How to Start an LLC in Nevada (May 2024 Update)
Limited liability companies (LLCs) have become an increasingly popular choice for small business owners in recent years. LLCs provide business owners with personal asset protection and flexibility while avoiding some of the more complex compliance requirements of a traditional corporation.
Nevada has emerged as one of the most business-friendly states for LLC formation, thanks to its tax advantages, flexibility, and privacy protections. Forming your LLC in Nevada can help limit personal liability, allow pass-through taxation, and keep your personal information off public records. This comprehensive guide will walk you through the entire process of starting an LLC in Nevada.
Benefits of a Nevada LLC
Unlike most states, Nevada does not have a state income tax on pass-through entities like LLCs. This saves Nevada LLC owners a significant amount on potential state taxes every year. Nevada also offers strong personal asset protection, flexibility in management structure, and privacy protections that aren’t available in many other states. Business licensing fees in Nevada are lower than in neighboring states like California, making it more affordable to start and maintain your business entity.
Choosing a Name
The first step to starting your Nevada LLC is choosing an official business name. Nevada law requires that LLC names include words like “Limited Liability Company” or an abbreviation like “LLC” or “L.C.” The full list of options you can use is:
- Limited Liability Company
- Limited-Liability Company
- Limited Company
- Limited
- Ltd.
- L.L.C.
- LLC
- LC
When selecting your name, make sure it complies with Nevada’s naming guidelines and doesn’t resemble any existing business names too closely. You can check name availability using the Secretary of State’s business database. If the name you want isn’t available, consider alternatives that convey similar branding.
You also have the option to reserve your preferred LLC name with the state for up to 90 days for a $25 fee. This prevents anyone else from using your name during that period.
After settling on your official LLC name, many businesses choose to operate using a “Doing Business As” name, or DBA. Your DBA name doesn’t need to resemble your official LLC name – it’s under this name that you’ll market and promote your business. Keep in mind that DBAs need renewed every five years in Nevada.
Appointing a Registered Agent
Nevada law requires all LLCs to appoint a registered agent to accept legal communications on behalf of the business. This agent must have a physical street address in Nevada, not just a P.O. Box. The registered agent accepts lawsuit notifications and other important legal documents sent by mail.
You can choose to act as your LLC’s registered agent yourself if you meet the address requirements. However, most LLCs prefer to hire a professional registered agent service instead. These services receive and digitize documents on your behalf, scanning them directly to you via email for much faster notification. This prevents any disruption to your business operations if legal communications arrive while you’re traveling or on vacation. Using a professional registered agent service also keeps your home address private by listing their business address on public records associated with your LLC instead.
Filing Articles of Organization
To legally form your LLC with the Nevada Secretary of State, you must file Articles of Organization, which acts as the formal creation document for your business. Preparing your articles of organization before filing through the state’s electronic portal SilverFlume can help smooth the process. The articles require you to list details like your registered agent, business activities, management structure, dissolution date, and the names of your business’s managing members or managers.
This filing also establishes whether your LLC will be member-managed (by its owners) or manager-managed (by assigned managers). You must name all initial managers or managing members and provide their business addresses.
Nevada also requires new LLCs to file a separate initial list of managers or managing members. This document essentially combines the first year’s annual report and the state business license application into a single $150 filing.
If you have all required documentation in order, new Nevada LLCs can usually complete state filings within 1-3 business days.
Creating an Operating Agreement
Unlike many other states, Nevada doesn’t require LLCs to have an internal operating agreement. However, having an operating agreement is still highly recommended for all Nevada LLCs even though it doesn’t get submitted to the state. This document lays out all the rules and regulations for how your LLC will manage internal affairs.
Here are some key items to cover in your operating agreement:
- Member contributions & percentages
- How new members can be admitted
- How existing members can transfer or divest ownership
- Profit and loss distribution
- Member voting rights & decision-making procedures
- Rules for holding meetings
- Management roles and structure
- Dissolution procedures
Having documented operating rules and processes prevents disputes down the line and gives your business more legitimacy in the eyes of courts and banks if any conflicts do arise. Get your operating agreement signed by all members once it’s complete.
Obtaining an EIN
Nearly every new LLC needs its own Employer Identification Number (EIN) from the IRS to open a business bank account and handle tax reporting properly. An EIN also prevents you from using your Social Security Number, keeping your personal information more private.
Sole proprietorships can use their owner’s SSN, but for any LLC with more than one member, you must obtain a free EIN from the IRS online.
Single-member LLCs aren’t required to get an EIN, but many still choose to do so for simplicity and added privacy protection.
The EIN only takes a few minutes to obtain on the IRS website.
Additional Startup Steps
Once your LLC is legally registered and you have your EIN, here are some next steps to take for new businesses:
Open a Business Bank Account
Keep your LLC finances separate from your personal finances by opening a dedicated business bank account. Nevada LLCs need to have their own accounts to preserve their liability protections under state law. Make sure to submit your new EIN, articles of organization, and operating agreement when applying for an account.
For more information, take a look at our article on the key benefits of business checking accounts.
File Annual State Reports
All LLCs formed in Nevada must submit an annual report each year to remain in good legal standing with the state. This combines your annual list of managers/members and state business license renewal. Reports are due at the end of your LLC’s first formation month annually. Not filing these reports on time can result in penalties or administrative dissolution of your company.
Conclusion
Starting a successful, complaint Nevada LLC does take careful planning and effort upfront, but know that the tax and liability benefits are well worth the investment. Seek help from legal and accounting professionals when needed, use professional registered agent services, and keep your business bank accounts separate.