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Reno Corporate Lawyer Assists with the LLC Formation Process

A Reno corporate lawyer can explain the different business models and the advantages of different types of entities. If a person decides he or she wants to form an LLC in Nevada, a Reno corporate lawyer can help the business owner prepare and file the documents necessary. He or she can also advise the client on ongoing responsibilities.

State Business Tax

An LLC in Nevada does not usually pass taxes itself. Instead, the tax obligation passes to the individual LLC members. One advantage to operating a business or working in Nevada is that it is one of a few states that has neither corporate income tax nor personal income tax. As such, no state income taxes are due on the individual LLC members — even on those members who elected to be taxed as a corporation. Therefore, LLC members will not usually owe any state business tax from any profits that they receive from the LLC since there is no corporate or personal income tax.

Employer Taxes

Many LLCs have employees. They have the obligation to pay employer taxes. Some employer taxes are paid to the federal government by submitting payments to the Internal Revenue Service. Before employment taxes are paid, the employer must obtain a federal employer identification number.

Additionally, employers have to pay state taxes. Nevada uses a modified business tax model. Employers make quarterly payroll tax payments to the Department of Taxation. Tax is due during quarters in which the LLC pays more than a certain amount of money to employees in the form of taxable wages. Before the employer can pay this tax, it has to register with the Nevada Employment Security Division. Employers can set up their account online or can submit the Nevada Business Registration form to the Nevada Employment Security Division. The registration relates to the payment of state unemployment compensation taxes, which are paid to this entity.

Sales and Use Taxes

LLCs that sell goods to consumers in Nevada are required to collect sales tax and forward it to the government. LLCs must register for the payment of sales and use tax with the Department of Taxation. They may register online or download a form and submit it to the Department of Taxation. After registration, the LLC receives a sales tax permit for each location where they sell goods. The LLC is then responsible for paying the sales tax. Payment is made through the Department of Taxation’s online system or through filing the Combined Sales and Use Tax Return from the Department of Taxation.

Annual Report

Each state requires LLCs to file different corporate forms. Nevada requires LLCs to file an annual report. This is commonly referred to as an “annual list” in Nevada. This form requires minimal information, including the names and addresses of the managers and managing members of the LLC. The initial annual report is due on the last day of the month that the articles of organization were filed. For subsequent years, the annual report is due on the last day of the month of the LLC’s anniversary date. For example, if the LLC was formed April 5, the annual report for the first year would be due by April 30. The same due date would apply for subsequent years. If the annual report is filed by the due date, the filing fee is currently $125. However, if the filing is late, penalties may apply. The form can be completed online or downloaded and submitted to the Secretary of State.

Registration in Other States

If the LLC plans to be doing business in states outside Nevada, it may have to register the LLC in these other states. The specific state laws regarding foreign LLCs must be followed. Some will require registration while others may not. Each state has a different definition for what is considered doing business in the state. Doing business in the state may include such activities as:

  • having a business location in the state
  • hiring employees in the state
  • soliciting business in the state through print ads, the Internet, mail or telephone

If the LLC meets the definition of doing business in the state, it may register in that state by obtaining a certificate of authority for this purpose. Legal Assistance For more information on the obligations of creating and maintaining an LLC in the state of Nevada, contact a Reno corporate lawyer from Sutton Law Center by calling (775) 824-0300.

An Overview of Nevada PLLCs from Our Reno Corporate Services Attorneys

Professionals frequently ask our Reno corporate services attorneys about the best way to structure their business in Nevada. We usually suggest that they set up a professional limited liability company, also known as a PLLC. As the owner of a professional services firm, this gives you protection from different types of liability in several ways. You might also find that you will benefit from certain tax advantages.

Defining a Nevada PLLC

Professional business people can form a Nevada PLLC if they offer services in the state. An LLC, or a business with at least one person, is registered in the state. These individuals, called LLC members, own the business. Similar to other LLCs, PLLCs help keep the individual members from claims against them for personal injury or other types of debt. However, the PLLC does not make the members completely immune to legal action.

Defining a Professional Service

A professional service means that the person must be licensed, registered or legally authorized to conduct their service in the state. Different states define professional services according to preset guidelines. Although the state does not have a specific list, Nevada’s Professional Entities and Associations Act recommends that the following industries fall under the category of professional services:

  • Architecture
  • Clinical professional counseling
  • Engineering
  • Homeopathy
  • Interior design
  • Landscape architecture
  • Legal services (provided through attorneys)
  • Marriage and family therapy
  • Medicine
  • Osteopathy
  • Psychology
  • Registered nursing
  • Residential design and
  • Social work.

If you do not know if you should set up a PLLC or incorporate in Nevada, contact our Reno corporate services attorneys.

Setting Up a Nevada PLLC

If you do decide to set up a Nevada PLLC, you will need to do the following:

  • Obtain the state professional license for each member.
  • Determine if you will need previous approval from the state licensing board. If so, submit the required documents.
  • Download the articles of organization, which can be found on the Secretary of State’s website, along with the instructions on how to file them.
  • File the articles of organization as directed along with paying the filing fee of $75.

Naming a PLLC

The state of Nevada requires you to include specific wording in the name of your PLLC. For example, you must use an acceptable variation or abbreviation of “Professional Limited Liability Company,” and you must also include the last name of at least one past or present member.

Business Restrictions

The business can only offer one specific type of professional service unless the services are closely related. For example, you can combine the following:

  • Mental health services
  • Medicine, homeopathy, and osteopathy or
  • Architecture, design, and engineering.

Operating Agreement

You should have a specific operating agreement although you are not legally required to do so by the state. Even so, you need this agreement so that your members and customers, including banks, know how you plan to run your business. An attorney should help you draft this document.

Understanding Protection from Liability

A PLLC personally protects you from financial liability in the following situations:

  • From a creditor who wants to collect debts under the PLLC
  • From the malpractice actions of another PLLC member or
  • From an injury on the PLLC premises or another injury that does not relate to your professional services.

As a PLLC member, you might be required to carry minimum malpractice coverage, so check your state requirements for your profession or contact our attorney. However, you can still be held personally liable in the following cases:

  • If you guarantee that you will personally repay a business loan
  • If you are involved in negligent or intentional tort, such as an attack against someone or
  • If you commit professional malpractice, such as failing to exercise due diligence when representing a client.

As such, you will need to obtain liability insurance that meets the minimum state requirements.

The Difference Between a PLLC and a Professional Company

A PLLC differs from a professional corporation in the following ways:

  • A PC has shareholders while a PLLC has members.
  • The shareholders in a PC own shares of stock while the members of a PLLC own interests in a business.
  • A PC has income tax obligations while a PLLC usually does not pay taxes. Instead, each member pays his or her own taxes.

For example, if a PC opts to create an S corporation status, the entity can establish a company that bypasses taxes, similar to a PLLC. Furthermore, if the PC does not protect itself, both the company and the shareholders might be taxed as a business and individually. However, Nevada does not have corporate or personal income taxes. Even so, you will need to pay federal taxes. Since these tax differences can be quite complex, speak with a lawyer for additional information.

Call Our Reno Corporate Services Attorneys at (775) 824-0300

For answers to your questions about how to incorporate in Nevada, contact the Sutton Law Center for help.

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