If you’re reading this article, you’ve either decided to form an LLC or want to know more about what a Limited Liability Company (LLC) is so that you can make that decision.
Any time you create a new business or start an LLC in a different state (known as a foreign LLC) is exciting, so congratulations!
I’m going to break down the entire process of forming an LLC in Nevada. But before I do that I’m going to give you an understanding of what a Limited Liability Company (LLC) is as well as some of the reasons people choose LLCs over other business types.
(If you want to skip to the ‘how to form an LLC’ section, click here)
Table of Contents
What Is A Nevada LLC?
A Nevada LLC is a Limited Liability Company formed in the state of Nevada that is governed by the laws, regulations, and statutes of the state of Nevada.
Why choose An LLC?
Over the years you’ll find many benefits of owning an LLC in Nevada, so this isn’t a comprehensive list. These are the main reasons that LLC owners site for choosing this structure for their Nevada businesses rather than other business structures, such as a sole proprietorship.
1. Limited Liability And Asset Protection
Many small business owners cite the personal asset and liability protection that they receive as part of a Nevada in LLC as the main reason they chose to form an LLC. The owner of an LLC in Nevada cannot be held responsible in a personal capacity for the debts and liabilities of their Limited Liability Company.
What does this mean? If your Nevada business happens to get sued or goes bankrupt and you’ve formed an LLC, the creditors of your LLC can’t demand your personal assets as compensation for the debts of your LLC in Nevada. So your house, car, the funds in your personal bank account and any other personal assets you may have will remain safe.
We’ve had our share of unexpected events and natural disasters in the United States during the past year like wildfires, hurricanes, floods, terrible winter storms and a viral pandemic. These events have shown us that even the most successful business can be brought to its knees in short order because of an unexpected event.
If you were to lose your business in Nevada, you wouldn’t also lose everything that you’ve bought and earned if you form an LLC in Nevada. This sort of personal asset protection is valued by many small Nevada business owners because they value their assets, having worked hard to obtain them.
Another reason that many business owners choose to form an LLC in Nevada is you can keep your personal information protected as an LLC owner.
Hackers and swindlers have become experts in their field which is unfortunate for everyone else. They can now easily steal your identity and use it to accumulate thousands of dollars in debt using small bits of information that the average person would consider insignificant (like your name and address).
If you choose a business type such as a sole proprietorship or sole trader, you’ll need to register your personal information with the Nevada Secretary of State. When you do this the Secretary of State will list it on their website which means you’ll be providing criminals with information you’d rather not provide to them.
If you form a Nevada LLC there is a way you can keep your information secure and off the public record.
How is this possible? You hire what is known as an LLC formation service. An LLC formation service will register their information with the Nevada Secretary of State instead of your own, so your identity remains secure and off the public record. You’ll retain ownership of your Limited Liability Company but also protect your personal information from criminals.
The third most commonly cited reason that business owners list for choosing a Nevada LLC rather than other business structures is the tax benefits that Nevada LLCs enjoy. These tax benefits that LLCs are provided with are quite great when compared with other business types.
The difference in tax benefits is most clearly seen when comparing LLCs to corporations. If you own a corporation you’ll be subjected to what is known as “double taxation”.
Here is how “double taxation” works. The profits of a corporation are taxed at corporate tax rates, then the corporation’s profits are dispersed to the corporate shareholders as dividends. This means that corporate profits are taxed twice before the shareholders of the corporation even receive them.
But you avoid “double taxation” when you form an LLC in Nevada.
Here’s how the profits of LLCs are taxed. The profits of a Nevada LLC are taxed at company rates (rather than corporate rates) and then doled out to LLC members in the form of personal income (rather than corporation dividends), which is later taxed at personal income tax rates. This means that LLCs aren’t taxed twice before they even show up in an LLC member’s bank account.
There are even more tax benefits for LLCs beyond avoiding the “double taxation” of corporation profits.
