Forming a Limited Liability Company is an incredibly exciting life event, so congratulations on making that decision! LLCs are becoming more popular because of personal asset protection, tax benefits and a simple structure, which make them preferable to forming a corporation. But starting a business always takes work and time. We’ll tell you everything you need to know about doing business in Nevada, and the formation process, including time frames, in our complete guide.
Discovering Nevada
There’s more to Nevada than Las Vegas, believe it or not. It’s nicknamed “the Silver State” due in part to the silver that was found there in the 1850s that spurred a rush to the region of people hoping to find the precious metal and get rich.
The state has borders with California, Arizona, Oregon, Idaho, and Utah, and is the driest and most mountainous state in the country. Parts of the Mojave Desert are in Nevada, as well as geysers and hot springs, one of the biggest mountainous lakes, Lake Tahoe, plateaus, canyons and ridges. As one would imagine from such a mountainous state, a lot of mining takes place there. Nevada is one of the biggest producers of the nation’s gold. ¾ of the United State’s gold comes from the state. Other stones and metals that are mined from Nevada are, of course silver, copper, and black opals.
Economic Overview of Nevada
Nevada has a Gross State Product (GSP) of $170.1 billion which has experienced a growth rate of 17.5k% from 2018-2023. The state’s biggest industries by revenue are Casino Hotels, Lotteries & Native American Casinos, Hospitals, New Car Dealers, and Supermarkets & Grocery Stores. The top companies by employment in Nevada are Mgm Resorts International, Clark County School District, Vici Properties, Amazon.Com, Inc., and Walmart. And the top sectors that contribute to the state’s GDP are Real Estate & Rental & Leasing, Accommodation & Food Services, Healthcare & Social Assistance, Retail Trade, and Professional, Scientific & Technical Services.
Business Environment in Nevada
Usnews.com ranks Nevada #10 in Business Environment and #13 in Growth. And CNBC.com ranks it #9 in Business Friendliness, #11 in Workforce, #9 in Infrastructure, #11 in Economy, #30 in Cost of Doing Business, #25 for Access to Capital, and #36 in Cost of Living.
The cost of living index in the state is 95.5, compared to the national index of 100.0, which means that it has a lower cost of living than some other states.
State-Specific Regulations and Incentives for Forming an LLC in Nevada
Here are some of the incentives and programs for starting a business in Nevada.
- Modified Tax Abatement: The Modified Business Tax in Nevada for employers is 1.378% of taxable wages exceeding $50,000 per quarter. 50% of the tax can be abated for up to 4 years for new or expanding businesses if they meet a minimum capital investment, minimum job creation or retention, or minimum wage requirement.
- Catalyst Fund: This is a discretionary program that offers tax credits for projects that require significant capital capital investments or create jobs. The funds are divvied out in installments over the course of 5 years and are supplied through regional development authorities.
- Partial Sales and Use Tax Abatement: In Nevada, Sales and Use Tax rates vary from county to county. The Governor’s Office of Economic Development (GOED) provides up to 75% abatements of this tax for an effective rate of 2% for businesses who are either moving to or expanding to Nevada, and purchasing and using certain capital equipment.
- Personal Property Tax Abatement: Businesses that both locate or expand to the state of Nevada and operate certain equipment and machinery could get an abatement for up to 50% of business personal property taxes for 10 years. To qualify, businesses must meet two out of three of the MBT requirements. However, a minimum of $5 million in investments for industrial equipment and machinery in urban areas, or $1 million in rural areas is required.
- Data Center Tax Abatement: Companies building new data centers, or expanding existing ones can receive a 75% abatement on business personal property taxes for data center equipment and machinery for a period of 10-20 years. They can also get a reduction of sales and use tax rates to 2% for between 10-20 years. The business has to invest a minimum of $25 million over 10 years in the new or expanded facility, or a minimum of $100 million over 20 years. They must also create a minimum of 10 jobs paying wages at or above the state average for the 10 year abatement. For the 20 year abatement, they must create 50 jobs at or above the state’s average wages.
- Real Property Tax Abatement for Recycling: Businesses and facilities that use recycled material to conserve energy, or as an alternative to fossil fuels and other sources of energy could receive a partial abatement of real property taxes. The partial abatement is up to 50% of taxes due on real property for no more than 10 years, which begins from the abatement’s effective date. The business must primarily recycle at least 50% of raw material or an intermediate product on-site, or convert energy derived from recycled material into electricity. They also have to meet 2 out of 3 MBT requirements. But there is a minimum $5 million investment requirement for new equipment or machinery in urban areas and a $1 million investment requirement in rural areas.
- WINN: The Workforce Innovation for the New Nevada program (WINN) was created to help businesses fund job training programs.
- Silver State Works: With this program, qualified employers could receive as much as $2,000 per employee, or training allowances for new jobs. There are three options available. Employer-based Training ($600 per employee training allowance), the Employer Incentive Job Program, which is reimbursal of up to 50% of wages for employees over a specified period, or Incentive-Based Employment, which is a wage supplement of up to $2000 per employee.
