profits and losses of the LLC flow through the entity to your personal income tax returns. The tax form used is based on whether your LLC is a single member or a multi-member entity.
b) Single-member LLC: A Single-member LLC is taxed similarly as a Sole Proprietorship whereby your LLC’s profits or losses are reported on Schedule C, which is part of your personal 1040 tax returns.
c) Multi-member LLC: The Multi-member LLC is Taxes similarly to a partnership, where IRS form 1065 Partnership Tax Return must be filed. A Schedule K-1 needs to be issued to each member of the LLC. Afterward, each member will use the information on the Schedule K-1 on their personal 1040 income tax returns.
There is no specific tax classification for LLCs that has been determined by the IRS, as a result, LLCs formed with multiple members are typically taxed based on the total number of members who LLC.
If an LLC elects to be taxed as an S Corporation to reduce self-employment taxes, that’s an option as well.
In addition to federal income taxes, your LLC may be required to pay other forms of taxes as well.
• Qualified Joint Venture: LLCs that are owned by a husband and a wife can elect to structure their taxes similar to a sole-proprietorship rather than a partnership. Those who are interested in taking the Qualified Joint Venture election can do so through the IRS. This election is possible since Nevada is a community property state.
• Sales Tax: You will be required to collect sales tax if your LLC plans to sell or transfer tangible goods in the state of Nevada. To do this, return to the Common Business Registration tool by using your SilverFlume account to register for a sales tax account.
• Sales Tax Permit: If your business’ sales with transfers tangible property in the state of Nevada and you are required to collect sales tax, your LLC will need to apply for a Nevada Sales Tax Permit for a fee of $15 for each physical location. You can use your Common Business Registration inside of your SilverFlume account to obtain a sales tax permit as well.
• Commerce Tax Returns: Each year all LLCs that operate a business in the state of Nevada must file a Commerce Tax Return. However, this requirement is only for businesses that generate a minimum of $4 million or more are required to pay the tax. For businesses that do not generate $4 million or more, then the commerce tax return will only serve as an informational return and no tax will be required.
The best way to determine which of the taxes you are required to pay is to schedule a consultation with a local accountant. They can assist you with determining what your Nevada based LLC tax filing and reporting requirements are. Although you can certainly take on this responsibility on your own, you’d be taking the risk of attempting to figure out these requirements and potentially overlooking and tax filing requirement. When working with a local accountant, they are well-versed with Nevada federal state and local tax requirements. For more information contact a Nevada-based local tax accountant today. Our next guide with help you set up your New Hampshire LLC.
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9. Setting up a Nevada Bank Account
When considering a bank account for your LLC, it is very important to have a bank account that is separate from your personal account. This is important to avoid co-mingling funds and protecting your personal assets. If your LLC is involved in a court case, you will avoid exposing your personal funds and investments.
After an EIN number has been issued to you by the IRS, you can open up a business checking account.
Another advantage of having a separate business checking account for your Nevada based LLC is that it simplifies the overall record-keeping process for both accounting and tax purposes.
The banks in Nevada have different rules and regulations from one financial institution to the next. Before opening up a new bank account, it is recommended that you first find out the following information.
- What’s the minimum initial deposit that is required to open the account?
- Is there a minimum balance requirement? If so what is the minimum amount?
- Are there any monthly maintenance fees? If so what are they?
- What is their policy concerning online banking?
- Be sure to find out their policies on debit and credit cards. Although most banks don’t have a problem issuing a business debit cards when a new account is opened, some do not and you may be required to wait a few weeks to receive your new debit card in the mail.
If you are interested in obtaining a business credit card you may also consider searching for a credit card by visiting www.creditcards.com
Required Paperwork Needed to Open a Bank Account
In addition to having an EIN number to open your business bank account, you will also be required to provide the following documents:
1. You are stamped and approved articles of organization
2. The initial list of LLC managers or managing members
3. Your State Business License
4. A copy of your photo ID which could be a copy of your driver’s license along with or your passport
5. A copy of your Operating Agreement. Although this may not be required by all financial institutions it’s a good idea to have it available)
6. Multi-Member LLCs: If your LLC has multiple members, each member that will be on the bank account must be present when opening the account. They will be required to sign a signature card and other documents.
If you are not a resident of Nevada but have formed an LLC, you may still open a business bank account.
To be better prepared you should give the bank a call in advance to find out what their requirements are.
10. Setting up a Nevada Business Phone Number
One of the advantages of having an LLC set up in Nevada is that you don’t have to use your personal cell phone number or the phone number associated with your landline that you use at home. You can get a business phone number for your new LLC.
If you haven’t already set up your new business line, simply visit Phone.com to find an affordable plan for you. In doing so, you can select a local phone number or an 800 number for your business. This service also allows you to set up call forwarding, make pre-recorded messages and have your voicemails forwarded to your email inbox.
Another great advantage is that when listing your business information on your website, you don’t have to list your own private phone number and you can avoid exposing your personal information.
You should now have everything you need to successfully set up an LLC in Nevada. From naming your LLC, to obtaining a business phone number. However, if this process seems too overwhelming to you, there are other options. Our company is associated with multiple entities that will professionally and accurately set up your LLC. Please visit them online or contact us for more information. Check out our guide to setting up a New Hampshire LLC.