Think business, think Nevada! Yes, the state of Nevada is being considered as a state that provides optimum business environment thanks to its flexible business and tax laws. Today there are in excess of 229,570 small businesses operating out of the state with the registering of 5,932 new establishments in 2013-14.

Talk about startup company Nevada and a rise in registration has been witnessed in different areas including Accommodation & food services, Transportation & warehousing, Real estate & rental & leasing, wholesale trade, construction, Management of comp. & enterprises, retail trade, manufacturing, and education services among others.

There are several other reasons why startup company prefer Nevada to other states. This is mostly due to the fact that the state not only offers a strong emphasis on innovation but also ensures you can derive maximum profitability in your business ventures and this is considered key to boosting the state’s economy.

Incorporation in Nevada comes with Several Benefits

People from across the country find it beneficial to register a new business in Nevada. Let us take a look into the various benefits you can derive in the state.

Benefit #1: Freedom from Taxes

Whether you are planning to form an LLC or invest in an LLC, or incorporate a business in Nevada, the biggest benefit you can drive is the tax benefit. Taxes can lower your profits and also slow down overall business growth but when you register a new business in Nevada, you don’t have to pay any state level taxes. These include:

• State Personal income tax: The constitution of Nevada has prohibited state personal income tax
• Corporate income tax: Nevada has liberal tax policies and does not tax any foreign or domestic corporations or LLC. Basically, State tax is not levied on corporate profits.
• State inventory tax: A startup company in Nevada is not required to pay tax on goods that they hold for interstate transit or sale. In fact, the state of Nevada has declared 12 Foreign Trade Zones located across the state that enables corporations to store their goods and ship them tax-free.
• Gift tax: Nevada tax policies ensure you are able to transfer your assets to anyone without incurring a state tax penalty. In addition to this, the recipient of your assets or gifts is not liable to pay inheritance tax in the state.
• Franchise tax on income: It may be applicable in other states but not in Nevada.
• Estate tax: A startup company in Nevada may be required to pay federal estate taxes but state estate taxes will not be imposed on them. This simply denotes you will be able to pass on your assets to your heir as it is.
• Corporate shares: Corporate stock or shares of members in a limited liability company (LLC) in the state of Nevada is non-taxable.

If you require more information on how to register a new business in Nevada? Get in touch with us today! Our Nevada tax expert will provide in-depth information and guide you through the entire process.

Benefit #2: Privacy standards are very high

If you register a new business in Nevada then you can be rest assured that the privacy levels in the state are extremely high. A Nevada LLC or corporation is not required to list their members or owner/s with the state. This also means that any investor in your business will be able to remain anonymous. In a way, it does take care of the “headache” that state agencies may be snooping into your business.

Benefit #3: Strong Asset Protection

If you are forming an LLC in Nevada then liability will be limited to your company. It doesn’t matter whether you are an officer, manager, or even a director; you will not be held responsible in any way for the liabilities of the company. This protection will only not be applicable if there is an involvement in activities that are unlawful in nature.

At the same time, it is not mandatory for a startup company Nevada or LLC Nevada to file a list of assets of the company or business, with the state. In a way, this assures that there is no record whatsoever of any assets being linked to you except for what you file with the IRS at the Federal level.

These are the foremost benefits that you can enjoy when incorporating your business in the state although there are many more. Here are a few::

• The corporate veil cannot be pierced in Nevada
• Bearer shares is prohibited in the state of Nevada
• You don’t have to reside in Nevada to register a new Company in Nevada

The most common question asked frequently is, what are the disadvantages?

Are there any Disadvantages of Incorporating in Nevada?

Incorporating your business in Nevada does not have disadvantages as such although there is always the possibility of increased administrative costs especially for small businesses. Wondering what problems you may encounter if you want to register a new company in Nevada especially if you are residing in another state? There will be no problem at all! This is where WE come in. We have a team of experts specializing in registering start-up or SMEs and we will ensure you are able to register your business in compliance with Nevada state business laws.

Except for increased administrative costs, there are no visible disadvantages for businesses or LLC in the state of Nevada. The good news is that if you are planning to incorporate in Nevada, we at incparadise.net are always there to not only guide you through the process but also help you save on filing fees and other administrative costs.
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Nevada economy is at its helm and has bounced back since the nation’s financial crisis in 2007-2008. This is just the perfect time to form Nevada LLC or Corporation. It is important to understand that Nevada LLC and Nevada Corporation are two different entities and hence it is important to ask yourself: Should I form in Nevada, an LLC or form a Corporation?

LLC and Corporation are two different business types that have their unique structure and benefits and it is important to identify which one of these will suit your requirements the most.

If you are thinking of company formation in Nevada then we can help you with the entire process right from choosing a name to filing of Articles of Organization. We are not just registered agents based in Nevada but have the distinction of having established a highly conducive relationship with Nevada Secretary of State. This allows us to bring to you nothing short of the best services all the time!

Nevada LLC Registration and Formation

If you have chosen to form an LLC in Nevada then the following steps will help you through Nevada LLC registration and formation.

Step 1

The first and the most important step towards company formation in Nevada, is to identify a name for your LLC. You have to choose an available name. How do you know, the name that you have thought of doesn’t exist?

Simple! Just click here to check!

Step 2

One of the important aspects of LLC formation is to take a decision on whether your LLC will have several members or if it is going to be a single entity business? This is a mandatory requirement if you need to form a Nevada business.

Once you have made your decision, we will fill the Limited-Liability Company Articles of Organization (NRS Chapter 86) and file it with the Nevada Secretary of State. You can download the form on our website and read through the Instructions for Limited-Liability Company Articles of Organization (PURSUANT TO NRS CHAPTER 86).

In case, you have any questions, feel free to call us at 702-871-8678.