The 2017 Tax Cuts and Jobs Act provided a tax benefit for LLCs known as the Qualified Business Income Deduction (QBID). QBID provides LLCs with a 20% discount on their taxes. This tax benefit is exclusive to LLCs, so you won’t get it if you form a sole proprietorship or corporation.
How To Start An LLC In Nevada
Now that you’ve reached this section of the article, you should know what a Nevada LLC is and some of the reasons you can benefit from forming an LLC in Nevada. So if you’re still comfortable with the idea of forming an LLC, here are the steps you’ll need to form an LLC in Nevada.
*IMPORTANT* If you’re inexperienced with forming an LLC and would like some guidance and instruction through the process then there’s good news for you. There are professional services designed to help with the formation process. LLC formation services help make formation go more smoothly.
LLC formation services help to file all of the formation documents and help get your Nevada LLC established for as little as $0 plus the state filing fees. (But my favorite LLC formation service is ZenBusiness, which charges $49 plus the state filing fees.)
If you’d like to learn more about LLC formation services, check out my article about the Best LLC service here.
1. Obtain Articles Of Organization Form
The first step to forming an LLC in Nevada is to get a copy of the Articles of Organization form from the Nevada Secretary of State.
You can get the PDF version of the Nevada Articles of Organization form here.
Since this is the main business formation document that you’ll need to file to form your Nevada LLC, the following steps will refer to the Articles of Organization form.
2. Choose Your Business Name
One of the first pieces of information that you’ll need to add to your form is your business name.
However, you can’t just add the first name you think of for your business in Nevada here. The Nevada Secretary of State requires that each business has a different name. This means that you’re required to choose a name for your Nevada LLC that isn’t already in use.
You can check the Secretary of State’s Online Entity Search to determine if the name you’ve initially chosen is available.
If the name you wanted to use isn’t available you could add a suffix (or multiple suffixes) to the end of it, such as “Limited Liability Company”, “LLC”, “L.L.C.”, “Ltd.” or “Co.”. This is a bit like adding numbers to the end of an online username once you discover that the username you first entered wasn’t available.
Once you have found a business name for your Nevada LLC that is available you must submit a Name Reservation form, which you can find here. The form can be submitted by mail or online using the Secretary of State’s online filing system called Silverflume. No matter how you choose to submit your name reservation form, it must be submitted along with a payment of $25 for the filing fee.
If you’re not fond of the official business name that you’ve registered with the Secretary of State for your Nevada LLC, you can register for what is called a trade name, DBA (Doing Business As) name or fictitious name. To do so you must register the trade name with the county clerk in the county that your Nevada LLC resides in. Here is a link to each Nevada county clerk.
3. Choose A Nevada Registered Agent
All Nevada state LLCs are required by the Secretary of State to have what is known as a “registered agent” for their business.
A registered agent is a person or professional service that will accept mail, documents and service of process on behalf of your Nevada LLC during business hours Monday-Friday.
Of course, you cano assume the role of registered agent for your business in Nevada or hire a professional registered agent service. But this is a decision that you should think about carefully before making it. I’ll give you the pros and cons of each choice so that you can make an educated decision.
If you are the registered agent for your business entity, you’ll be required to register your personal information with the Secretary of State, which will mean it will be listed on the public record. This negates the measure of privacy and protection of your personal details you achieve when you form an LLC and use an LLC formation service.
If you choose to become the registered agent for your Nevada LLC, the job will cost you a lot of time and require a fair amount of work on your part. As the registered agent for your business you will need to be available during business hours on weekdays to receive mail and service of process from government agencies on behalf of your LLC. The problem with this is that most LLCs also operate during normal business hours on weekdays and there’s really no way for you to be in two places at once.
If you miss an important piece of mail or a service of process from a government agency, your LLC could be sued and you would have no way to defend yourself from the lawsuit. A default judgment could be catastrophic to your business. Furthermore, missing correspondence from the Secretary of State could mean that your Nevada LLC loses its legal “good standing” status and is no longer legally able to conduct business in the state of Nevada.
The only upside to becoming the registered agent for your LLC is you don’t have to pay any fees to a professional registered agent service.