Pros and Cons of Establishing an LLC in Nevada
There are benefits and pitfalls when it comes to doing business in Nevada.
Nevada is a major tourist destination, being home to both Las Vegas and Reno. It averages more than 40 million visitors every year. The population has also increased from 2.7 million to 3.2 million in the past decade. And the real estate market has jumped up 27% in 2022. This is all good news for business owners because it means that millions of potential customers come to the state every year, and that more potential customers are moving to the state. When tourists come in, business really booms.
There are numerous tax advantages in Nevada. There’s no business income tax, state income tax, inventory tax, franchise or privilege tax, estate or inheritance tax, or state corporate share tax. Obviously, these tax benefits are good for businesses. Some LLCs choose to be taxed as corporations, but others are taxed as pass-through entities. That means that ordinarily LLCs would pay taxes on personal income taxes, which aren’t charged at the state level in Nevada.
Nevada doesn’t put restrictions on LLCs, such as requiring them to hold annual meetings. Many states have strict rules about how and when LLCs should hold meetings. So the fact that Nevada has less regulation on LLCs is a major benefit to any LLC owner in the state.
Nevada supports small businesses. In fact, over 45% of workers in Southern Nevada are employed by small businesses. The Nevada Small Business Development Center is a resource that helps small businesses with education, training, and other resources for small business owners. So there’s a good chance that you’ll find the help you need starting out.
But, it’s not all good.
Filing fees in Nevada are pretty high. Nevada’s filing fee is $425. That’s $150 for the Initial List of Managers, $200 for the State Business License, and $75 for the Articles of Organization. Annual fees are around $350 per year ($150 for the Annual list and $200 for Business License Renewal). Compare this with Kentucky, which has a filing fee of $40 and an annual fee of $15, or Arizona with a filing fee of $50 and an annual fee of $0, and you’ll see that Nevada’s filing fees aren’t cheap.
A lot of Nevada’s business is tied up in tourism, and there are seasons for it. Many people flood to the state during the spring and fall. This means that business owners could experience a fluctuation in income, and there could be lulls in sales during the winter and summer when less tourists are visiting the state.
Although Nevada doesn’t collect corporate or personal income taxes, that doesn’t mean that your LLC won’t have to pay federal income taxes. So you’re not avoiding taxes altogether.
Procedure of Establishing an LLC in Nevada
The most important aspect of getting an LLC that you need to learn is the LLC formation process. Here’s how to form a Limited Liability Company in Nevada.
- Acquire an Articles of Organization Form: Your Articles of Organization is the most important formation document due to the fact that it serves as your application to form an LLC. That’s why it’s the first step. You can pick one up from the Nebraska Secretary of State.
- Pick a Name for Your Company: Choosing a name for your company isn’t as easy as choosing the catchiest name you can think of. One of the legal requirements is that it must be a unique business name, meaning that no other company in the state may be currently using it. Use the Online Entity Search on the Secretary of State’s website to see whether your proposed business name is available for use. When you’ve identified a name that’s available, you’ll also need to submit a Name Reservation form.
- Decide on a Registered Agent: Having a registered agent is mandatory for every Limited Liability Company in Nevada. The person or entity designated as your registered agent will receive official government correspondence and legal notices at their address on behalf of your company. You’re free to designate someone you’re close with and trust, such as a relative or friend. Many business owners choose to hire a professional registered agent service for an extra layer of protection, though.
- Choose an Address for Your LLC: Choosing your business address is important because it’s added on the public record because it helps customers and authorities locate your company. Listing your home address as your business address is not a good idea due to it being public information. Getting a virtual address, or requesting to use your registered agent’s address as your business address are viable options in some cases.
- Sign and Submit Your Articles of Organization: Make sure that all of the information on the document is filled in and correct, and that you have the proper number of copies. Once you’ve double-checked it, it’s time to sign and submit your Articles of Organization. Or, you could hire an LLC formation service to fill the documents out, sign and file them on your behalf.
Necessary Documentation for Filing an LLC in Nevada
Here is the paperwork required when filing for an LLC.
Articles of Organization: You apply for an LLC via your Articles of Organization, which means it’s a critical LLC formation document. It includes important business information, like your business name, duration, purpose and address, a detailed list of your LLC members and their contact information, specification about whether your LLC will be member or manager-managed, and your registered agent’s information. You get your Articles of Organization from the Secretary of State.
Operating Agreement: While it’s true that the Secretary of State doesn’t legally require you to have an Operating Agreement, government agencies, business advisors, and legal professionals all advise LLCs to create one. Its purpose is to provide exhaustive operational instructions for your business, as well as for your LLC members, and it’s likely that you’ll need to refer to it from time to time throughout the life of your business. It should contain an LLC member list along with their information and detail their contributions to the company as well as the ownership shares of each member, an explanation of the profits and losses distribution of the company and any compensation plans it provides, contact information for managers, voting rights, and meeting schedules for managers. But one of the most vital sections of any operating agreement is instructions for how to add and remove LLC members, plus how to proceed if a member dies.