Step 3

If you are planning to form a Nevada business with multiple members then you will be required to fill the Nevada LLC Operating Agreement. Filing the Operating Agreement is not a legal obligation but the salient benefit is that it will help in strengthening the organizational structure of your LLC.

In simple words, each member of the LLC will be required to provide their consent to the terms and conditions as mentioned in the agreement and it will act as a legal proof showing that all members are aware of the various rules and regulations that needs to be followed.

You can download the Nevada LLC Operating Agreement at our website to get an insight into the information required.

Step 4

The final step is to choose a Nevada registered agent. incparadise.net has a dedicated team of committed agents that have the expertise and experience required to form a Nevada business LLC. We take pride in our work and have successfully established over 10,000 LLC or corporations.

The Articles of Organization Limited-Liability Company (PURSUANT TO NRS CHAPTER 86) also requires you to reveal information regarding your agent in the Registered Agent Acceptance (PURSUANT TO NRS 77.310) part of the form.

We as one of the top Nevada LLC registered agents will explain in detail the entire process of LLC formation in the state and also ensure the forms are correctly filled and quickly filed.

If you have any questions regarding Nevada LLC registration and formation, you can simply visit the Nevada LLC formation page.

Once Steps 1 to 4 are complete, you will receive your Nevada LLC Articles of Organization verifying your LLC registration in the state.

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Nevada Corporation Registration and Formation

If you have chosen to incorporate your business in Nevada then the following steps will help you through Nevada Corporation registration and formation.

Step 1

If you want to form a Corporation in Nevada, the first step is to identify a name for your business. You have to choose a name which is not in use. How do you know, the name that you have thought of doesn’t exist?

Simple! Just click here to check!

Alternatively, we at incparadise.net can conduct a quick name search and ensure it is reserved for you. Reserving the name means it cannot be used by any other business.

Step 2

In order to form a Corporation in Nevada, you will be required to fill different types of forms that have to be eventually filed with the Nevada Secretary of State. The form that needs to be filed will be Articles of Incorporation (PURSUANT TO NRS CHAPTER 78) for domestic Corporation filing and Qualification to do Business in Nevada (PURSUANT TO NRS CHAPTER 80) for foreign Corporation filing.

Once you have made your decision, we will fill the correct form and file it with Nevada Secretary of State along with the applicable fee. You can download the form at our website and read through the Instructions.

In case, you have any questions, feel free to call us at 702-871-8678.

Step 3

The final step is to choose a Nevada registered agent. incparadise.net has a dedicated team of committed agents that have the expertise and experience required to form a Corporation in Nevada. We take pride in our work and have successfully established over 10,000 corporations or LLC.

The Articles of Incorporation (PURSUANT TO NRS CHAPTER 78) and Qualification to do Business in Nevada (PURSUANT TO NRS CHAPTER 80) requires you to reveal information regarding your registered agent for servicing your request.

We are regarded as one of the top registered agents in Nevada for incorporation of businesses today. We will not only explain in detail the entire process of incorporation in the state but also ensure the forms are correctly filled and quickly filed.

If you have any questions regarding Nevada Corporation registration and formation, you can simply visit the Nevada Corporation formation page.

Once Steps 1 to 3 are complete and paperwork is approved you will receive your Nevada Certificate of Incorporation verifying your LLC registration in the state.

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A corporation was the most common choice for a business entity for many entrepreneurs years ago. This was due to the fact that it offered much more advantages over the partnerships and the sole proprietorships. But for some time now, the LLC business entity type has taken over and become the most common choice for many entrepreneurs.

The reason is simple. The LLC offers a lot of simplicity and ease which is why many tend to opt for this type of business entity. But this does not mean that the corporations are now a bad option; they still offer a lot of benefits. In this post, you would understand all about the benefits of the corporation and also learn about the various types of corporation and their differences so that you can choose the applicable business entity type for your Nevada corporation.

History of Nevada Corporations

In 1987, Nevada had adopted the Revised Statutes for corporations, which were based entirely on the Delaware corporate statutes that have lured companies from all over the country for the past century. Nevada has always been a professional business state, and it was looking for new methods to increase the revenue of the state where they do not tax the businesses or citizens of the state.

Even though room taxes, games and sales have been the primary source through which the state got its revenue, Nevada’s rapid growth needed more funds to support it. And with an idea to offer companies with beneficial incorporating situations to attract revenue to the state proved to be a new vehicle for the entrepreneurs, and a prosperous new source of income for the Nevada.

During the recent years, there has been an increase in the number of businesses that have been incorporated in Nevada. Between the years 1994 and 1999, the number of new corporations that were filed in a year rose by 75%.

Moreover, about 80,000 companies were filed in the year 2006 even though the population of Nevada is just 2 million people in the whole state. As a matter of fact, the top state that has the highest number of new business filings are those states with the most population, like Florida, Texas, New York, and California.

What is a Corporation?

A business that is granted a charter that recognizes it as a separate legal entity and has its own liabilities, privileges, and rights distinct from those of its owners is a corporation.

The Corporate Business Structure

Even though a corporation is distinct and separate from the officers, directors, and shareholders, it is an entity that can function only through the agents, officers or members in it. Moreover, the entity cannot have any belief or knowledge of any subject that is independent of the belief or knowledge of its people.

A shareholder of the company (the owner or a partial owner) is a holder of the shares of the business, and this person is normally not in any legal danger for any actions of the corporation. This is only when these acts are not fraudulent and damaging or if the corporation does not maintain and follow the formalities. Additionally, the shareholder/stockholder is not the employer of any of those who are working in the corporation nor is this person the owner of the corporate property.

