Why Form an LLC in Nevada?

By Anna Assad

A Nevada limited liability company (LLC) is a business organizational structure that blends the legal aspects of a corporation and partnership. The owners, known as members, of a Nevada LLC have personal asset protection from creditors of the company under state law, but other benefits exist, especially if the LLC primarily conducts business in the state.

Tax Savings

The members of an LLC formed in Nevada do not pay personal income tax on profits received from business conducted in the state, as Nevada does not have personal income taxes. Profits made in another state may be taxable in accordance with the state's tax laws. No gift, inheritance or admission taxes, or taxes on tickets to the public for places like amusement parks, are levied in Nevada. Nevada does not share information about LLCs to the Internal Revenue Service, the government agency responsible for the collection and enforcement of federal taxes.

Minimum Requirements

The minimum requirements to form an LLC in Nevada are less restrictive than those found in other states. The members of the LLC do not have to live or conduct meetings in Nevada, and the LLC paperwork may be filed by phone, fax or mail. No annual business meetings are required and the LLC does not have to draft an operating agreement, although doing so provides a plan for the company's management. Nevada laws favor the operating agreement and generally permit the agreement's provisions to oversee the internal procedures of the LLC.

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Asset Protection

Nevada laws do not allow a creditor to attach a standard money judgment to the interest of an LLC member. The creditor may be able to obtain a court "charging order" allowing the creditor to place a lien on the profits that the LLC member is entitled to receive.

Privacy

Nevada law is geared toward protecting the privacy of individuals engaged in business. The names and addresses of an LLC's board members are not a matter of public record, as no requirement for the public naming of the individuals exists in state laws as of 2010.

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LLC Minutes Requirements

One of the major benefits for a small business owner in choosing to form a limited liability company, or LLC, over a corporation is that maintaining the formalities for an LLC is a simpler process. If the owners of a corporation or LLC do not maintain legal formalities, a creditor may be able to pierce the corporate veil and hold the business owners personally responsible for business debts. Unlike a corporation, however, an LLC is not required to hold annual meetings.

Advantages & Disadvantages of a Single-Member LLC

An LLC enjoys the limited liability of a corporation, and the potential tax benefits of a disregarded entity. State law regulates LLCs and determines whether single-member LLCs are allowed. Single-member LLCs may enjoy tax benefits, and they offer owners a great deal of control. On the other hand, the informality of an LLC may create difficulties when establishing credit. A single-member LLC has the choice to be taxed as a sole proprietorship or corporation.

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Limited liability companies, or LLCs, are flexible business entity structures that have characteristics of a corporation as well as a partnership. However, each state can impose different requirements to create a LLC, though in most jurisdictions, the formation process is similar. Moreover, most state laws allow you to form a LLC for any legitimate purpose, such as to hold and trade investments.

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