If you hire a professional registered agent service then it’s guaranteed that you will receive the mail, legal documents and service of process that the service receives on behalf of your Nevada LLC. They will also register their name and address as your registered agent with the Secretary of State, which means that your information won’t be put on the public record for cyber criminals and scammers to access.
The only downside to using a professional registered agent service is that they charge fees between $99-$299 per year for their services.
But if you think about it, it’s well worth the cost to pay these fees simply to have the peace of mind that comes from knowing that you will receive each piece of mail, legal document or service of process that’s sent to your business. Default judgments against your business and not complying with laws regarding LLCs and registered agents in the state could mean that you are at risk of losing your Nevada LLC and everything you’ve worked to establish. For these reasons I always recommend that new LLCs hire a registered agent service.
If you’d like to know more about registered agent services, check out my article on the Best Nevada Registered Agent
4. Choose Your LLC Address
Adding an address to your Articles of Organization form is one of the business formation filing requirements of Nevada law. You’ll need to register an address with the Nevada Secretary of State to list on the public record for your business entity.
The address you register on this form is where your Nevada LLC will receive all of its official mail and legal correspondence, so this piece of information is just as important as the name you register for your LLC.
If you’ve decided not to use a registered agent service for your Nevada state business, then you can register your business’s physical street address. Owners of businesses without physical addresses in the state of Nevada will be forced to register their home or home office address. Of course, registering your home or home office address can leave a business owner vulnerable to cybercrime and identity theft, so this is not an ideal scenario.
No matter which address you use, Nevada law states that an LLC must not register a PO Box as their business address even if it is a Nevada state address.
If you use a registered agent service for your LLC then they will register a name and address with the Secretary of State for your LLC. This address will show up on the public record as the address associated with your business, but it can’t be traced back to your home or home office address, which is quite helpful.
5. Sign And File Your Articles Of Organization
Once you’ve filled in all of the requested information on the form and you’ve double-checked to make sure it’s all accurate, it’s time to sign and file the Articles of Organization for your LLC.
You can sign and file the Articles of Organization for your LLC yourself, but this will register your personal details with the Secretary of State and leave you vulnerable to identity theft. You also have the option to hire an LLC formation service that will sign and file the Articles of Organization on behalf of your LLC in the state of Nevada. This keeps your personal information off the public record in a legal way.
You can either submit your form online or by mail. If you choose to submit your articles by mail, you must send it along with a check or money order payment for the filing fee to the following address:
Secretary of State
202 North Carson Street
Carson City, Nevada, 89701
If you choose to submit the form online, you can do so through the Secretary of State’s Silverflume online filing system. You’ll be required to make a payment for the state filing fee using a debit or credit card if you submit your form online.
Once you’ve filed your LLC’s Articles of Organization the Secretary of State will contact you by mail or email once they’ve processed the formation documents and the filing fee. If you’ve filed online this should be processed the same day, but if you filed by mail it can take 3-5 days. However, if you’d like your documents processed faster, many LLC formation services in the state of Nevada offer expedited processing, which can cut down the processing time to 1-3 days.
Other LLC Activities
Once you’ve formed your LLC you’ll be required to perform some activities that have nothing to do with the formation process, but are just as important because they help keep your LLC in legal “good standing”.
Every LLC in Nevada, whether it’s a domestic or foreign LLC, must file an annual report or annual list. This annual report or annual list must initially be filed when you form your LLC by attaching a copy to the Articles of Organization. In subsequent years, you must file your annual list by the end of the month that you formed your LLC. So if you formed your LLC in March, your annual list will be due to be filed by the end of March.
The state of Nevada doesn’t charge a personal income tax, however, every business of any type (LLC, corporation, sole proprietorship) must file what is known as an Initial List of Managers upon its formation. Every year after the initial list, it’s referred to as the annual list. The filing fee for the initial list is $150 and if you don’t file the annual list on time you’ll be forced to pay a late penalty fee of $75.
LLCs in the state of Nevada are required to pay an annual commerce tax. The rules for the commerce tax are a bit tricky. To find out more, check out the Nevada Department of Taxation site.