And it is this separation in the corporation that is the most important benefit. Think about the many newsworthy lawsuits that have come up in the last few years where negligence or other significant obligations have been charged against a corporation. There have been cases where the consumers have been affected by the products that a corporation provides. And in all these cases, the shareholders of the corporation were protected as separate, and it was only the corporation that held liable for the issues.

The corporation is also the citizen of the state in which it has been created in. Moreover, it does not stop being a citizen of the same state even after it engages in any business activity or acquires property in another state. And since the corporation is the creation of the state law, all the powers that it has is acquired from the laws of the state and its constitution in which the company is incorporated in.

Being an artificial person of the state, the corporation is deemed to have its home in the state in which it has been incorporated in and the place where it has a lawful presence. When the company engages in business activities in another state, the place of its selected registered agent or resident is at times called the ‘statutory domicile’ of the corporation.

As soon as the corporation is brought to life, it has almost the same privileges and rights that a person in that state has. The corporation has the rights to own and even run businesses, can sue, hire employees, maintain retirement plans for employees, rent office space, make contracts, buy and sell goods and services, and also be sued.

Additionally, the existence of the corporation is not changed even if the director, officer, or shareholder die or go bankrupt. This means that it has a continuous existence, though the existence remains as long as the corporation follows the statutory requirements of the state where it is incorporated.

Moreover, even though the corporation is considered as a ‘person’ legally, the corporation cannot think, talk, walk or act for itself. The corporation cannot produce the products on its own or perform any of the physical tasks needed to run the company. For these tasks, the director (you) and those hired to work within the corporation do it.

The main point that has to be kept in mind is that when you have a corporation, it exists as a separate person or entity. It does not matter which state you live in. It is the corporation that complies with the obligations of the state in which it has been incorporated. With all these details explained about a corporation, it is also important to note that Nevada is the state where a corporation enjoys the most number of benefits.

Comparison of C & S Corporations

There isn’t just one type of corporation in a state. Corporations vary in their organization and structure. You would need to choose the type of tax treatment you want for your corporation. There are two main tax treatments that many attorneys and CPAs would advise to choose: S-elections and C-elections.

But before you choose from one of these, it is important to note that each state has different laws for the corporations. Hence it is better to learn about that state, and its benefits before you choose the tax treatment you want.

The below comparison between the S and C election is a basic one that applies to all the states in the USA:

C Election Corporation

• The profits are taxed on an 1120 tax return at corporate rates, separate from the individual return.
• The profits can be kept as retained earnings.
• Follows the fiscal or calendar year that the Board of Directors has designated.
• Permits to have an unlimited number of stockholders.
• Permits to have limited liability of the directors/officers/owners.

S Election Corporation

• The state taxes would apply for those who are in the state where there is an individual state income tax.
• All the profits of the corporation are taxed on the tax return of the owner even though it is not distributed.
• The profits pass through the individual tax return 1040. This means that there are no tax brackets separate from the personal tax brackets that apply.
• Needs full disclosure of up to 100 corporate owners.
• Normally runs on a calendar year.
• Permits to have limited liability of the directors/ officers/owners.

Note: It should be noted that Nevada is a state in the US where there is no state corporate income tax of any kind for both S-election and C-election corporations.

These are not just the only differences that are there. Several other variations exist between these two types of tax elections that can be understood better by explaining each in details, as shared below.

S Election Corporations

Not any company can choose to be an S corporation. There are a few specific requirements that have to be met for electing the S corporation status. For being listed as an S corporation, you would have to file Form 2533 with the IRS where your corporation has to meet all the following requirements as well:

• It has to be a small business corporation. (The financial institutions like the insurance companies, banks, or building and loan associations are not permitted to take advantage of an S election.)
• It has to be a domestic corporation formed in the US.
• It must just have one class of stock.
• It does not need to have non-resident alien shareholders.
• It can just have certain trusts, estates or individuals as shareholders.
• It can have no more than 100 shareholders.
• It has to adhere to the state statutory limitations, which limit the transfer of ownership/shares of the company.

The S corporation runs on the December 31st calendar-year-end basis. Nevertheless, there are exceptions just like there are exceptions with many of the other rules. The corporation can also choose the Section 444, which would permit the corporation to follow the tax year ending on either September 30, October 31, or November 30. But in this case, estimated tax payments have to be made that negate any advantage a shareholder may get by having an offsetting fiscal year.

Factors When Selecting an S Corporation

Here are some of the considerations while choosing the S corporation:

• When the losses of the corporation flow-through, those losses can be utilized to neutralize the active income from an owner. (Here the active income constitutes the income obtained directly from the business activity.)
• The employee/shareholder of the S corporation might be able to deduct 100% of the cost of medical insurance as an adjustment to income.
• There aren’t any penalties for excessive collected earnings for S corporations.
• There is no double taxation.
• In case the S corporation earns active profits, it can be balanced by the losses from other companies and/or running costs from a sole proprietorship.
• The S corporation has to report bonuses paid for group term life insurance and health insurance as taxable income in case the shareholder owns more than 2% of the stock. Nevertheless, the shareholder still has the eligibility to get the 100% deduction as mentioned before, to help balance this.

Who Should Use S Corporation Status?

The following companies should choose the S corporation status:

• The companies that may be subjected to the Alternative Minimum Tax.
• The companies that don’t expect to distribute multiple classes of stock.
• The companies that have no intention of going public in the future.
• The companies that are expecting to have startup losses during the initial years of operation.

Now that you have understand all about the S corporation, let us more towards understanding the C corporations.

C Election Corporations

The C corporations have a very different tax rate as compared to the individuals. There are some cases where the C corporations pay less tax as compared to the individuals. Moreover, there are no limitations on the shareholders of the C corporations, and the shareholders can be any type of entity or live in any part of the world. This type of corporation is the most flexible one and is even recommended in a few cases.

