LLC Taxes in Nevada – Everything You Need to Know
So you just started your new Nevada LLC and now you have no clue how or what you need to pay for taxes. Don’t worry we have you covered. Here is a detailed guide on everything you should know.
There are three levels where taxes are reported:
Your Nevada business, including its location, nature, and how its LLC is determined for taxes, has a local, state, and federal tax structure.
Federal Taxes (Nevada LLC)
One files federal taxes are filed through the IRS.
Primarily, LLCs in Nevada, based on default tax elections, are “tax-reporting” entitles rather than “tax-paying” entities. In other words, LLCs don’t file their own tax returns with the IRS. Instead, the profits and losses flow to owners. It is the owners who must file on their personal income return.
(Article related: tax-reporting entity versus tax-paying entity)
Done by default, the IRS taxes your LLC based in Nevada on the number of owners or LLC Members.
An LLC based in Nevada that has one member is taxed as a Disregarded Entity:
Individual LLC owner: The Nevada LLC is taxed as a Sole Proprietorship
Another Company as LLC Owner: The Nevada LLC is taxed as a branch or division of the parent company
Sole Proprietorship as a Nevada LLC: The federal return is not filed by the LLC. Instead, the owner of the LLC reports on and pays the taxes through their Form 1040 or personal tax return. In most cases, profits and losses from the company are reported on a Schedule C. In some cases, a person may need to include different Schedule and Forms, but that will depend on the income.
A Partnership is a Nevada LLC that has two or more members:
Nevada LLC as Partnership: This is a tax-reporting entity. It must file its own Form 1065 or federal information return. It then must issue K-1s to every LL Member that is reporting to get their share of the financial profits. After this process, the K1 is affixed to the Form 1040 of the owner.
These taxations listed above are “default” tax elections. No action is needed to receive them. When applying for your EIN, the IRS needs to know how many Members are in your LLC. It is in this way they know what kind of tax return to expect and how to disseminate them.
In addition to default tax elections, you have the right to request the IRS tax you LLC as a Corporation.
Corporation Taxation for LLCs are taxed in two types: C-Corp and S-Corp
C-Corp: Under the federal tax, an LLC is dealt with as a C-Corporation. This choice is not common for most individuals. This is because a C-Corp can receive double taxation, which is not something that most individuals are capable of financially handling. Therefore, choosing this option is ideal for large companies that want to raise money, go public, or have extensive healthcare expenses. Go here for more information: LLC taxed as a C-Corp.
S-Corp: Under the federal tax, an LLC is dealt with as an S-Corporation. For the desire to save dollars on self-employment taxes, this selection is ideal. However, an LLC’s net income should be approximately $70,000 per year or higher for this choice to make sense. Therefore, if a business is just starting out and hasn’t gained any profit, this choice is not a good idea. Go here for more information: LLC taxed as an S-Corp.
LLC (Nevada Business License)
We think of this as an “annual requirement.” To obtain your Nevada LLC’s State Business License, you must first file a Nevada LLC Articles of Organization. It is renewed yearly when filing the Nevada LLC Annual List. It is renewed yearly when filing the Nevada LLC Annual List.
Nevada Taxpayer’s Can Obtain a Packet
You can receive an extensive taxation guide for your Nevada LLC from the Department of Taxation in Nevada. Go to – (*) for all of the information. This packet will likely provide information that you hadn’t thought of to help with the process
LLC State Taxes with the Nevada Department of Taxation
You must file your state taxes with the Nevada Department of Taxation. It is the department that collects taxes and that pays for Nevada public services.
Register you Nevada LLC in two ways with the Department:
1. With SilverFlume by way of the Common Business Registration (instructions)
2. With the Department of Taxation site, otherwise known as the Nevada Tax Center
For further information, go to Department Registering:
Personal State Income Tax
Primarily, Nevada LLCs exist as pass-through tax entities. Therefore, the individual LLC owners are responsible for reporting taxes.
There is no state income tax in Nevada. The information below applies to Nevada residents only.
Here is a good rule to remember:
You pay taxes where you make your money.
Therefore, for example, if you reside in and do business in California, Nevada’s tax advantages that you could take advantage of don’t apply. In other words, you cant do business in California and then expect to benefit with Nevada policies. You can’t have your “cake and eat it too.” Therefore, with this example, you’ll need to:
1. File an information return with the Nevada Department of Taxation
2. Apportion your income to California
3. File and pay taxes in California
Corporate State Income Tax
You’ll hear that Nevada has no corporate income tax, but that doesn’t apply to approximately 95 percent of Nevadans. Unfortunately, many Nevada LLCs are unaware of this particular fact.
Primarily, Nevada LLCs are pass-through entities. That means they don’t pay taxes at the corporate level.
Nor do they pay taxes at the federal or state level.
LLCs taxes at Sole Proprietorship, Partnership or S-Corp won’t have state corporate income taxes. Nevada Corporations or Nevada LLCs taxes as C-Corps will be affected. However, that’s not common for most of our readers.
Finally, most LLCs in Nevada don’t pay state income tax. However, there may be other returns and taxes owed.
Commerce Tax Return
The yearly tax on Nevada LLCs for doing business in Nevada is a Commerce Tax.
Due to Senate Bill 497, Nevada LLCs, whether there is revenue or not, no longer have to file a Tax Return (Commerce). Starting with the 2018-2019 taxable year, if an LLC has a revenue under $4 million, a Tax Return (Commerce) doesn’t have to be filed. Those over $4 million must file. This change in policy makes it easier for smaller businesses and start-ups to survive.
