Nevada LLC Law: Everything You Need to Know
Nevada LLC law makes the state of Nevada a desirable place to form and operate a business. In fact, Nevada is known as a "pro-business" legal and tax environment.3 min read
Nevada LLC law makes the state of Nevada a desirable place to form and operate a business. In fact, Nevada is known as a "pro-business" legal and tax environment. In order to form an LLC in Nevada, you will need to file all required paperwork and meet each requirement. Since Nevada LLC law offers members certain benefits, businesses often form in this state — even if their primary location is in a different state.
Alleged Reasons to Form an LLC or Corporation in Nevada
When forming an LLC in Nevada, the only way to avoid paying income taxes is if all of the entity's revenue is derived in the state of Nevada or in states that do not collect income tax. Under the United States law, if you form an LLC in a state that does not tax income but you derive income in a state that does, that secondary state can tax all of the income made within that state.
For example, if you are a Nevada-based LLC, but you conduct business in Arizona, you will be required to pay taxes to Arizona. This means that any income derived in the state of Arizona would be subject to income tax. If you ignore these requirements, you could end up in court and face legal penalties.
Entity Formation Fundamental Concept
When forming your LLC, do so in the state where the entity is located — unless it makes sense to register elsewhere. If you plan to do business in multiple states, it is recommended that you compare each state's legal attributes. Unless there is a compelling reason not to, it is suggested that you form an LLC and do so in the state that offers the best entity law.
Nevada LLC Name Requirement
One of the most important steps will be naming your LLC. Your company's name must end with "limited liability company" or an appropriate abbreviation. Your desired name cannot be similar to any other reserved name. There are also some words that are forbidden based on certain licensed professions or businesses. These include, but are not limited to "accountant" or "engineer."
Member/Manager Information of LLCs
When you form an LLC, owners are referred to as members. In order to operate an LLC, you will need a minimum of one member or manager, though you can have as many members or managers as you'd like. Unlike some states, Nevada does not require members or managers to live in the state itself. In order to successfully form an LLC, you must be 18+ years old and file your articles of organization.
Requirements for the Articles of Organization
You can find all of the requirements for forming the articles of organization under The Nevada Limited Liability Company Act — Nevada Revised Statutes, Chapter 86. Once you file the articles of organization with the secretary of the state, your LLC will become a separate legal entity. All of the required forms can be found on the state's website.
The Benefits of Forming a Nevada LLC
When deciding where to register your LLC, Nevada offers a range of state and federal benefits. In fact, over the past few years, Nevada LLCs have become as well regarded in many ways as Delaware LLCs. Just some of the core benefits include:
- No corporate or personal income tax
- No franchise or admissions tax
- No estate or gift tax
- High levels of privacy
In addition, the United States Treasury allows LLC owners to purchase additional savings per annum.
Significant Asset Protections When You Use a Nevada LLC
Under Nevada LLC law, you are not required to file a list of company assets — nor do you need to list and file member names with the state. As a member or manager, you will not be held responsible for the company's liabilities. However, there are exceptions.
Since there will not be any official records of your assets outside of filings with the IRS (which are protected by law), your assets will not be linked to you. Technically, you could be a professor in another state yet have millions put away in private businesses, mutual funds, or other assets in a Nevada-based LLC.
Understanding Nevada LLC law before you form your LLC can help you protect your business and assets. If you plan to start an LLC in Nevada, be sure to practice due diligence. Also, seek a professional opinion if required.
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