The only thing about using a C corporation that would trouble you is the double taxation. In the S corporations, the losses and profits flow through the shareholders or the owners of the corporation. And all the taxation takes places at the individual level and not at the corporate level, eliminating the issue of double taxation.

In the C corporation, double taxation occurs when the company has the profits taxed initially after which the dividends are then paid out to the stockholders. These shareholders are then taxed again at a personal level.

Deferring or eliminating profits via a proper financial management would be able to cover this issue easily. Moreover, the double taxation becomes an issue with huge corporations that have many shareholders who want the profits to be distributed to them at the year-end of the corporation. In such cases, the owner can choose what to do with the profits at the end of the year.

In short, they can have a retirement plan that profits are distributed to on a tax-deferred basis, keep retained earnings (up to a maximum cap), pay bonuses (wages) which are tax-deductible to the corporation or pay the dividends to the shareholders (which is not recommended). The earnings that are held can be used for growing the company, buying another company, for the additional investments in equipment, advertising expenses, etc.

So, when the corporation holds the earnings, the profits earned by the corporation is taxed at the corporate level and is left in the corporation. And since it is not distributed to the owners, there isn’t any double taxation on the profits. In case the officers or the owners of the corporation need the money for any personal expenses, they can set up a retirement plan to expense as much from the corporation as possible or get paid a salary in the form of the year-end bonus.

As per the IRS, it is the obligation of the taxpayers to reduce their tax liability. Moreover, the IRS also says that a corporation can also deduct any company expense, so a low tax liability can be obtained by applying proper money management.

Below shared are some additional terms that need to be understood as well:

Private vs. Public Corporations

Moving ahead, let us now see what a public corporation is and what a private corporation is. A private corporation is the one in which the company’s ownership (or shares) is not put up for sale on any public market. On the other hand, a public corporation is a company that is registered with the Securities Exchange Commission (SEC) and has put up stocks for purchase in one of the major stock exchange markets. Examples of public corporations are IBM, AT&T, Facebook, etc.

Closely Held Corporation

A close group or a family owns a closely held corporation, and shares of this company cannot be sold outside the group or family. A corporation is said to be a closely held corporation on in case more than 50% of the value of the outstanding stocks are held indirectly or directly by five or fewer individuals at any time during the last half of the tax year.

To understand better, a corporation is closely held if all of the following apply:

• It is not a personal service corporation.
• It is not an S corporation.
• In case more than 50% of the value of the outstanding stocks are held indirectly or directly by five or fewer individuals at any time during the last half of the tax year. (“Individual” here includes specific trusts and private foundations.)

For determining if five or fewer individuals own more than 50% of the stock value, you would need the help of an attorney or a tax professional.

Domestic Corporation

A domestic corporation is a company which is operated in the state in which it has been incorporated in. For instance, a corporation that is incorporated in Nevada and operates in the same state is a domestic corporation for Nevada.

Steps for incorporating your business in Nevada

Now that you are aware of all the types of corporations, what their differences are and what might be the right choice for you, here are some steps that you need to take for incorporating your company in Nevada:

Select a business name

Ensure that you choose a business name that related to your service, product, and business message. The name should also be easy to remember so that customers can easily locate your business. Moreover, you would need to check with the Nevada Secretary of State to see if no other company has taken the name. Check out our article or contact your Secretary of State to see the other naming limitations for your Nevada corporation.

Appoint and/or recruit directors/officers for your corporation

For this, the Nevada Corporation requirements are:

• A Nevada corporation should have at least one or more directors.
• The director/s have to be at least 18 years old.
• The director can be from any part of the world.
• As per the Nevada corporation rules, the director’s names and addresses have to be mentioned on the Articles of Incorporation. (The officer’s names and addresses are not needed.)

Register your Corporation & File for the Incorporation

You would have to register your company and incorporate it to get the Articles of Incorporation for corporations from the Nevada Secretary of State.

Business License and annual report requirements

It is essential to file the Annual List of Directors/Officers and file for the Business License for your Nevada corporation as soon as the company gets incorporated. The filing fee for the Annual list is $150 and $500 for the business license registration.

Get any needed business permits/licenses

Other than the business license, there are many other licenses or permits that you might need depending on the type of service or products you are offering. You would need to get the specific licenses before you can begin operating your business. Check out the Secretary of State for more detail

Get the EIN

In addition to the tax and regulatory obligations, you would also need a Federal tax identification number (EIN).

Additional Requirements

Based on the structure of your company, you would have to satisfy some other stated requirements like:

• Opening a business bank account for all the business transactions.
• Getting a physical address with a mailing address.
• Business phone number.
• Company employees working in the State of Nevada.

How can Inc Paradise help you?

If you have decided on the type of business entity that you want, and are ready to have it registered in Nevada, Inc Paradise can assist you with the registration and incorporation process. Other than that, IncParadise also offers mail-forwarding and virtual business address services.

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With your company registered in Nevada, there are many things that you need to take care of. And one of the main things is complying with the laws and paying the applied taxes on time. Speaking of taxes, Nevada has always been a favorite for many entrepreneurs when it comes to starting a company here. And the simple reason for this is that the state has never imposed any gross receipts tax, Nevada commerce tax or business income tax.

Being a “tax-free state,” Nevada has always attracted a lot of businessmen to set up their companies here. As a matter of fact, any business that wants to incorporate outside from their “home” state usually choose Nevada as the state to incorporate in due to the lack of the state income taxes and the low filing fee. But recently in a 2015 Legislative Session, there was a new law created. This law is called the Nevada Commerce Tax law.

