Nevada LLC
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Should I form a Nevada LLC?
Unlike the C Corporation or the Subchapter S Corporation which require annual meetings and written minutes along with other corporate procedures, your Nevada LLC does not requires such meetings and records. Like the C corporation, your LLC can bring in unlimited numbers of investor or members through private placement contracting, which allows you to capitalize your Nevada LLC at whatever level meets your needs, inclusive of debt financing as arranged with lenders. However, unlike the C corporation which must distribute earnings on a dollar-per-share basis, your Nevada LLC can develop much more flexible distributions policies, as will be noted in your llc operating agreement.Advantages and Disadvantages of a Nevada LLC
Advantages of Limited Liability Company
- Limited Liability: Owners of a LLC have the limited liability protection of a corporation.
- Flexible Profit Distribution: Limited liability companies can select varying forms of distribution of profits. Unlike a common partnership where the split is 50-50, LLC have much more flexibility.
- No Minutes: Corporations are required to keep formal minutes, have meetings, and record resolutions. The LLC business structure requires no corporate minutes or resolutions and is easier to operate.
- Flow Through Taxation: All your business losses, profits, and expenses flow through the company to the individual members. You avoid the double taxation of paying corporate tax and individual tax. Usually, this will be a tax advantage, but circumstances can favor a corporate tax structure.
Disadvantages of Limited Liability Company
- Limited Life: Corporations can live forever, whereas a LLC is dissolved when a member dies or undergoes bankruptcy.
- Going Public: Business owners with plans to take their company public, or issuing employee shares in the future, may be best served by choosing a corporate business structure.
- Added Complexity: Running a sole-proprietorship or partnership will have less paperwork and complexity. A LLC may federally be classified as a sole-proprietorship, partnership, or corporation for tax purposes. Classification can be selected or a default may apply.
At such time as your Nevada LLC seeks to sell ownership interests to the public, then your llc form will have to be changed to a C corporation.
Nevada's 2007 Business Tax Climate Ranks 3rd
Nevada ranks 3rd in the nation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: California (47th), Oregon (10th), Idaho (31st), Utah (17th) and Arizona (25th). Nevada’s State/Local Tax Burden Below National AverageDuring the past two decades Nevada's state and local tax burden has consistently ranked among the nation's lowest. Estimated at 10.1% of income, Nevada's state/local tax burden percentage ranks 36th highest nationally, below the national average of 11.0%. Nevadans pay $4,127 per-capita for state and local taxes, and per capita state income is $40,916.
Nevada’s Individual and Corporate Income Tax System
Nevada assesses no corporate or individual income tax, joining Texas, Washington, South Dakota and Wyoming as the only states to levy neither type of income tax.