You may also need to pay a business tax if your LLC collects sales tax. This sort of business tax can be paid by registering with both the Nevada Department of Taxation and the Nevada Employment Security Division.
Every business in the state of Nevada must obtain a state business license to legally do business in the state. The state business license is another thing that you’ll need to file annually and the renewal fee is $200. You can initially file the application for your state business license with your Articles of Organization and initial list, filing it with the annual list in subsequent years.
You can register to start an LLC in Nevada from another state, which is known as a foreign LLC. To register as a foreign LLC in Nevada, you must file an Application for Registration of Foreign Limited Liability Company form along with the $75 filing fee. Foreign LLCs must file their applications along with their initial annual report. You can register a foreign LLC online or by mail by finding the form on the Secretary of State’s business form site.
This is a lot of things to remember and it can be quite stressful. If you’d like to take some of the form filing and application burden off of your shoulders, consider hiring a Nevada PEO service and subscribing to some online legal services. This should drastically lessen the workload for you.
Nevada LLC Fee Summary
How much does it cost to form an LLC in Nevada? No matter whether you’ve chosen to hire an LLC formation service or go it alone, you’ll be required to pay a few fees. Here is a breakdown of some of the fees that you can expect to pay when you form a Nevada LLC.
Articles of Organization filing fee: $75
Name Reservation filing fee: $25
State Business License fee: $200
Initial List of Managers filing fee: $150
Registered Agent Fee: $99- $299
Annual Report filing fee: $150
After Starting Your Nevada LLC
Congratulations! In forming your LLC you have completed the first and biggest step along your business journey. So take some time to relax and celebrate this milestone.
Throw a small celebration party with some of your close family and friends, go out to dinner, buy yourself something nice or have a celebratory glass of champagne or wine. But don’t relax for too long. There are still a few things you need to do to establish a good foundation for your LLC so that it can operate as a properly functioning business.
Step 1. Create An Operating Agreement
LLCs in the state of Nevada are not required to create and file an Operating Agreement, but it’s highly recommended that you do it anyway.
To explain how important an LLC Operating Agreement is, I want you to think of an animal. The LLC functions like the animal’s skin, scales or outer shell to protect it, and the LLC Operating Agreement would act as the animal’s nervous system that tells it what to do and how to react to things.
An Operating Agreement works to function as both a contract between LLC members and also a set of precise instructions that explain how the business should run. It should not only list each LLC member individually but also provide all of the necessary details about the managerial, operational, structural and financial aspects of your business.
*IMPORTANT* Before you draft the Operating Agreement for your business, you should consider which sort of management system you would like to utilize for your LLC. If you choose a single-member system, then a single member will make the big decisions for the company. If you choose a multi-member system, then a handful of members will vote on decisions.
Your Operating Agreement should start by listing each of your LLC members individually, designate which members have the authority to make top-tier decisions for the company, and also indicate the ownership percentages and the shares of profits and losses allocated to each LLC member. Your business’s Operating Agreement should define the roles of LLC members, which departments or members they should most closely interact with who their supervisors are and the roles and tasks that each department is in charge of. This should prevent a lot of petty, workplace squabbles.
One important section that many LLC owners forget to add to the Operating Agreements for their businesses is a section that clearly spells out what should happen if an LLC member leaves or if new members join the business. This section is important because it provides instructions in the event that there is a major disagreement between LLC members that results in members leaving or being replaced. These logical and easily understood instructions are important during high-stress situations when emotions run wild.
The Operating Agreement is one of the most important formation documents for businesses during the first few years of establishment. It provides comprehensive instructions about how the business should be run, the roles of LLC members and their compensation.
As I’ve previously stated, Operating Agreements aren’t a filing requirement for LLCs in the state of Nevada. But you really should draft one anyway, and if you do you should include the sections and the framework I’ve listed here. I’ll explain what happens if you don’t include these important bits of information in your Operating Agreement as well.