The Nevada Commerce Tax

It was before the 78th Nevada Legislative Session when the “The Revenue Session” was dubbed in reference to the bipartisan acknowledgment of the legislators that the legislation has to meet the growing budget demands of Nevada. Then in 2015, during the session, the new Commerce Tax was introduced. And the aim for the tax was to increase the revenue for the education system in the state.

The new Nevada Commerce Tax is a tax that is imposed on the rights of a person who is earning from a business that is registered Nevada. This tax is only applied to those businesses that have a gross income that exceeds $4 million in a taxable year.

Moreover, there is still no tax imposed on personal income. The government aims at imposing the tax on the strong business revenues and not on the wages. And with the new Business Taxes in Nevada (Senate Bill 483 (SB 483)), a company has a threshold of $4 million that can be deducted from the gross revenue when finding the Nevada Commerce Tax liability.

As a matter of fact, it is not the threshold for filing. This means that any company that is running a business in Nevada has to file the Commerce Tax Return. This is regardless of it the company’s tax liability unless the company is exempt from filing for the tax return.

So, if a company earns an amount that is less than $4 million as total income in a fiscal year (financial year), they can select the box on the form of the Nevada Commerce Tax Return indicating that the company has an income that is below the threshold. This form would then have to be submitted to the government. On the other hand, those that have an income that exceeds the threshold would have to calculate the liability of the Nevada Commerce Tax.

And it is normal for all the additional state taxes that come in to be burdensome for many businesses, but the Nevada Commerce Tax has many unique aspects as shared below:

• Tax is imposed on a separate entity basis.
• Taxpayer funding is used for potential state audit expenses.
• A fiscal year filing requirement.
• Virtually no deductions from gross receipts.

What entities are subjected to the Nevada Commerce Tax?

Those businesses that are engaged in business within Nevada are subjected to the Business Taxes in Nevada. A business entity means a:

• A corporation (C- or S-corporation)
• A joint venture (Note: This includes any joint venture, excluding the co-ownership arrangement or joint operating company, that meets the requirements of 26 C.F.R. §1.761-2(a)(3), Treasury Regulations §1.761-2(a)(3) and that elected out of the federal partnership treatment as offered by 26 U.S.C. §761(a).)
• A partnership
• A limited-liability partnership
• A joint stock company
• A proprietorship
• A business trust
• A bank
• A holding company
• A Limited-liability company
• A business association
• A professional association
• A savings and loan association
• A sole proprietorship
• Independent contractors
• The individuals with rental real estate or royalties
• Or any other person that is engaged in business in Nevada, which also includes a natural person who files schedule E, part I, with their Federal tax return.

“Engaging in business” means that continuing, conducting, and commencing a business and the exercise of franchise or corporate powers concerning a business, without any limitations.

Let us take an example to understand this better:

Example: KLMNOP Inc. is corporation that is incorporated in Nevada and has the license to work in Nevada. Now, let us say that all the activities of the business are in California and there isn’t any income in Nevada for the company. In this case, the company would have to file the Commerce Tax Return in Nevada. Nevertheless, since it is not getting any income from Nevada, it would not have a tax due.

But remember that the filing is an important step that has to be done regardless of if the company is getting income from Nevada or not, and if the company has a Nevada license to do business. Moreover, the companies that are set up in other states but are engaged in business in Nevada are also obligated to file the Nevada Commerce Tax Return.

In short, the activities that are subjected to the imposition of the tax includes renting, leasing, or selling personal or real property in Nevada, offering services while being physically located in Nevada, holding and maintaining a business facility or place in Nevada, entering into a contract to work in Nevada, and having employees in Nevada. So, if any company is performing any of the above mentioned activities have to file for the business taxes in Nevada.

Which Entities are Exempt from the Nevada Commerce Tax?

Yes, there are some organizations that are not obligated to file for the Nevada Commerce Tax. And the entities that are exempt from filing for the new Nevada Commerce Tax include:

• IRC 501(c), NRS 82 and NRS 84 non-profit organizations
• Grantor trusts
• Credit unions
• Business entities organized pursuant to NRS 82 or NRS 84
• Passive entities
• Real Estate Mortgage Investment Conduits
• Governmental entities
• Certain Real Estate Investment Trusts
• Individuals
• Entities that only manage and own intangible investments, that includes patents, trademarks, stocks, bonds.

Entities that are exempt from the Commerce Tax must file an Exempt Status Entity Form with the Nevada Secretary of State. The exemption remains in place until the status of the business changes.

What is Taxed?

The Commerce Tax applies to gross revenues that are “sitused” in Nevada. Such gross revenues include:

• revenue from rents, royalties, and sales of real property are sitused in Nevada if the real property is located in Nevada;
• revenue from rents and royalties from personal property are sitused in Nevada if the personal property is located or used in Nevada;
• revenue from the sale of personal property is sitused in Nevada if the property is delivered or shipped to a buyer in Nevada, regardless of the origin or other condition of sale; and
• revenue from transportation services is sitused in Nevada if both the origin and destination points of the transportation are located in Nevada.

The legislation also contains a “catchall” provision for gross revenue not otherwise described, which is extremely broad and undetailed. The “catchall” was a subject of substantial discussion at the initial regulatory hearing before the Department of Taxation (Department) on July 7, 2015, and is likely to be clarified as the Department establishes its regulations on this tax.

Returns, Commerce Tax Year and Filing Deadline

The Commerce Tax year runs from July 1 through June 30. Returns are due 45 days following the end of the tax year. For 2016, the filing deadline was Aug. 15, 2016. A 30-day extension of time to file is available upon written request – currently there isn’t a separate form for the extension request.

