The Nevada economy has long been associated with the ‘vice’ industries. What most people are not aware of is that Nevada is the 2nd largest producer of silver in the U.S. after Alaska. There is a popular phrase, “Nevada was founded on mining and refounded on sin”, and it captures the current economic situation of the state.
Nevada’s hospitality industry is extraordinarily large. The hospitality and food services industries are the largest in the state and are all concentrated in the three highly-populated cities in Clark county: Las Vegas, Henderson and Reno. Las Vegas alone has the largest concentration of casinos in the U.S which bring in annual revenue of $6.4 billion. That’s $4 billion more than Atlantic City in New Jersey, which has the 2nd highest number of casinos and resorts.
Despite the rosy outlook, the per capita personal income in the state has been falling compared to the national average and this has had an impact on small businesses particularly in the retail industry as they battle with the rising cost of living.
Things are however optimistic as the state government has imposed a business friendly tax code to encourage new entrepreneurs to set up shop in Nevada.
Below are statistics on small businesses (SMBs) in the state of Nevada:
- There are 283,333 small businesses in Nevada representing 99.2% of all businesses in the state.
- SMBs account for 42.2% of the state’s workforce with a total of 503,144 small firm employees.
- In 2019, small businesses created 30,054 new jobs. Of these, 17,376 were generated by firms with less than 20 employees.
- Self-employed individuals running their own incorporated businesses have an average median income of $50,000 while those with unincorporated businesses (without an LLC in Nevada) have an average median income of $25,000.
- Nevada’s tax code does not include personal income tax. This coupled with a lower cost of living than it’s highly populated neighbor, California, makes the state more affordable for first-time business owners as their overhead is much lower.
- In the fourth quarter of 2018, 2,147 businesses exited the market which resulted in 6,437 lost jobs. In the same period 2,804 businesses started up, creating 9,617 new jobs.
- There are 2,901 small firms in the export business that account for 17.4% of Nevada’s $10.2 billion in total export revenue.
- Nevada state law requires that every new Nevada LLC designates a Nevada registered agent that will be available during regular business hours at a physical address within the state.
- Small business profits are susceptible to the tourism-centric Nevada economy. During the peak seasons, SMBs (especially in the retail, accommodation and entertainment sectors) experience success. But the inverse occurs during the off-peak seasons. It takes a bit of planning to get through the low seasons.
- Nevada does not require businesses to collect sales tax on the sale of digital goods or services. Businesses must however collect taxes on the online sale of pre-written computer software.
- When a business owner acquires a seller’s permit or a reseller’s certificate, he or she does not have to pay sales tax when purchasing goods for resale.
- Nevada has a destination-based tax policy. This means that long-distance sales within Nevada are taxed according to the address of the buyer.
- Nevada law is lenient on requirements placed on corporations and their board members. For instance:
- The directors, officers and shareholders of Nevada corporations do not have to be US citizens.
- Board of directors of corporations do not have to hold meetings in Nevada.
- The state also has minimal requirements in terms of annual reporting and disclosure documentation.
- Due to Nevada’s rising popularity as a tax haven, more people are opening corporations to protect their individual assets. It is one of just two states (including Texas) that does have an information sharing agreement with the IRS (Internal Revenue Service).
- Nevada corporations have to part with $500 for a business permit while other types of businesses have to fork out $200 for a permit.
- In addition to not having a personal income tax, Nevada has no franchise tax, no inheritance taxes and no state income tax.