The Nevada LLC Act provides the filing requirements necessary to form an LLC in Nevada. The act requires that articles of organization are filed with the Secretary of State so that the LLC can engage legally in business. 

The Nevada LLC Act began in the early '90s as a means of attracting companies to the state to incorporate and do business. Nevada followed the business-friendly approach that initially began in Delaware that offers liability protection to owners and managers and has low corporate taxes. 

Forming a Nevada LLC

  • Articles of organization must be created to form an LLC in Nevada and must include the signature of the LLC's organizer. 
  • The Nevada LLC Act requires certain information when preparing the articles of organization. This includes the name of the LLC; name and address of the registered agent responsible for service of process; a clarification statement as to whether the LLC will be managed by the owners, also known as members, or by a single manager or multiple managers; name and address of each managing member or manager; name and address of the organizer of the LLC; or the name and address of the person who prepared the articles of organization.
  • The registered agent must provide a signed certificate indicating their acceptance of the appointment to act as the LLC's registered agent. The certificate is attached to the articles of organization when submitted. As an alternative, the signature of the registered agent may be included in the articles of organization indicating their acceptance.
  • There are two requirements by the Nevada LLC Act when naming the business. The name must include the words L.L.C., LLC, or limited liability company, and it must distinguish itself from other businesses that are already registered with the state. 
  • Certain words are not allowed when selecting a name for the LLC. Words that relate to professional businesses or businesses such as engineer, bank, trust, or accountant may not be used unless the LLC has complied with Nevada agency responsible for the licensing or certification requirements that regulate the particular business or profession.

Advantages of Forming a Nevada LLC

  • Corporate profits and LLC profits are not taxed in Nevada.
  • The state does not tax corporate shares or LLC ownership. 
  • There is no franchise tax in Nevada.
  • Nevada does not have a personal income tax.
  • Anonymity is possible for both shareholders in a corporation doing business in Nevada and the owners of an LLC in Nevada. This information is not required to be part of the public records. 
  • Business owners that register in Nevada receive more than average privacy.
  • The IRS does not have an Information Sharing Agreement with Nevada.
  • Nevada's stringent privacy laws protect owners of LLCs from being targeted by unscrupulous creditors, unnecessary litigation, and aggressive attorneys. 
  • Because of the privacy level businesses in Nevada enjoy, LLCs are also out of view of government entities.
  • LLCs in Nevada may issue stock for a variety of reasons such as real estate, capital investment, leases and options, and personal property.

Disadvantages of Forming a Nevada LLC

  • The privacy rules in Nevada do not protect LLC members.
  • The Articles of Organization for an LLC in Nevada must list the name of at least one member.
  • Nevada requires an LLC to provide a list of its officers and directors annually. Failure to file the form may result in monetary penalties assessed against the LLC, and the LLC is subject to suspension by the Secretary of State. 
  • Information provided on the list of officers and directors of an LLC is posted to the Secretary of State website.
  • Nevada is one of the most expensive states in the U.S. due to increased incorporation fees.
  • An LLC manager does not have the same liability protection as that of a director of a corporation. 
  • There is an underlying concern that Nevada businesses may be used for illegitimate goals by unscrupulous business persons.

FAQs

Q. What is the Information Sharing Agreement with the IRS?

A. The Information Sharing Agreement (ISA) is in place by the Internal Revenue Service to combat businesses that avoid paying taxes. The IRS has agreements in place with other states - not Nevada - that allow sharing of information of those taxpayers who regularly avoid paying taxes as well as the abusive tax avoidance transactions.

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