Penalties and interest will be assessed if the Commerce Tax Return is not timely filed or the tax timely paid, based on the amount of unpaid tax. For this first tax year, there is a grace period until Feb. 15, 2017 to file and pay the tax. Penalties and late charges may be waived if the return is filed and the amount due is paid during the grace period if there is good cause for being late (i.e., the failure occurred despite the exercise of ordinary care and was not intentional or due to willful neglect). Waivers will be determined on a case-by-case basis.

Each separate entity must file its own Commerce Tax Return – there is no provision for consolidated returns. Simplified reporting is available for entities with less than $4,000,000 gross Nevada revenues for the year; and, returns can be filed online.

Fiscal year tax

The tax year is a fiscal year ending June 30. The report is due 45 days after the end of the fiscal year ending June 30, 2017. This means your commerce tax return and payment will be due August 14, 2017.

You may request a 30-day extension by written request with “good cause” before the due date. SB 483 does not provide a clear nexus standard applicability to the commerce tax and does not address the applicability of the physical presence nexus standard and Public Law 86-272.

Exclusions and deductions

There are exclusions and deductions from gross revenue. However, there is no deduction for cost of goods sold or other expenses incurred. The commerce tax rates vary depending on the industry type, based on your North American Industry Classification System (NAICS) code. The NAICS code reported on the initial return links your status with the state. If an appropriate NAICS category cannot be determined, the unclassified rate of 0.128% will be applied. The rates range from 0.051% to 0.331%.

The Welcome Letter

All Nevada entities should have received a “Welcome Letter” with information regarding the Commerce Tax filing requirements and enrollment instructions. Due to difficulties in implementing the tax, some entities may not have received the notice and other entities that have no Nevada revenues may not realize there is still a filing requirement. Additional information regarding the filing and registration requirements can be found on the State of Nevada Department of Taxation website.

This Taxpayer ID number is different from your Nevada Business ID number which is located on your Nevada State Business License. Your Taxpayer ID number is what you will use to file the Commerce Tax Return. If you did not receive a letter, please contact the Nevada Department of Taxation Taxpayer Call Center at 866-962-3707 to get the Tax ID number assigned to your business.

Steps to Take Before Filing for the Nevada Commerce Tax Return

Now that you know the basics of the Nevada Commerce Tax let us understand what to do next. So, before you can file, there’s a couple of steps that you’ll need to take:

STEP 1: You have to determine your NAICS code, that’s the acronym for the North American Industry Classification System from the 26 different categories selected by the state to choose from. To determine which NAICS code applies to your business you can look it up at the following link http://www.naics.com/search/ and then drill down from the initial category to determine which one best describes your primary business activity.

Please note: If your business operates multiple types of businesses under its single entity that don’t fall under the same NAICS code (like a bar and laundromat), the NAICS code would be the category where the highest percentage of revenue comes from.

STEP 2: You have to mail in or file online at http://tax.nv.gov/comtax/ the Commerce Tax Additional Information Form which is how you complete your registration. The state has to gather information such as your federal tax id number; the names and addresses of the owners, partners, corporate offers, managers and members of the business.

They also want to know if you’re enrolled in any other taxes in the state such as the Modified Business Tax – which is tied to a Nevada business that has Nevada employees; The Sales/Use Tax applies if you sell tangible goods in the state whereby you have to collect and remit the sales tax.

Use Tax means that if you bought something outside the state of Nevada and did not pay sales tax, that by law you’re supposed to report and pay the sales tax that you would have paid had you purchased the same item in the state.

Certificate of Authority relates to a retailer who does not maintain a place of business in the state, but obtains a certificate authorizing him to collect the sales tax from a purchaser here and then turns around and pays the sales tax to the state. Typically, you see this with online retail organizations.

Excise taxes apply to sales of gasoline, cigarettes, alcohol, cellphones, and vehicle registration and title fees all of which are flat per-unit taxes that must be paid directly to the Nevada government by the merchant before the goods can be sold. You must submit the Commerce Tax Additional Information Form so you will be ready to file by August 15th.

How to file for the Nevada Commerce Tax Return?

Now, let’s talk about the Commerce Tax Return in detail so that you know what you are doing. If your business’s gross revenue, that’s money earned only in the state of Nevada, ranges from zero to $3,999,999.99 cents during the state’s fiscal year which begins July 1 and ends on June 30th, the following year, you qualify for the simplified reporting. You still have to submit the tax return which may take 2 minutes to file online, but remember the really good news, there’s no tax due! Here is the link to the various Business Taxes in Nevada – https://www.nevadatax.nv.gov/

Future heads up. If you’ve always been under the four million mark and during the next fiscal year, again that’s July 1 through June 30th your status changes, meaning you now have Nevada gross revenues that exceed four million dollars, then be aware you’ll need to complete the entire tax return the next time you file. As I said, it may take two minutes to file if fall under the four million in gross revenue so let me share this quick instruction of what you’ll need to complete:

• Fill in the taxable year (example July 1, 2015 through June 30, 2016)
• Fill in the State Tax ID Number as shown on the Welcome Letter/upper right hand corner.
• Fill in the NAICS code
• Fill in the Business name
• Fill in the Business address
• Check the box: I declare that the Gross Revenue from engaging in business in Nevada of the above Business Entity did not exceed $4,000,000 during the taxable year.
• SKIP TO BOTTOM OF FORM: Check the ‘Under Penalty of Perjury’ box, sign, put in your phone number, name, title and date.
• PRINT THE RETURN for your records.

Then Hit the Submit via email button to complete the filing online, or you can mail it to the Nevada Department of Taxation

Please make sure you task yourself to file the tax return every August 15th, because the state will not send any reminders. Also, make sure you keep copies of your returns for a minimum of four years, however I recommend you keep them for as long as you have the business.

