Benefits of Forming a Nevada LLC

If you’re starting a business and forming a limited liability company (LLC), you may be considering the best state in which to base your business. You may have heard that some states, such as Nevada, have more favorable LLC laws. 

This is true, but is Nevada the right location for your LLC? Read on to learn what factors to consider before deciding where to form your LLC. 

Nevada LLC Benefits

Nevada offers a few advantages for LLCs. There is no state income tax for LLCs, corporate or franchise taxes, or personal state income tax. Nevada LLC filing fees are higher, at $425, and they have annual filing fees, but many business owners think the tax and other benefits outweigh this. 

Nevada also has substantial liability and privacy protection, no operating agreement or annual meeting requirements, and business-friendly courts. Here’s a list of Nevada’s LLC benefits:

• No state income taxes
• No state corporate taxes
• No franchise taxes
• No operating agreement requirement
• No annual meeting requirement
• Good personal liability protection for LLC owners
• No information sharing with the IRS
• Privacy protection for LLC owners
• The judicial system relies on case laws to settle disputes

But Is It Best to Form Your LLC in Nevada?

Unless you’re planning to relocate to Nevada, forming your LLC may not be advantageous, mainly because of the foreign LLC rule. A foreign LLC is an LLC doing business in a state other than the one originally registered. 

States have different definitions for doing business in the state; review the secretary of state’s guidelines. Generally, you’re considered to be doing business in the state if:

• You have a physical presence of any kind in that state, including owning property in your business name
• You have employees in that state
• You regularly meet with clients, managers, investors, or business partners in that state.
• You’re licensed to do business in that state.

If you do business in your home state but register your LLC in Nevada, you’ll also need to register as a foreign LLC in your home state. This means you’ll have to do twice the paperwork and abide by all regulations and tax laws in both states.

If you form an LLC in Nevada, for instance, yet mainly do business in Florida, you’ll have to register as a foreign LLC in Florida and abide by both states’ laws and tax regulations. 

Considering all this, the wisest option is to form your LLC in your home state.

In Closing

Nevada offers several benefits to LLC owners, but if you’re not planning to relocate to Nevada, it may not be the best choice for you. It’s highly recommended that you speak with your tax advisor to weigh your options. 

It’s important to get your LLC off on the right foot to give your business the best chance to be successful.