Starting your own business is a bold move. Your guts and ideas got you here. Now, you face a new kind of problem. If you are not a lawyer, forming an LLC in Nevada can seem scary and arcane. Even for experienced business owners, legal technicalities can be a challenge.
But there’s good news! Starting an LLC in Nevada isn’t that hard. You just need to make sure you follow the steps of the many that have come before you.
In this article, you’ll find all the information you need, including:
- Tips on drafting and filing the documents you need for your Nevada LLC formation
- Guidelines for staying within state and federal law
- The actual laws and rules you need to follow
Step 1: Name your Nevada LLC
If you’re ready to form an LLC, chances are that you’ve already thought of a good name. You need to do more than pick a catchy name for your Nevada LLC, though. Nevada Revised Statutes section 86.171 has the rules for naming your company.
First, the name of your LLC must contain one of the following terms:
|Limited Liability Company||Ltd.||LLC|
Nevada law allows you to shorten the word “company” in your LLC name to “co.” if you like.
Second, your name needs to be unique. Check the Nevada Secretary of State’s website to make sure that your LLC’s name isn’t already taken. Your name won't work if it looks too much like the name of an existing company.
Third, your business name can’t have certain words. Those words relate to certain kinds of businesses. To use these, you need permission from the Nevada board that regulates that business.
For instance, you can’t name a company “Nevada Accounting LLC” if you’re not an accountant. Even if you are, you still need permission from the Nevada Board of Accountancy to get this company name. This naming rule applies to almost every regulated/licensed business in Nevada.
The big rule is this: if you need a license to do your job, double-check with the Secretary of State to make sure your company name complies with the law.
Fourth, your business name can’t sound like it's part of the government. For example, “Department of State LLC” isn't allowed. Nor is “Tax Assessor Limited.”
Finally, these rules may be tougher than you expected. You can still use a different name for your Nevada LLC by using a fictitious business name. These are also known as “doing business as” or DBAs.
A DBA clarifies who the actual owner of your business is. It can distinguish you from another business that, under the LLC naming laws, might sound like yours.
Step 2: Appoint a Registered Agent for your LLC
New Nevada LLCs must choose a registered agent to receive correspondence and service of process. Service of process is a legal term for letters or legal papers that must be delivered to your business.
Registered agents are the public-facing points of contact for your LLC. If the state needs to contact you about your business, this is the address it will use. And if your LLC is ever sued, your registered agent will get the paperwork.
You can choose your own registered agent. You can even do it yourself. There are also lots of companies you can hire to do it for you. These companies will use their address and offices for the service of process and correspondence.
Doing it yourself makes sense for a few reasons:
- It’s cheap: You’re not paying someone for something you can do yourself.
- It’s simple: The only address and contact information you have to keep current is your own.
- It’s reliable: You will receive all important documents personally.
That said, there are also big drawbacks to being your own agent:
- No privacy: Registered agents must make their addresses available to the public. If that’s your home address, you could have a problem.
- Junk mail/spam: Once your address is public knowledge, get ready for a ton of worthless mail to come in with a small amount of important stuff.
- No breaks: Registered agents must always be available during business hours. Resident agents don’t get sick days or vacations.
- Business interruptions: If your agency address is the same as your business address, your business and clients may be interrupted by your duties as an agent. If you are getting served with a lawsuit in front of customers, that could be embarrassing.
- It’s your fault if you miss something: You have to make sure your agency address is correct and updated at all times. (For example, if you change offices, you also have to change your agency address.) If there’s a mistake, you’re to blame.
The best option, then, is to use a registered agent service. Their address, not yours, is the one that people see. Their sole job is to make sure you don’t miss anything. That way, you can focus on your business.
If you are looking for a professional registered agent service, take a look at our Best Registered Agent ranking for some of our recommendations.
Nevada follows the Model Registered Agents Act in Nevada Revised Statutes Chapter 77. These laws will tell you all you need to know.
