Selecting the right business structure is one of the most vital decisions business owners have to make when setting up a new business. The different factors to consider include the liability of the members, the taxing criteria, flexibility, and the management structure.
Though the characteristics vary for different business forms, an LLC combines the aspects of corporations and partnerships. Some advantages that come with owning an LLC include personal property protection, tax benefits, fewer administrative procedures, and the flexibility to amend or make changes to the Operating Agreement as things change within the business.
Therefore, if you wish to establish an LLC in Nevada, here are the basic procedures to follow:
Also, feel free to follow along with our video on How to Start an LLC in Nevada (2022).
6 Steps to Forming an LLC in Nevada
Here are the steps to follow when creating an LLC:
1. Name LLC
When choosing a business name, be sure to follow Nevada's state naming guidelines. They include:
- The business name must have the phrase “limited liability company,” “LLC,” or “L.L.C.” appended at the end.
- The name cannot cause confusion with a government agency (i.e., FBI, Treasury, State Department, etc.).
- Must be unique from the other LLCs in the state
- Make sure the name is available in Nevada. You can check if your preferred name is available for use by conducting an entity search on Nevada's Secretary of State's website. You can also reserve the name by completing a Name Reservation Form so that other entities do not use it before you file your paperwork. However, this only lasts up to 90 days.
- Choose a name with an available URL to ensure your LLC has a web presence.
2. Appoint a Registered Agent
Appointing a registered agent is a standard requirement across all states during LLC formation. A Registered Agent is a person or business that is solely responsible for sending & receiving critical legal documents on your behalf, such as tax forms, lawsuits, government correspondence forms, and more.
Registered Agent must be a full-time resident in Nevada or a service authorized to conduct business in Nevada with a physical business address in the state. This may be yourself, an employee, or a registered agent service. However, being your own registered agent is not advisable, especially if you travel a lot for work. In that case, it's best to hire a reliable third-party service that can be available at all business hours.
3. File Articles of Organization
The Articles of Organization are the legal document that creates an LLC in Nevada. It should be filed with the Nevada Secretary of State online, by mail, or in person. The filing fee costs $75.
Here are the essential details to provide in the Articles of Organization:
- Your LLC name
- Name and address of your selected registered agent
- Whether your LLC is member-managed or manager-managed, the member's or manager's names and addresses, and the member's control when it comes to daily operations and business decisions in a member-managed LLC. In contrast, a manager-managed LLC places this obligation in the hands of an elected professional manager or managers.
- Dissolution date. Most LLCs are indicated as perpetual unless there's a different business objective.
In addition, you must also file:
- Initial List of Managers and State Business License Application for $150
- Certificate of Acceptance by Appointment by Registered Agent for $200
4. Create an Operating Agreement
An operating agreement is an internal legal document that outlines an LLCs ownership and operating procedures. Though it's not legally required in Nevada, having an Operating Agreement is considered good practice for businesses to ensure everyone knows what to expect and what is expected of them in various situations.
An Operating Agreement can also act as a roadmap regarding future business functions, and outline how day-to-day internal operations should be conducted. As a whole, Operating Agreement’s ensure that both owners and employees know what to expect from the company and vice versa.
For instance, it could be beneficial in the case of an owner(s) departure by outlining exactly what should be done in that situation. Operating Agreements can also act as a reference document in the case of future lawsuits.
Usually, the general state law applies if you have no Operating Agreement, which could end up hurting your business in the long run.
An operating agreement entails the following:
- Organization: Who members are, their obligations, when & where the business was created, and the ownership structure.
- Management & Voting Structure: If your LLC is member-managed or manager-managed, and the voting procedures.
- Capital Contributions: Which members support the LLC, their individual contributions, and the future funding plans.
- Distributions: How profits & losses are shared between members.
- Membership Changes: Process for adding and removing members or transferring ownership shares.
- Dissolution: When LLC may be dissolved.
5. Obtain Nevada LLC EIN from IRS
An Employer Identification Number (EIN), also known as Federal Tax Identification Number, serves as the social security number for a business. It allows the Internal Revenue Service (IRS) to identify and keep track of your business's tax status. Also, it's required by the state to:
- Open a business bank account
- Hire employees
- File taxes
IRS provides EIN free of charge to a business owner after forming the company. You can apply online through the IRS website or by mail. Also, note that sole proprietorship owners must get a new EIN when converting to an LLC.