Now, let’s move onto those businesses that have Nevada Gross Revenue that Exceeds Four Million dollars. The date to file is still August 15th and of course, you have to pay the commerce tax which is based on the rate associated with your NAICS code. You can request an extension to file for up to 30 days without penalty but, if there are any taxes due, interest will accumulate along with any penalties assessed after the 30-day extension expires.

If you’re a Nevada resident and your business is incorporated outside of Nevada, you should complete the Nexus Questionnaire to determine if you are subject to the commerce tax. Most likely not, but you better make sure. Here is the link to it – http://tax.nv.gov/uploadedFiles/taxnvgov/Content/FAQs/COM_nexus_questionnaire.pdf

I can’t even begin to describe how complicated they’ve made the ability to calculate the tax which for some there is at least a few tax credits and/or industry-specific deductions that can be applied against the gross revenue. I’m going to recommend you use the services of a tax professional and maybe more specifically a Nevada based tax professional to prepare your commerce tax return because remember this return is based on the gross revenue you generated during the state of Nevada fiscal year end, not your company’s regular fiscal year end. We can, of course, offer some great recommendations for our clients.

One note of caution. If you have or are going to go out of Business in the State of Nevada, I suggest you call us here at Sage International to provide assistance with properly dissolving the company. Think about it, without properly dissolving and filing final tax returns, both the IRS and the State of Nevada have every reason to believe you are still in business and are legally required to file annual tax returns.

Since there’s no getting around the requirement to file, I wanted to make sure everyone who has a Nevada corporation or Nevada LLC understands the full meaning of “staying in compliance.”

Items to consider

Other than what has been explained above, there are some things that you would have to keep in mind so that you file the Nevada Commerce Tax Return in the right way. These are the things that you would need to consider:

• The fiscal year for the commerce tax is July 1 – June 30, regardless of your own tax year, and reporting can be cumbersome for many entities. Consider how to tailor reporting processes to comply.
• In the event of an audit, you are responsible for the actual expenses or costs to execute the audit. Entities that keep records outside the state of Nevada are liable for an “amount equal to the allowance provided for state officers and employees while traveling outside of the state for each day or fraction thereof” during an examination.
• Establish the correct NAISC code on the tax return, as it can be cumbersome to change the code for future filing periods. The commerce tax has 26 business categories.
• Specific exclusions and deductions are listed, although be careful when determining any deduction to the commerce tax.
• The commerce tax is set on a separate entity basis, and no guidance is set for consolidation or combination.

Conclusion

The doubling of the annual license fee for corporations is quite hefty, and will probably cause some entrepreneurs to rethink the popular trend of incorporating in Nevada.

If you’re wondering where to incorporate or form an LLC, here’s the advice I have been giving small business owners for years. And this advice hasn’t changed because of the new Nevada commerce tax policy. If you’re a small business (less than five shareholders), it is generally best to form your business in whatever state you live in or operate your business from.

The bottom line is that you are going to be subject to the tax laws and pay corporation maintenance fees for whatever state you conduct your business in. So if your business is located in California and conducts business there, you can’t escape paying state taxes to California just because you incorporate in Wyoming or South Dakota. Contact IncParadise to know more!

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Once you have made the decision to form an LLC or incorporate a new business in Nevada, one of the things you would require is a Nevada business license unless statutorily exempted. Where and how do you obtain a business license in the state of Nevada?

The filing and payment for State Business License for Nevada was initiated since October 1, 2009. The application for business license is processed by the Secretary of State’s office. Earlier Nevada business license authority was Department of Taxation but Pursuant to AB 146 passed by the 2009 Nevada Legislature, and codified in NRS Chapter 76 – the authority was transferred to the Secretary of State.

It is important to understand that the Nevada State law requires that every individual or entity preparing to conduct business in the state has to first obtain a business license, which has to be renewed annually.

Note: There are certain businesses that may be exempt from the State Business License requirement and you can find out from the office of the Secretary of State whether your business is exempted or not.

Do you need a Nevada Business License?

Nevada is considered as one of the dream jurisdiction in the United States for LLC’s and corporations and this is because it has flexible tax policies and a favorable business climate. There are several advantages of incorporating in Nevada and this is what makes the state a first choice for LLCs and businesses. Some of the advantages that you can benefit from include:

• Nevada does not tax the income of state’s citizens and LLCs
• It is not mandatory for directors, shareholders, and officers of an LLC in Nevada to be Nevada residents.
• No Personal State tax
• No Corporate State tax
• No franchise tax on income
• No unitary tax
• No admissions tax
• No estate tax or gift tax
• Nevada is the only state in the USA that does not have a formal information-sharing agreement with the IRS
• In Nevada, incorporation can take place without the need for any minimum initial capital

You will be able to benefit from the above advantages only when you plan to start a business in the state. In order to start a business or LLC in Nevada, you will require a Nevada State Business License, which is issued by the Secretary of State’s office. The filing and payment towards a company license was transferred on October 1, 2009 from the Nevada State Department of Taxation to the Secretary of State.

Whether you reside in Nevada or any other state, the moment you choose to start your business, you will require this license without which you will not be able to incorporate or form your LLC. It is important to get a complete understanding of the regulations of business license in Nevada as it will help you to ensure compliance with all licensing requirements.

If you require in-depth information regarding incorporation of business or formation of LLC in the state of Nevada, you can speak with one of our business experts or click on the incorporation page of the said state.

Getting a business license in Nevada

A State Business License is a mandatory requirement for starting a small business or corporation in Nevada and this license has to be renewed each year. There are specific types of organizations that are not required to obtain Nevada company license and this includes:

• Government entities
• Nonprofit religious entities
• Charitable organizations
• Fraternal organizations

In the state of Nevada, a nonprofit corporation that has been formed under NRS Chapter 82 as well as a Corporation formed under NRS Chapter 84 is automatically excluded from the requirement of obtaining a business license in Nevada.

