Nevada is a very popular and somewhat hyped state when it comes to forming LLCs. A Nevada LLC is formed when the Nevada Secretary of State approves the submitted Articles of Organization. But of course, there are more steps and finesse involved in knowing how to form an LLC in Nevada.
Here are the things to keep in mind when forming an LLC in Nevada.
1. Choosing The Nevada LLC Name
If you’re ready to start an LLC, you probably have a name in mind already. However, it’s equally important to see if you can use that name in the state. Nevada requires LLCs to have names that are unique and distinguishable from other business entities on record.
This means you can’t use a name that is the same as, or very similar to, another entity already registered with the state of Nevada. Start by checking the name availability using the Nevada Secretary of State business name database. This will give you a good idea of whether the name is available or if problematic similar names exist.
It’s also useful to check the USPTO website for possible trademark issues or infringements.
NV LLC Name Designators
Every LLC in Nevada must end its name with a proper designator. The most popular choice is LLC, but the following options are available as well:
- Limited-Liability Company
- Limited Liability Company
- Limited Company
Nevada allows the word Limited to be abbreviated to Ltd. and Company to be abbreviated as Co. This means you can also use Ltd. Liability Co., Limited Liability Co., or similar variations for the designator.
Name Reservation Request (Optional)
You can temporarily reserve a name for your LLC in Nevada without fully setting up an LLC. Once approved, name reservations are valid for 90 days. The filing fee for this form is $25. This, and related forms are available on the SoS website.
Several filings can be completed online using the state’s SilverFlume business portal.
Using A Fictitious Business Name (Optional)
Foreign LLCs (companies not native to Nevada) may sometimes need to use a fictitious business name to operate in Nevada. There can be several reasons for this, including the original business name not being available in Nevada. One way around this problem is to use a fictitious business name, also called assumed name or trade name.
To put it simply, your LLC would be DBA (Doing Business As) its assumed name. Using a fictitious name requires registering the name with the county clerk of the county where your LLC is doing business. Each county can have its own specific fees and requirements, so it’s best to check with the local requirements.
2. Appointing A Registered Agent In Nevada
LLCs in Nevada are required to have a Registered Agent for service of process in the state. Legal documents like lawsuits, summons, and subpoenas for the LLC get delivered to the registered agent.
Registered Agents must have a physical street address in Nevada. Alternatives like PO Box addresses aren’t accepted. It is also useful if the agent can maintain conventional working hours, in case the service of process arrives.
Given these requirements, the Nevada LLC Registered Agent can be:
- Any individual who is a resident of the state
- A business entity authorized to do business in Nevada
The business entities also include commercial registered agents. These are a popular option for many people forming an LLC in Nevada, mostly because they can professionally handle the requirements.
3. Filing Nevada Articles Of Organization
A Nevada LLC comes into existence once its Articles of Organization get approval from the Secretary of State. It’s possible to file the Articles of Organization online or through postal mail. The cost of filing the Articles of Organization is $75. However, Nevada also requires filing additional forms with the Articles of Organization, so the actual cost is higher.
Filing online requires the use of Nevada’s SilverFlume, which is the NV government’s system for managing businesses. The system is useful and easy to handle. NV LLC Articles of Organization filed online are approved almost instantly.
SilverFlume will also present the other forms and fees needed to complete filing the Articles of Organization. Having everything in one place makes things more convenient.
To file Articles of Organization via mail, you’ll have to download and print the Articles of Organization. Nevada SOS Website offers a complete packet for NV LLC formation. This includes:
- Articles of Organization
- Initial List of Managers/Managing Members
- State Business License
All of these are different forms and have separate filing fees. However, they must be submitted together. Starting with the Articles of Organization, the filing fee is $75.
The Forms For Starting An LLC In Nevada
Most states create an LLC once the Articles of Organization are approved. That is technically true for Nevada as well. However, the state requires filing separate forms along with the articles of organization, each with its own filing fee.
Filing for the Initial List of Managers/Managing Members requires a fee of $150.
The State Business License requires a fee of $200.
You’ll have to file these forms (and their fees) together with the Articles of Organization. As such, the total cost of setting up a Nevada LLC is $425.
If you’re filing online, SilverFlume will take you through the necessary steps to form the Nevada LLC. For filings via mail, the forms are included in the complete packet, as described above.
4. Get An Operating Agreement
Nevada law doesn’t require LLCs to have an operating agreement. However, it is highly recommended that you put an agreement in place for your LLC. Having an Operating Agreement in place shows that the LLC is being run professionally and is indeed a separate entity from its owner(s).
