Starting or Restructuring a Business in Nevada? The Walsh Firm, Ltd., Can Help You Choose the Right Entity.
The type of entity you choose affects how much you pay in taxes, how well your personal assets are protected, and how easily you can bring in partners, raise money, or sell the business. Choosing the wrong structure, or forming the right one carelessly, can lead to unexpected tax bills, disputes between owners, and personal liability for business debts. The Walsh Firm, Ltd., can explain your options under Nevada law, help you weigh the trade-offs, and form your entity with the required governing documents.
Business Entity Options in Nevada
- Sole proprietorship: The simplest option, with no state formation filing. A business that operates under a name other than the owner’s name must file a fictitious firm name (commonly referred to as a “Doing Business As” or DBA) certificate under NRS Chapter 602. The owner has no liability protection.
- General partnership: Two or more owners doing business together under NRS Chapter 87. No filing is required, and each partner can be personally liable for the partnership’s debts.
- Limited partnership (LP) and limited liability partnership (LLP): These structures limit some or all partners’ liability. LPs are often used for real estate and investment holdings, and LLPs are common among certain professional firms.
- Limited liability company (LLC): Governed by NRS Chapter 86, the LLC is the most popular choice for small and mid-sized businesses because it combines liability protection with flexible management and tax treatment. Nevada also allows series LLCs.
- Corporation: Governed by NRS Chapter 78, a corporation is often preferred by businesses planning to raise outside capital, issue stock options, or go public.
- Professional entities: Licensed professionals such as doctors, lawyers, and accountants may need to form a professional corporation or professional LLC under NRS Chapter 89.
LLC vs. Corporation: Key Differences
- Management: An LLC is run by its members or appointed managers under an operating agreement. A corporation has a board of directors and officers and follows its written formal bylaws.
- Formalities: LLCs generally have fewer required formalities. Corporations are expected to hold meetings, keep minutes, and adopt formal resolutions.
- Investors: Venture capital and institutional investors often prefer corporations because of their familiar stock structure and ability to issue different classes of stock shares. LLCs do not issue stock.
- Asset protection: Under NRS 86.401, a charging order is generally the exclusive remedy for a judgment creditor of an LLC member, including the member of a single-member LLC. The owners of a corporation are typically shielded from personal liability for debts of the corporation.
How Your Entity Is Taxed
- Pass-through taxation: Sole proprietorships, partnerships, and most LLCs pass profits through to the owners’ personal returns, so the income is taxed once.
- C corporation: The corporation pays federal income tax on its profits, and shareholders pay tax again on dividends.
- S corporation election: A qualifying corporation or LLC can elect S corporation status. This keeps pass-through treatment and can reduce self-employment taxes. S corporations are limited to 100 shareholders and one class of stock.
Nevada has no state corporate or personal income tax. Businesses may still owe the Commerce Tax if their Nevada gross revenue exceeds $4 million in a year, along with the Modified Business Tax on payroll and annual state fees. Your attorney should work alongside your CPA to choose the right structure.
Forming Your Business in Nevada
A properly organized business typically needs:
- Articles of organization (LLC) or articles of incorporation (corporation) filed with the Nevada Secretary of State.
- A Partnership Agreement or Certificate of Limited Partnership is strongly suggested if forming a partnership.
- A registered agent with a physical Nevada address.
- An initial list of managers or officers and a Nevada State Business License, both renewed annually.
- An operating agreement, or bylaws and a shareholder agreement.
- An IRS employer identification number (EIN) and any tax elections, filed on time.
- Any required city or Clark County business licenses.
Frequently Asked Questions About Choosing a Business Entity in Nevada
Should I form an LLC or a corporation?
Many small businesses choose an LLC for its flexibility and lack of formalities. A corporation may fit better if you plan to raise venture capital, issue stock options, or eventually go public.
Should I form my business in Nevada if I live in another state?
Forming in Nevada does not by itself avoid the rules and taxes of the state where you actually do business. If you operate elsewhere, you will generally need to register there as a foreign entity and may be subject to that state’s taxes and fees as well.
Will an LLC or corporation fully protect my personal assets?
Not automatically. Courts can hold owners personally liable when they mix personal and business funds or misuse the entity. Keeping separate accounts and proper records helps preserve your protection.
Can I change my entity type later?
Yes. Nevada allows entities to convert from one type to another, but conversions can have tax consequences. It is usually simpler and less expensive to choose the right structure from the start.
Why Choose The Walsh Firm, Ltd.?
Robert J. Walsh, Esq. has been admitted to practice law in Nevada since 1989 and in Illinois since 1990, and brings 35 years of legal experience, including the perspective of a former judge, to every business matter The Walsh Firm, Ltd., handles. Having seen how business disputes play out in court, the firm builds entity structures and governing documents designed to prevent conflicts between owners and hold up if they are ever challenged.
The firm is committed to no-nonsense legal representation and timely communication. It offers home visits and services in Spanish, and its Illinois license and Chicago-area office make it a strong choice for business owners with ties to both Nevada and the Midwest. Fees are discussed upfront during your consultation.
Contact a Las Vegas Business Formation Lawyer Today
If you are starting a business, bringing on partners, or reconsidering how your company is structured, get advice before you file. Contact The Walsh Firm, Ltd., at 500 North Rainbow Boulevard, Suite 115, Las Vegas, NV 89107, or call (702) 474-4660 to discuss your business today. Spanish-language services are offered.
This page is provided for general informational purposes only and does not constitute legal or tax advice. Contact The Walsh Firm, Ltd., directly to discuss your specific business needs, and consult a qualified tax professional regarding the tax consequences of your entity choice.