Key Takeaways

  • A Nevada S corporation combines the liability protection of a corporation with the tax advantages of pass-through taxation.
  • Forming a Nevada S corporation requires meeting state incorporation rules and IRS S corporation eligibility requirements.
  • Nevada has no state corporate income tax, franchise tax, or personal income tax, making it an attractive state for S corporations.
  • The incorporation process involves filing Articles of Incorporation, appointing a registered agent, paying multiple state fees, and filing an initial list of officers.
  • To obtain S corporation status, you must file IRS Form 2553 after your Nevada corporation is formed.
  • Compliance includes filing annual lists, renewing the state business license, and maintaining corporate records.
  • Common mistakes include missing IRS deadlines for S election, exceeding shareholder limits, and failing to meet Nevada naming or officer requirements.

When forming a Nevada S-Corporation, you will need to be aware of many required steps and items in order for your formation to be successful. You will need to consider:

  • Fees and state processing times - When forming a corporation, you will need to pay filing fees, which will be based on the number of shares of stock your corporation plans to issue. You will need to pay fees for multiple steps of the formation steps, including fees on the Articles of Incorporation, registered agent acceptance, the initial list of officers filing, name reservation, filing your directors and registered agents, and for your state business license application. Expedited processing is available for most forms, though the associated fees will be significantly higher.
  • Determine which tax designation will work best for your company - When forming a corporation, you will need to determine whether a c-corp or s-corp designation will be the best for your company. One of the determining factors will be the number of stock shares that you plan to issue for your company. A c-corporation can issue an unlimited number of shares, while an s-corp will have a limit on the number of shareholders and allow just one class of stock to be issued. Another difference between the two is when you determine taxes. C-corporations will have their individuals taxed at a shareholder level, and s-corporations will use pass-through taxation.
  • Verify personnel requirements - Every state will have rules and regulations involving the personnel required to allow a business to incorporate. You must include the names and addresses of each member of the board of directors and trustees, and all personnel must be stated to be at least 18 years of age. You also must have at least one director named, though this person can hold multiple positions.

Nevada S Corporation Benefits

Choosing a Nevada S corporation offers several advantages, especially for small to medium-sized businesses seeking tax efficiency. Nevada does not impose state corporate income tax, franchise tax, or personal income tax, meaning shareholders typically only pay federal taxes on their share of corporate income. This tax environment, combined with the federal S corporation pass-through taxation, can result in significant savings compared to C corporations. Additionally, Nevada’s strong privacy laws allow the use of nominee officers and directors, enhancing confidentiality. Businesses also benefit from limited liability protection, which shields personal assets from corporate debts and legal claims.

Your Articles of Incorporation is one of the most important pieces that will be filed for your incorporation, and this document has many requirements that will need to be met in order to be approved and your business allowed to be incorporated. Your articles of Incorporation must:

  • Designate a registered agent. The registered agent cannot be the corporation, and they must have a valid Nevada street address to be able to receive legal communication.
  • Name the corporation.
  • Include the numbers of shares of stock that the corporation plans to issue.
  • Include the par share value per share of the stock.

Steps to Elect S Corporation Status in Nevada

Forming a Nevada S corporation is a two-step process. First, you must create a standard Nevada corporation by filing Articles of Incorporation with the Nevada Secretary of State, paying all applicable fees, and appointing a registered agent. Once your corporation is legally formed, you must elect S corporation status with the IRS by filing Form 2553, Election by a Small Business Corporation. This form must be filed no later than two months and 15 days after the start of the tax year in which the election is to take effect, or any time in the preceding tax year. All shareholders must sign the form to confirm agreement. Missing this deadline can delay S corporation tax treatment until the following tax year.

The list of officers has specific requirements as well that will need to be met including:

  • The list must be filed exclusively online.
  • The list must include the corporation's name, the registered agent's name, and the tax filing period it covers.
  • If there is a reason for exemption from required fees for business licenses, the information should be stated here along with any supporting documentation.
  • The list must indicate if the corporation will be traded to the public, the Central Index Key number, and the names and addresses of the president, secretary, and director.
  • Subsequent lists filed will be referred to as annual lists.

Naming your corporation is an essential step in the process of incorporating. When deciding on your name, you will be required to follow specific practices, such as:

  • The name must indicate that it is a corporation in the name, such as by adding "corporation," "incorporated," "limited," or some relevant abbreviation.
  • Your name will need to be able to be distinguished from all other existing corporations in the state of Nevada, including those on reservation.

As a Nevada business, you will be responsible for filing corporate reports and paying state taxes. Before a business can officially open in the state of Nevada, it will need to file for an employer identification number for taxes. When opening a corporate bank account, the EIN will often be required as well.

In addition to paying taxes, best practices for your business include keeping corporate records and creating regular annual reports that have been set up by your bylaws. While this type of reporting is not required in the state of Nevada, such reports will help you maintain accurate records and protect the legality of your corporate status.

Common Mistakes to Avoid

When forming and maintaining a Nevada S corporation, avoid these pitfalls:

  1. Missing S Election Deadline: Late filing of IRS Form 2553 can cause your corporation to default to C corporation status for the year.
  2. Exceeding Shareholder Limits: An S corporation may not have more than 100 shareholders, and all must be U.S. citizens or residents.
  3. Issuing Multiple Stock Classes: S corporations can only issue one class of stock.
  4. Neglecting Annual Filings: Missing the annual list or business license renewal can result in penalties or loss of good standing.
  5. Poor Record-Keeping: Failing to maintain corporate records may lead to loss of liability protection.

Ongoing Compliance Requirements

To keep your Nevada S corporation in good standing, you must meet several ongoing obligations:

  • Annual List of Officers and Directors: File online with the Secretary of State each year, listing key officers and paying the associated fee.
  • Business License Renewal: Renew the Nevada State Business License annually to avoid penalties.
  • Federal and State Filings: File federal informational tax returns (Form 1120-S) and issue Schedule K-1s to shareholders. While Nevada has no state corporate tax, you must still comply with IRS requirements.
  • Corporate Records: Maintain meeting minutes, shareholder agreements, and accurate financial records to preserve liability protection.
  • Registered Agent Maintenance: Keep a valid Nevada registered agent on file at all times to receive service of process and state notices.

Frequently Asked Questions

1. What is a Nevada S corporation?

A Nevada S corporation is a standard Nevada corporation that has elected pass-through taxation with the IRS, allowing profits and losses to be reported on shareholders’ personal tax returns.

2. How do I elect S corporation status in Nevada?

Form your Nevada corporation first, then file IRS Form 2553 within the required deadline, signed by all shareholders.

3. Does Nevada tax S corporations?

No, Nevada has no state corporate income tax or personal income tax. However, you must still file federal returns and renew the state business license annually.

4. Can a Nevada LLC elect S corporation status?

Yes, an LLC can elect S corporation taxation with the IRS if it meets eligibility requirements. This is done by filing IRS Form 2553 after LLC formation.

5. What are the shareholder requirements for a Nevada S corporation?

An S corporation may have up to 100 shareholders, all of whom must be U.S. citizens or residents. Only one class of stock may be issued.

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