Why form a Nevada LLC? Recently Nevada has improved their LLC statutes making it the most favorable state in which to form an LLC.
Let’s list some of the benefits.
- First, the names of the members, or corporate shareholders for that matter, and CEO are not filed in the public records in Nevada.
- Nevada has zero business tax on corporations or LLCs.
- They also have no personal income tax.
- Nevada does not share financial records with outside agencies.
- You do not have to reside in Nevada to form an LLC there.
- Nevada offers protection for acting members and managers or corporations and LLCs.
- A one-person LLC offers charging order protection – so when an owner is sued the law can protect the member from losing the company or the assets inside.
- LLCs and corporations in Nevada can offer stock or LLC membership in exchange for services, work, real estate, cash and more.
- LLCs are flexible in terms of management – that is, you don’t even need to be a member or owner of a Nevada LLC in order to have 100% of the management control.
- Nevada offers flexible profit distribution regulations to LLCs.
- And finally, Nevada minimizes the risk, time and cost of potential commercial litigation.
As you considering forming a Nevada LLC, let’s first discuss exactly what an LLC is.
An LLC, or “Limited Liability Company”, gives limited liability to its owners (also known as “members”), and offers a pass-through tax structure by default. With a pass through tax structure the business does not pay taxes on its own income, instead, any gains or tax deductions are passed through to the owners and are filed on their personal tax returns.
Furthermore, you get to choose the tax treatment of your Nevada LLC. You can choose to have it treated as a be treated as a single member or sole proprietorship or partnership for tax purposes. It can be taxed as a C corporation or S corporation.
As with any state, there are some guidelines you must follow when setting up an LLC in Nevada, but there are also some significant advantages. For more information, read our article on Nevada LLC advantages and disadvantages.
Let’s detail some of the benefits of forming an LLC in Nevada:
#1. Members, shareholders, that is, owners as well as CEOs, and non-registered officers are not a matter of public record. Nevada provides privacy for business and corporate owners.
In Nevada, you can nominate a “nominee Director” or “Nominee manager” that will act as the public face of your company, should you so wish. Because Nevada Corporate law states that the names of the manager and some of the corporate officers and directors must be publicly filed, your nominee will have no real control but will show up in the public records. As a nominee (meaning “in name only”), this person does not necessarily have to have an authoritative position in the company. Using this option helps to add further anonymity for those associated with companies in Nevada. Naturally, this service is to be used for ethical and legal purposes only.
Owners of privately held Nevada LLCs and corporations do not need to have their names disclosed in the public records. In doing this, members and shareholders help protect themselves from lawsuits as the public cannot necessarily tie them to the company. If a member or shareholder has a nominee he can remain out of the public records.
Reason #2. Nevada has no business or corporate taxes. One of the most appealing aspects of forming an LLC in Nevada, is that Nevada is a zero income tax state.
Along with this, here are some other tax benefits Nevada offers:
- Zero corporate tax
- Zero franchise tax
- Zero stock tax
- No information sharing with outside agencies
Reason #3. Nevada does not have personal income taxes. For single membership and partnership LLCs, the income report (including gains and losses) is passed through to the individual members. Since Nevada does not require a state income tax, Nevada resident members of LLCs are able to avoid this extra taxation.
Accordingly, combined state and federal taxation averages around 45%. When you consider forming an LLC, where the taxes go straight to the members, it is important to consider your state income tax in addition to the federal taxation rate. Depending on which state you reside in, these tax breaks can be significant. As a flow-through entity you will pay taxes where you live but there will not be additional fax filings in Nevada.
Reason #4. Nevada does not share business or personal record with outside agencies. Since Nevada does not have an information sharing agreement with the IRS, this keeps a conflict between a state and federal computer from creating a red flag.
Reason #5. You can live anywhere and own a Nevada LLC. Aside from being 18 and older, there are few regulations about who can form a Nevada LLC. This makes forming an LLC in Nevada an ideal choice for those seeking to take advantage of Nevada’s asset protection benefits.
You can be located in another state, or even another country, and still form a company in Nevada. We also offer a Nevada office program giving your company a Nevada address and a phone number answered during business hours.
Reason #6. Protection for acting managers, officers, and directors. “Piercing the corporate veil” does not generally apply in Nevada.
For acting members of corporations, Nevada offers immunity from lawful acts of the corporation. An individual can be protected from personal liability while holding a position in an LLC as long as it does not involve fraud or breach his fiduciary duties. Acting members include anyone who manages day to day operations, which includes anyone who makes decisions or votes on behalf of the company.
Managers and acting members of LLCs can be protected to the same extent, however, the decision can be left to majority vote of the owners of the LLC. In the case of most LLCs, no person can be held personally liable for lawful acts of the business.
Reason #7. Owners of LLCs can offer stock in exchange for a multitude of things. If you are a member of an LLC you have the option of receiving or offering membership in your company for services, real estate, leases, and property. Not all types of LLCs support this option, but it is still worth considering as an advantage. Additionally, Nevada corporations can sell, hold, and transfers its own corporate shares.
Reason #8. LLCs in Nevada are not subject to formal management regulations like corporations. Corporations are run by directors who oversee major decisions of behalf of the corporation, and officers who uphold and run the business on a day-to-day basis.
LLCs, however, are not generally held to the same stringent annual formalities as corporations.
Reason#9. Nevada LLCs have flexible profit distribution options. While there is no limit on the number of members allowed in any particular LLC, there are also no regulations on distributing profits from the LLC. One person can own 10% and receive 80% of the profits and have 100% of the control, for example, if that is what is written in the operating agreement.
Reason #10. The risk, time, and cost of commercial litigation is significantly minimized in Nevada. By minimizing the need for extensive LLC or corporate formalities, Nevada law helps minimize the risk of penetrating the company shield. And, with predictable commercial rulings, the risk of litigation is further decreased. Finally, Nevada offers priority business hearings to reduce the time and expense of litigation.
Nevada offers a highly regarded business legislation. The corporate mindset of Nevada makes it appealing to many looking start a business. Offering low taxation, privacy, and protection, many agree that Nevada is most favorable state in which to form an LLC.
For More Nevada LLC Information
If you would like to form a Nevada LLC or have questions about the Nevada Office Program or Nominee Privacy Service, call Companies Incorporated at 1-888-444-4812 or complete an inquiry form on this page.