In case my definitions for Operating Agreements in the previous paragraphs weren’t clear enough, let me clarify: the rules and directions you provide in the Operating Agreement for your business are the specifications that your business must operate according to. A poorly- written Operating Agreement that doesn’t include the proper instructions will stifle business growth.
It’s easy to bungle your Operating Agreement by not allowing for things like change, innovation and business growth. But a well-designed Operating Agreement with all of the information I’ve suggested here should allow you to sit back and watch as your business grows and prospers without being held back by faulty instructions and a poorly thought-out Operating Agreement.
If you’re worried that you may screw up the Operating Agreement or you’re inexperienced and less than confident about drafting a good agreement for your business entity, there are a few options available to you.
The first option is of course utilizing an LLC or business formation service because they will typically draft Operating Agreements for businesses as part of their services. The second option is to use the free Operating Agreement template for businesses that Northwest Registered Agent provides on their website. And your last option is to sign up for online legal services which will help provide you with the framework and legal terms that you need to draft a good Operating Agreement.
Step 2. Apply For An Employer Identification Number
If you plan to take part in certain business activities such as opening an LLC bank account or hiring employees your LLC must apply for an Employer Identification Number (EIN). An EIN will qualify your business for permits and business licenses that your LLC would not otherwise qualify for. However, your business isn’t required to hire employees to obtain an Employer Identification Number- an EIN is basically just a tax identification number.
An EIN is a tax identification number that identifies businesses in much the same way that a Social Security Number identifies people. An EIN is issued from the Internal Revenue Service (IRS), and applying is easier than you would think.
A lot of LLC formation services in the state of Nevada will apply for an EIN on behalf of your Nevada LLC. However, it’s not hard to apply for an EIN on your own. Simply head over to the IRS website Monday-Friday between 7 am – 10 pm to apply.
Step 3. Open A Business Bank Account
The last step to forming strong business foundations for your LLC is to open a dedicated business bank account for your LLC.
A lot of small business owners either forget this step or underestimate its importance. They think that running both business and personal transactions through one account is somehow more convenient. But there are two, crucial reasons you shouldn’t conduct business in this way.
When you open a business bank account, filing your annual taxes will become far easier. A lot of business owners will assume that they can remember which transactions were for business and which were personal. However, these purchases are often made months before tax season rolls around and remembering such things becomes quite difficult as time passes. So if you have a bank account specifically for business transactions, you can look at all of those transactions and know that they weren’t made for personal reasons which makes filing taxes much simpler.
The other reason you shouldn’t use one bank account for business and personal purchases is you’ll leave yourself vulnerable to lawsuits. When you make a business transaction on your personal account then your personal information is at risk, and so is everything in your bank account. This means that not even the asset-liability protection that you enjoy from forming an LLC can protect you if you conduct business from your personal bank account.
In short, to save yourself time and energy, make filing your annual taxes easier and keep your identity and personal assets protected, simply open a business bank account.
You’ll need what is known as a “bank kit” to open a business account for your LLC. This includes copies of many formation documents that you’ve obtained when forming your LLC, like your Articles of Organization, the initial list of managers and resolution, EIN, state business license and Certificate of Good Standing.
You can of course collect these documents yourself, or use an LLC formation service. LLC formation services in the state typically create a bank kit as part of their services.
Congratulations! Making the decision to form an LLC in the state of Nevada is the first step toward taking control of your business’ future.
If you’ve chosen to form your LLC yourself to avoid paying the fees of an LLC formation service (which typically have fees that cost as little as $0 plus state filing fees), here are the steps you need to take to form an LLC in the state of Nevada.
- Obtain the Articles of Organization form
- Name your LLC
- Choose your Registered Agent
- Choose your LLC address
- Sign and file your Articles of Organization
You can become overwhelmed quite quickly by all of the red tape, legal terminology, form filing, filing fees and applications involved in the LLC formation process. But even if it’s a lot of work, the feeling of self-accomplishment and achievement that comes from forming an LLC on your own without the use of an LLC formation service is definitely worth the trouble.
Congratulations again on your decision to form an LLC in the state of Nevada, and best of luck on your business journey!