6. Obtain Additional Licensing in Nevada
All LLCs operating in Nevada must obtain a Nevada Business License and renew it annually. You can apply with a licensing or regulatory agency. The initial licensing fee costs $200 plus formation fees, and the first application must be included with the Articles of Organization filings. The renewals must be submitted with the annual report.
In addition, all LLCs selling physical commodities in Nevada must have a Sales Tax Permit or Seller's Permit. There is no fee associated with obtaining a Seller’s Permit in Nevada.
Also, depending on your business operations and region, you might be required to obtain additional licensing. Therefore, it's best to check with your local government office for all the permits you should apply for.
Using professional services is more efficient and cost-effective. For instance, if you opt for Incfile’s services, they’ll take care of the state, local, and federal licensing for a flat fee of $99.
Use IncFile to Complete Formation Process
You can bypass these six steps by using a third-party service such as IncFile. The Gold Plan offers the following:
- It covers filing state fees
- Preparing & filing articles of organization
- Unlimited name searches
- Free registered agent service for the first year
- EIN business tax number
- IRS form 2553
- Operating Agreement
- Banking resolution
- Lifetime company alerts
- Business banking account
- Business tax consultation
- Online access dashboard
- Unlimited phone & email support
Steps After Forming Nevada LLC
Below are some additional obligations to perform after completing the formation process:
Open a Business Bank Account
Opening a business bank account separates your personal assets from business assets. It's important because:
- It keeps personal assets safe from potential business lawsuits.
- Ensures simplified bookkeeping giving you an easy time during tax time.
Below are the essential documents needed when opening a business account
- LLC Articles of Organization
- Your LLCs operating agreement
- Resolution by members to open a business bank account
- LLC's EIN
Get a Business Credit Card
A business credit card keeps business expenses separate to avoid confusion, hence efficient tax return reporting and filing. It also builds your business credit score, making you eligible for business loans.
Hire an Accountant
Hiring an accountant generally improves efficiency in the management of finances. With a professional accountant, you can track losses and profits and determine the necessary cause of action to enhance productivity. Also, this is a tax expert who understands the legal strategies to save money on taxes and avoid penalties or fines.
Get Insurance for LLC
Here are three types of insurance:
- General Liability Insurance: A general business insurance policy covers common risks such as customer property damage or injury.
- Professional Liability Insurance: Protects professional businesses such as lawyers against claims like negligence made by a client.
- Workers Compensation Insurance: Provides medical assistance and wage benefits to injured employees on duty.
Fulfill Nevada Tax Filing Requirements
LLCs in Nevada must report income to the IRS annually using the forms below:
- Form 1065 Partnership Return: For most multi-member LLCs
- Form 1040 Schedule C: For most single-member LLCs
Below are some types of taxes imposed:
- Seller's Permit: Register through the Nevada Tax Center website
- Modified Business Tax: Apply for businesses paying a minimum of $50,000 in wages each quarter.
- Commerce Tax: Levied on businesses with gross annual revenue of over $4,000,000.
- Employer Taxes: All LLCs with employees must register for Unemployment Insurance Tax and Employee Withholding Tax.
Also, LLCs must file the Nevada LLC Annual Report. It's also known as an annual list and can be filed online, by mail, or in person. A $150 filing fee is due by the end of the LLCs anniversary month. Nevada charges a $100 penalty for missing the filing deadline.
This only applies if the federal government regulates your business. The LLCs that are commonly required to comply with this step include:
- Fishing & Wildlife
- Firearms & ammunition
- TV broadcasting
- Nuclear Energy
An LLC is an uncomplicated business structure embraced by many entrepreneurs in Nevada. Therefore, if you're looking to start one, above is a comprehensive step-by-step guide to getting it off the ground. While at it, remember to fulfill all the local, state, and federal obligations that apply to LLCs.To avoid missteps during this initiation process, it'd be best to invest in a reliable third-party service like IncFile.