Step 3: File Your Nevada LLC Articles of Organization
Filing articles of organization is a big step in getting your Nevada business off the ground. Think of them as the legal document that gives birth to your LLC. Until you do this, your company doesn’t exist. It can’t sign a lease or do business at all.
Nevada Revised Statutes section 86.201 says your company needs to do two things here. First, file your Nevada articles of organization with the Secretary of State, and then pay the current filing fees. If you try to do business before completing this step, you’ll face a hefty fine of $1,000 to $10,000.
The Nevada Secretary of State’s typical startup filing fees for an LLC are:
- Articles of Organization: $75
- Initial List of Managers or Managing Members: $150
- Business License Fee: $200
Articles of organization are pretty uniform. They should at least have this information:
- The LLC’s name
- The names of all members of the LLC (people who own the company)
- The names and addresses of any managers or directors of the LLC (people who run the company)
- Its principal place of business (the address of its main office)
- The LLC’s business and function, which is typically stated as “engaging in any lawful activity”
- The name and address of the LLC’s registered agent
Normally, it takes five days to get the new LLC set up. Expect an additional 2-3 days for mailing of documents. The Nevada Secretary of State does offer expedited service for filings, but it will cost you.
It takes $125 to expedite processing time to 24 hours. You can shorten that to 2 hours for $500, or 1 hour for $1000. All expedite fees are per item filed. These costs can add up fast, so think hard about how much you need them.
If you would like to avoid the hassle of filing for your LLC yourself, you can also use a professional LLC formation service. Check out our Best LLC formation services article for some of our suggestions.
Step 4: Draft your Nevada LLC Operating Agreement
An operating agreement is another important document for your LLC. Nevada won’t make you draft an operating agreement if you don’t want to. It is still a good idea to make one.
Business is unpredictable. You must prepare for the future. Part of that is making sure you know what to do when new situations happen. An operating agreement is a contract between the members of the LLC. It sets down everyone’s expectations about how the business will operate, especially when there are problems.
Your LLC’s operating agreement should list your company’s rules. For example, your LLC might have six members, but those people probably won’t all do the same thing.
Maybe one of you mainly puts in capital for the business. Another member has more “sweat equity” and runs the business day-to-day. The operating agreement gives you the chance to define each role in the LLC between the LLC owners.
The agreement will show who is in charge and what they have to do every day. It will also clarify that all members have agreed to their roles.
It should also say what happens if somebody breaks the rules. If the manager fails to pay business expenses, you may need to fire them. A written agreement will tell you how to do that.
Operating agreements also say what will happen if the business needs more money.
Let’s say you are six months in and you need a capital infusion. Do all members have to pay the same amount? Is it based on some other metric?
The operating agreement lets you clarify these issues before there’s any conflict.
Those are only a few of the uses for LLC operating agreements. An operating agreement can also specify:
- Who can sign contracts on behalf of the LLC
- How members can leave the LLC
- How new members can join
- How and when profits are paid to members
- How managers can be hired and fired
- Whether there are annual company meetings, and how votes take place
- How the LLC should be treated by the IRS for tax purposes
- What happens when the business ends (dissolution)
Unlike the articles of organization, you don't file your operating agreement. It's your contract. Make sure that it serves the needs of your company. Without it, later financial problems or conflicts will hurt you more.
Step 5: Get an EIN (Employer Identification Number) for Your Nevada LLC
EINs are tax ID numbers that the IRS uses for paying taxes. Think of an EIN as a kind of social security number for your LLC. Not all LLCs need one, but many do, and it’s important to understand when you need to get one.
In most cases, here are the criteria:
- Does your LLC have more than one member?
- Does your LLC have any employees?
- Is your LLC taxed as a C corporation or S corporation?
If the answer to any of the above questions is yes, you will need an EIN for your Nevada LLC.
