When you work with a Nevada incorporation attorney to decide what the most appropriate legal entity structure may be for your new business, they may recommend you consider a Nevada LLC formation. There are several reasons why an LLC may be the best option for your business among the available entity structure options.
Not Being Taxed Twice
Since LLCs are taxed in the same way that sole proprietorships are taxed, they can help you to avoid being taxed twice. Double taxation may occur with entities such as a C-corporation, because both your corporation and you will each be taxed by the IRS. An LLC can support several classes of stock, and they may be converted later if you need to change it to a corporation.
Choosing the Location for Your LLC
One nice benefit about an LLC is you can choose the state in which you want to form it. Nevada is known for its business-friendly laws, leading many entrepreneurs to choose a Nevada LLC formation, even if the owners live in different states. There are costs associated with setting up an LLC in any state, and your attorney will be able to advise you about them. While Nevada doesn’t tax LLC profits and does not have an income tax or report to the IRS, you should be aware that you will still need to pay taxes in the state in which you reside if you do not live in Nevada. The IRS is able to track profits you make from a Nevada LLC through such things as bank statements, business records, mail and credit cards in your business’s name.
Benefits of Choosing Nevada for Your LLC
Nevada has a reputation for being a business-friendly state, and with good reason. As mentioned previously, the state does not have state income tax and does not tax LLC or corporate profits. The owners of a Nevada LLC or shareholders of a Nevada corporation are also allowed to remain anonymous. In some states, anonymity is not allowed and the identities of owners and shareholders are instead matters of public record. The state also does not have a franchise tax. LLCs are allowed to issue stock for real estate, personal property, services or capital in Nevada. While a majority of states have an information-sharing agreement with the IRS, Nevada does not. There are also strong privacy protection laws in place, helping Nevada business owners to limit their exposure to potential lawsuits. While an experienced plaintiff’s lawyer will still be able to uncover the identity of a Nevada owner of an LLC, it is very hard, time-consuming and expensive for them to do so, making a lawsuit less likely.
Changes Are Easy to Make
After you have set up your LLC, you may need to make changes to it later. It is easy to make the changes you need to your LLC. For example, you may want to add a partner or sell an interest in your company. Unlike a C-corporation, minutes and board meetings are not required to make such decisions. In general, LLCs have far fewer documentary requirements than do C-corporations. Protecting Your Assets An LLC provides important protections to its owners. The structure prevents creditors of your business from going after your personal assets to satisfy debts or lawsuit judgments. If you instead run your business as a sole proprietorship, you will not enjoy this protection from liability. After your company grows and expands, you may later then choose to convert it to an S-corporation or a C-corporation. An LLC, however, offers enough protection from liability when you are first starting and growing your business.
Ease of Registration
LLCs are very easy to set up and register. They generally require filing required paperwork with the Secretary of State and paying the filing and registration fees. After you have set up your LLC, you are then able to apply for and receive your Employer Identification Number, or EIN, from the Internal Revenue Service. Getting your EIN allows you to then open business accounts and checks. The LLC’s manager may then form contracts acting as the LLC with other businesses and people, and people may transfer their patents to the LLC as well. Since changing the name of an LLC is hard, it is important to be careful when making the initial choice. The name also must be one that is not already registered with the state as another business. Your lawyer may be able to help you with the name selection for your LLC.
Why Getting Legal Advice About Formation Is Important
Even though forming an LLC is a straightforward process, it is still important for you to get professional advice. There are a variety of different types of legal entity structures through which your business can operate. The best legal structure for your business may vary depending on your business type, size and whether you intend to issue stock, among other considerations. Each provides different levels of liability protection. There are also different tax considerations and documentation requirements for the different types of corporate structures. An attorney who practices law in the area of business formation and planning may be able to help you choose the structure that will work best for you.
Contact a Nevada Incorporation Attorney
To schedule a consultation with a Nevada incorporation attorney at the Sutton Law Center, call (775) 824-0300.