You can make the agreement as detailed as you prefer. Some even equate the agreement to being the constitution of the company. As such, you can include various company policies, ideas, and other similar arrangements in the agreement.
Multi-member LLCs may also include the roles, responsibilities, and powers of each member. The ownership of the LLC, and what part is owned by each member can also be included.
As an internal document, the operating agreement doesn’t have to be filed with any government department or agency. However, each member should have a copy of the agreement with them.
5. Getting A Federal Tax ID (EIN)
The EIN (Employer Identification Number) is a federal tax ID issued by the IRS. There is no filing fee for getting an EIN. It’s best to file for the EIN only after the LLC has been approved by the Nevada Secretary of State.
You are required to get an EIN if the LLC intends to hire employees or has more than one member. It’s better to get one since it comes in handy for more than just taxation. For example, opening a business bank account or credit card is a breeze if you have an EIN.
The quickest way to get an EIN is to file for it online. However, if you don’t have an SSN or if the Nevada LLC is owned by another business entity, filing online may not be an option.
In these cases, you’ll have to download and fill Form SS-4. Once completed, this form can be filed via fax or postal mail. Fax works faster and has a processing time of a few days. Forms sent via postal mail can take several weeks to process.
6. File The Annual List (Annual Reports)
All LLCs in Nevada must file an Annual List with the state. The first annual list is filed along with the Articles of Organization. After that, the annual report list must be filed every year. The last date to file the list is the last day of the anniversary month of the organization of the Nevada LLC.
For example, if your LLC got its approval on June 15, 2020, the filing date of the Annual List is by June 30, 2021 (and so on, annually).
The Annual List (annual report) includes the listing of the officers, directors, and the registered agent of the LLC. The filing fee for the Annual List is $150.
You can file the Annual List online using NV SilverFlume or download the relevant form from the Secretary of State website.
7. Business Licenses, Permits, And Taxation
LLCs in Nevada have to get a Nevada State Business License, which costs $200, renewed annually. You file for the license with the Articles of Organization. In most cases, the renewal for the license is filed with the Annual List. Adding that to the $150 Annual List filing fee, the total cost of this filing comes to $350 ($200 business license renewal + $150 annual list filing).
Additionally, your LLC might have to consider additional licenses are permits, which depend on the city/county of operation of the business. A good way to check for licensing requirements is through the Common Business Registration on SilverFlume.
It’s worth noting that apart from the licensing required by the city/county, the state might impose some taxes as well. The taxation often depends on the industry and revenue of your business, and yes, it’s separate from the $200 Nevada Business License.
SilverFlume is fairly expansive and includes areas like state taxation and registration where necessary. For example, you could get the Nevada Sales Tax Permit for your LLC through SilverFlume.
As for federal taxation, LLCs are pass-through entities by default. Your income from the LLC can be reported with your personal returns filed with the IRS. However, things like structuring your company and the number of members can have an impact on federal taxation requirements.
You could also have the Nevada LLC taxed as an S-corp or C-corp. Proper tax planning can save you money, while also keeping the authorities happy. For a lot of businesses, it is usually helpful to seek the services of a professional in helping manage taxation, licensing, and business requirements.
Should YOU Register Your LLC In Nevada?
Nevada is often hyped as a wonderful destination for setting up your LLC, irrespective of where you live. The truth to that claim is questionable, especially if you aren’t a resident of the state.
Residents of Nevada looking to form an LLC should go ahead and file for the company in their state. Those living outside Nevada should remember that there will be complexity in taking such a decision.
If you don’t live in Nevada, after forming the LLC in Nevada, you’ll also have to form a company/LLC in your own home state. Except now, the company in your home state will be formed as a Foreign LLC (since the LLC is domestic to Nevada). Foreign LLCs usually have to pay higher fees as compared to domestic LLCs.
So you’ll now be managing two LLCs and have to pay for their fees, reports, etc. in each state.
Some people claim that Nevada LLCs enjoy lower taxation, which isn’t quite the truth. Even if you managed to save taxes in Nevada, remember that you still have to pay taxes in your home state as well. So, once you transfer that money to your home state, you’ll have to pay tax on it, within the laws of your state. Therefore, any advantage Nevada had to offer is moot.
Besides, federal taxation is relevant for each state, so there are no tax savings to be made there.
My opinion is, if you’re a resident of Nevada, or live in another state and have a legitimate reason to start a Nevada LLC, by all means, do it. However, if you don’t live in Nevada and want to register an LLC simply for the purported benefits, think again. The complexity and taxation might not seem worth the effort once you actually get into it.