Employer Identification Number (EIN): You need an Employer Identification Number (EIN) because it identifies your business to the IRS, and will allow you to open a business bank account, hire employees, and participate in other business activities. Fortunately, you can apply for one through the IRS’s website for free.
Name Reservation Application: In order to legally use your business name in the state, you must file a Name Reservation form with the Secretary of State.
Annual Commerce Tax: You don’t have to file an Annual Report in Nevada, but your business will have to pay an Annual Commerce Tax, which you can register for with the Department of Taxation website.
Business Licenses: All businesses in Nevada are required to obtain a state business license and renew it each year. Unlike other states, you get your business license from the Secretary of State in Nevada.
Tax Registrations: Your business needs to register with the Nevada Department of Taxation, as well as the Nevada Employment Security Division to collect sales tax.
Legal Requirements for Starting an LLC in Nevada
There are a few things that you must do to start an LLC.
Nevada doesn’t collect a personal income tax. However, LLCs in the state must pay an annual commerce tax. Rules around this tax are complicated, so it’s best to check in with the Nevada Department of Taxation for information about taxes.
Your Limited Liability Company must file an Initial List of Managers when you file your Articles of Organization. Every subsequent year after that, it’s referred to as an Annual List.
Time Frame for Establishing an LLC in Nevada
What is the typical time frame to form a Limited Liability Company in Nevada? That’s what we’ll cover in this part of the guide.
How Long Does the Initial Paperwork Take in the State of Nevada?
One business day is the processing time for online filings. The approval time for filing by mail is as much as 5-6 weeks, which takes processing time into account as well.
Processing Times in the State of Nevada
Processing time by mail takes 3-4 weeks plus mail time, and processing time to file online is one business day.
Common Delays in the LLC Formation Process in Nevada
Here are some of the things that could cause a holdup in the LLC formation process in Nevada.
- Lack of Staff and the Amount of Applications: There is always a flood of filings at both the beginning and the end of the year. Many people also don’t know that paper filings require manual reviews by the staff. So if there aren’t enough staff to cover the influx of filings, it will take quite a while for them to get through it all.
- Document Problems: If you submit any LLC formation documents that are incomplete or include inaccurate information, they will be rejected. The formation time frame is extended by the time required to update or amend the information in question. That’s why it’s best practice to go over and double-check all the paperwork before submitting it.
- Processing Errors: Website crashes and other technical problems could cause online processing delays and extensions of the LLC formation time frame.
Expedited Processing for LLC Formation in Nevada
The quickest method to get an LLC is through expedited processing. Here’s all the information you need about expedited processing.
What Are The Expedited Options Available?
There aren’t expedited processing options if you file online. You don’t really need them though, because online filings are processed in one day.
But there are a few expedited processing options if you file by mail. There are 24- hour, 2- hour and 1-hour options available.
Additional Costs for Expedited Services in Nevada
Expedited processing costs extra, and you must pay fees in addition to the standard filing fee.
24-hour expedited processing costs $125 extra, 2-hour processing costs $500 extra, and 1-hour processing costs $1,000 extra.
Comparing LLC Formation Time Frame in Nevada with Other States
Regardless of whether you want to establish a domestic LLC in Nevada or are considering a foreign LLC in a different state, it’s important to learn about the formation timelines in other states so you can set them side by side and see how they compare. Here’s how Nevada compares to other states.
Brief Comparison with Key States
Just to review, processing for online filing takes 1 business day, mail filing takes 3-4 weeks, and there’s a 1-hour expedited processing option.
It doesn’t get faster than one hour expedited processing. But there are faster online and mail processings. Online filings are immediate in Alabama, Alaska, Colorado, Kansas, Kentucky, Minnesota, Missouri, New York, South Dakota, Tennessee, Wisconsin and Wyoming. And mail filings in Ohio and Kentucky are 1 hour without expedited processing.
It could be slower, too. Alaska, Arkansas, Idaho, Indiana, Kansas, Kentucky, Mississippi, Missouri, Nebraska, New Mexico, Oregon, Rhode Island, Tennessee, Vermont, and Wyoming don’t even have expedited processing. Maryland and Arizona have expedited processing, but Maryland’s takes 7 days and Arizona’s takes 5 days. Online processing in Maryland takes 2 weeks, Arizona’s is 14-16 days, and Texas’s is 13-15 days. And Maryland’s processing times for mail filing is 5-8 weeks, Oregon’s is 4-6 weeks, Pennsylvania’s is 6 weeks, Texas’s is 4-8 weeks, Washington’s is 5-6 weeks, and New York is the slowest at 8 months.
Why is Nevada a Favorable Place for Forming an LLC?
Nevada is a good place to form an LLC because there are lots of potential new customers moving to the state, millions of tourists each year, and you can’t really beat the tax benefits of Nevada.
