Advantages of Forming an LLC in Nevada

By Jeffry Olson, J.D.

Advantages of Forming an LLC in Nevada

By Jeffry Olson, J.D.

A limited liability company (LLC) is a form of business that provides owners (members) with liability protection without the so-called double taxation of corporations. Each state has its own laws governing LLCs and other business entities. While LLCs in all states have numerous positive aspects, forming an LLC in Nevada provides many unique advantages.

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Why Nevada?

LLCs generally offer the same protections, limiting liability of the members and allowing taxation similar to partnerships. However, each state has its own laws governing LLCs. The state of Nevada, through its legislature, has taken steps to make the state business friendly.

In the past, Delaware was known as the most business friendly state. As a result of the many corporations and other business entities formed in the state, the state generated considerable revenues from corporate formation fees. Further, a number of businesses arose to meet the needs of the many businesses created in the state.

Other states recognized this and beginning in the 1990s, changed laws to make themselves equally attractive. This allowed those states to collect formation revenues and generate businesses to assist those businesses. Nevada has been in the forefront of this movement.

Taxation

The state of Nevada receives significant tax revenue from gambling. It is able to pass this savings on to individuals and businesses. This is one of the biggest advantages to forming an LLC in Nevada.

Nevada does not tax personal income, corporate income, or LLC profits. Obviously, this has no impact on Federal taxes.

Not only does this lack of taxation directly benefit LLC owners, it also makes it easier to recruit talent for the business. No state income tax makes salaries offered by Nevada LLCs much more attractive.

The state also has no franchise tax. A franchise tax is referred to as a tax for the ability to conduct business in the state. Many states impose this tax on an annual basis.

Liability Protection

Nevada extends generous personal liability protection to officers and shareholders when they are acting in their capacity for the business. This does restrict the right of the business or shareholders to pursue claims against an officer or fellow shareholder.

Series LLCs

Nevada is one of 17 states in the U.S. that allows for series LLCs. The most common example of a series LLC is a real estate investment company. A properly established series LLC can protect individual real estate projects from the creditors of another, even if operated under the same LLC.

Privacy Protection

Members of an LLC in Nevada may remain anonymous. This protects owners from unscrupulous creditors and frivolous lawsuits involving aggressive attorneys. It also protects owners from aggressive government agencies.

Nevada has no Information Sharing Agreement with the IRS. This is, in part, because the state does not tax LLCs and corporations. Therefore, it has nothing to share.

Formation of an LLC in Nevada

Nevada offers a number of advantages to LLCs formed in the state. Those advantages include taxation, liability protection, series LLCs, and privacy protection. Perhaps the biggest advantage Nevada offers is a pro-business climate. This attitude is not likely to change anytime soon.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.