Go to the Nevada Department of Taxation for more information:
Beginning with June 13, 2019 – Commerce Tax News
FAQ – Filing Requirement
Modified Business Tax
A Modified Business Tax or MBT is a tax for employers. In addition, these employers are liable to pay contributions under the Nevada Unemployment Compensation Law.
Nevada LLC’s that have employers and that must adhere to the unemployment compensation laws of Nevada must also pay a Modified Business Tax. This tax is calculated from gross wages that include tips paid by the LLC, minus health care benefits.
How do You Register for a Modified Business Tax?
When you register for Unemployment Compensation, with the Nevada Employment Security Division (ESD), your Nevada LLC is automatically registered to pay, payable to the Department of Taxation, the Modified Business Tax.
For further information:
Nevada Unemployment Insurance – Benefits.gov
Modified Business Tax – Nevada Department of Taxation
Modified Business Tax Information and FAQs – Nevada Department of Taxation
The guide to online self-service claimant – Nevada Department of Unemployment
Unemployment Insurance Tax or Unemployment Insurance or Unemployment Compensation Contributions
Administered by the Nevada Employment Security Division or ESD, Unemployment Insurance Tax is paid by employers. It is used to support those who are unemployed or who get fired. (They must be fired through no fault of their own.) It also helps to stabilize those who are unemployed. The insurance is funded via LLC’s payroll taxes. Unemployment Insurance is an important benefit that most employers try to provide for qualified employees.
Nevada LLCs with employees must submit payroll taxes. What are payroll taxes?
They include a variety of taxes, deductions, and withholdings including Federal income tax withholding, Medicare tax, Social Security tax, Federal unemployment taxes (FUTA), State unemployment taxes (SUTA), employee deductions and local and county deductions. When an employee looks at their paycheck stub, these are examples of taxes, deductions, etc. that would be listed on the stub for the employee to see.
When you are an employer in Nevada, you must set up not only payroll, but also withholding payroll taxes from the paychecks of employees. You then must submit those taxes and filings to various government and state agencies.
Is it recommend to file payroll taxes yourself? No. Doing so can get complicated and if done wrong, the errors can lead to fines and penalties. Because payroll taxes are mandatory and important, it is recommended that you hire an accountant or a payroll company for assistance with the matter.
When doing so, it’s important to hire an accountant who specializes in payroll taxes. When hiring a payroll company, our recommendation is Gusto Payroll. This company can handle all of your payroll tax filings.
Nevada Sales Tax Permit
You must get a Sales Tax Permit if your LLC will transfer or sell tangible personal property in Nevada. Furthermore, your Sales Tax Permit must be on display at your place of business.
Companies that have multiple locations or storefronts must get a separate Sales Tax Permit for every location. Furthermore, if you move locations in Nevada, a new Sales Tax Permit is needed.
$15 Sales Tax Permit Fee
To Register for a Sales Tax Permit:
Use the Common Business Registration, by way of SilverFlume, to get your Nevada LLC’s Sales Tax Permit.
All work is done online and it is easier to submit APP-01.01 online than by mail.
Getting Sales Tax in Nevada
For a Nevada LLC that sells or transfers tangible personal property, the company must collect sales tax from buyers. Collected taxes are then remitted to the Nevada Department of Taxation.
According to NRS 372.354, money should be held in a separate general ledger or bank account.
Resources from the Nevada Department of Taxation:
Nevada Sales Tax Information and FAQs
Nevada Sales and Use Tax Publications
Sales Tax that is Destination Based
A destination-based sales tax, or sales taxes collected based on where customers live, applies to LLCs based in and operating in Nevada.
Calculating Your Sales Tax:
Calculating your sales tax and doing it by the deadline can be tricky. Accountants can help, but not every accountant knows how to deal with sales taxes.
If you need help with sales tax, automate your Nevada sales tax with TaxJar. This is a service that helps online and brick-and-mortar businesses in Nevada.
The TaxJar guide on Nevada sales tax: Nevada Sales Tax Guide for Businesses Nevada Resale Certificate
You must use a Resale Certificate when your Nevada LLC buys goods from a separate business for resale. For example, if you manufacture or sell baseball hats, and you buy the fabric from a distributor, when you show your Resale Certificate, sales tax does not have to be paid on the buying of the fabric. It’s the end consumer who buys the baseball hats who pays the sales tax.
It will depend on your Nevada LLC business, but your business may have to pay additional tax filings that may include:
Cigarette Tax and Other Tobacco Products
Intoxicating Tax and Liquor License
Tax for Live Entertainment
Fees for Exhibition Facilities
Insurance Retaliatory Tax
Real Property Transfer Tax
Short Term Lessor Tax
Transportation Connection Tax
LLC Local Taxes
Your Nevada LLC, depending on what city and/or county it is located, may have to pay local taxes. Contact local officials to know which taxes your Nevada LLC may have to pay – Nevada Counties. In addition, speak to your accountant.
Contact Information for Federal and State
Contact the IRS at 800-829-4933 for any questions about federal taxes. The hours are 7am to 7pm, Monday-Friday, Pacific Time.
Contact the Nevada Department of Taxation for questions about state taxes at 866-962-3707. The hours are 8am to 5pm, Monday through Friday, Pacific Time.