If you have to get an EIN, please know that it is not a difficult process. The IRS has a detailed website on the topic and allows you to apply online. The entire application will take around five minutes.
You should never pay anyone to do this for you unless it is part of a larger service package.
First Tasks After Registering your Nevada LLC
Of course, forming your LLC is only the beginning. After the legal stuff is out of the way, you have other jobs. Below are a few items you will need to take care of as soon as your Nevada LLC is set up.
Open a Business Bank Account
Your company must have a separate bank account for several reasons:
- Accounting: You’re in business to make money. You can’t tell if you’re making money unless you know exactly how much your company spends and deposits every month.
- Credit: Even successful companies need to borrow money. You don’t want to use your personal credit, though, for a business expense. Keeping your company’s money separate helps build up company credit that it can use for business purposes.
- Personal Asset Protection: Keeping your company’s money separate from your own is the whole point of even forming a limited liability company (instead of doing business as a sole proprietorship.) Without a business bank account, you risk losing those protections.
The third point is the most important. Keeping a separate account for your company is critical for protecting yourself from legal liability. If your company is financially separate and somebody later sues it, your personal assets will not be at risk.
Lawyers call this company/individual separation the corporate veil. (Even though an LLC is different from a corporation, the concept is still the same.) You run the risk of the veil being “pierced” if you treat your company’s assets like they are your assets.
Let’s say you use a company car to pick your kids up from school. That shows that you are using the company’s assets for yourself. It’s the same idea if you put the company’s money in your own bank account. In that case, it’s hard to argue that you are keeping your business and personal finances separate.
If you have legal trouble, a court will look at these things. If it decides that you have been treating the company’s assets as your own, it will “pierce the veil.” The other side can then ignore any legal protections you get from the LLC. Of course, that defeats the purpose of even forming a company.
So, this is an important step. Get your new LLC a bank account as soon as possible.
Get Business Insurance For Your Nevada LLC
Don’t get so caught up in legal issues that you miss other important protections for your business. The most pressing of these is insurance. Any small business will need policies to protect itself going forward. Some policies you may want to consider are:
- General liability insurance: You’ll need this if there's an injury on your property. The insurance pays for damages and legal representation.
- Commercial automobile insurance: This works like your own automobile insurance. It covers drivers and vehicles for your business.
- Workers compensation insurance: Nevada law requires your business to carry this. It's insurance for workers injured on the job.
- Commercial property insurance: This protects your property in the event of damage. Keep in mind that flood insurance is often a separate policy.
- Professional liability insurance: Lawyers, doctors, architects, and other professionals need this insurance. It provides coverage and legal defense in the event of a malpractice complaint.
Keep Your Nevada Company Compliant
You’ve got it all set up. Now, you’re ready to focus on making your business the best it can be. As you operate, though, keep in mind that you will have ongoing obligations.
We’ll go over a few of them here.
Nevada Business Permits and Licenses
You paid $200 to the Secretary of State when you first obtained your business license. You also have to renew that license annually for $200. Also, remember that you may need city and county business licenses. For example, in Las Vegas, you would need to maintain a separate business license in Clark County.
Nevada Tax Requirements
Nevada does not have a state personal income tax or a corporate income tax. Thus, in the vast majority of situations, neither your LLC nor you as the business owner will owe taxes to the state of Nevada.
Federal LLC Tax Filing Requirements
The IRS will treat your single-member LLC or multi-member LLC as a pass-through entity, meaning that it does not pay taxes directly. Instead, income will come through the LLC to you, and you will pay taxes on that income. Profits or losses from your LLC should be on a Schedule C for your personal tax return.
Annual Report and other Filing Requirements
Nevada Revised Statutes section 86.5461 mandates that you file a short annual list. This list contains information about your LLC and its managers or managing members.
The Nevada state fee for filing the list is $150. These filings are under penalty of perjury. Material misstatements are a crime in Nevada, so make sure these are accurate.