Determine Type of Business

Business license required in the state of Nevada vary according to the type of business. Some of the business specific license categories include:

• General License
• Privileged License (valid for gaming and liquor)
• Regulated License

In order to move ahead with the specific type of business license required in the state of Nevada, you need to identify the type of business and what your business offers. You can choose the type of business entity as an LLC, General Partnership, Corporation, or Sole Proprietorship. In the state of Nevada, more than 70% of small businesses start out as LLCs.

Once you have identified the type of business, we at EastBiz.com, Inc. will help you obtain the right license for your business to become operational in the state.

County Business License

There are 8 counties in the state of Nevada and each county has their own format for business license in Nevada. Hence, it is extremely important to determine the city/county that your corporation, small business, or LLC will operate from. Some of the important aspects to be considered while applying for company license are:

• The location as well as the type of business will determine whether you require a county license or a city license as well.
• If you are planning to operate your business from several jurisdictions within a single county you will be required to obtain a city license from each of the jurisdictions.
• The Nevada company license fee will vary according to the type of your business.
• The company license fee will also vary according to the jurisdiction of your business.
• You will also require special permits from Police, Health, Building, or Fire Departments prior to starting your business.
• Separate permits will also be required for businesses catering to gaming, liquor, home occupation, and cosmetology among others.
• Business license will have to be renewed each year. The renewal will be due on the last day of the anniversary month in which you had filed the license. As for partnerships and sole proprietorships (NT7), the Nevada Business License needs to be renewed on or prior to the expiration date mentioned on the license itself.

Obtaining a business license in Nevada County is not that demanding a process but it is important to ensure you apply for the license with the right authorities. If your entity is a corporation, an LLC, limited partnership or any other Title 7 entity, then the application for a Nevada state business license can be filed online or mailed or faxed to the Las Vegas or Carson City offices. The filings should be accompanied by specified state business licensing fees at the time of submission. Failure to obtain the right type of business license and permits can result in fines and even lead to premature closure of your LLC or Corporation.
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Have you selected a place for starting your small business? If not, Nevada can be the right place for you. Check out what Nevada has to offer and why most of the companies love to start a new business over there to be sure that you are starting your business in the right place.

As a matter of fact, in Nevada, the cost of living is economical, plus it has a business-friendly tax climate and the high number of businesspeople in Nevada, makes this state one of the best states for starting a new business in comparison to any other state in the USA.

Nevada Business Facts

If you are having thoughts of opening a Nevada LLC, below shared are some of the business facts regarding Nevada LLC that would help you determine if your thoughts are right for your business.

• Nevada is the seventh-largest state, and the federal government governs approximately 85% of the Nevada land.
• Nevada is recognized as “The Silver State,” because of the importance of silver to its history and economy. During 1800, silver was so abundant in Nevada that prospectors directly excavated it off the ground.
• Nevada is a great place to work without worrying much about the taxation. Nevada has no personal or state corporate income tax, no franchise tax for LLC or corporations, nor any business inventory tax.
• In Nevada, about 30% of all small businesses are owned by women, an impressive 66,737 businesses statewide.
• Nevada has more mountain ranges and hot springs than any other state in the US.
• Nevada offers a tremendous degree of privacy to owners of the business who chartered there.
• Nevada’s largest industry is gaming and tourism, owing mainly to the casinos, desert, cacti, and hotels.
• Nevada ranks 33rd among U.S. states and territories by GDP (146,278 million USD).
• Nevada is also remembered for Hoover Dam which is the most massive public works project ever initiated on the USA land.
• Nevada is the best place for all the sorts of businesses and sets the stage for an enormous boom in the employment sector.

Now that you know a lot about Nevada and why this state is a great place to incorporate your business, below shared are the steps to start a Nevada LLC.

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Step 1: Planning of Business Idea

A business concept is a bridge between the business idea and the business plan. In fact, there is no business formula for writing a business plan, because every business idea is unique. Without having proper road-map for doing business in Nevada, your business plan is nothing more than an overnight dream.

If you feel that opening a business is a child’s play and its success is based entirely on luck and the chances you get, this is like playing poker even if you have no idea about the rules and probably might lose at the end. Opening a Nevada LLC is not a simple task, you need to put all your struggles, hard-boiled money, time and become a professional in your niche until you achieve the best and grow your business.

There’s one thing above all that increases your odds, and that’s professional business planning. So, write a business plan, get financial forecasts in proper line, nail your pitch, conduct thorough market research on the field and the demographics of potential clientele in order to make the business plan a virtual reality.

Step 2: Choose Legal Business structure and Incorporate it

By now, you are done with your research work on the business plan and with the market analysis. The next step is to select a business entity in order to start a business in Nevada. The legal business structure affects everything from how you are filing your taxes to how you are doing business.

The second thing which makes this step important is for registering your company in Nevada so that you can secure a brand name and protect your personal assets. There are four business entities from which you can choose as per the benefit offered by each and your needs. These four business entities include the corporation (C-Corporation, S-Corporation), LLC, Sole proprietorship, and partnerships.

But most of the business people prefer to form their business as an Nevada LLC because of its hybrid structure that has all the legal protections of a corporation and the tax benefits like that of a partnership. On the other hand, a corporation is a separate entity that has a legal business structure that includes officers, directors, and shareholders. This type of entity is preferable for the entrepreneurs who are looking to raise their substantial capital funds.

Step 3: Nevada Tax Obligations

The third step for starting a business in Nevada is to follow all the tax rules and regulations. As a matter of fact, Nevada does not impose any franchise tax, although it does collect modest fee along with LLC’s official reports. There is no personal or corporate income tax, and it also offers a tremendous degree of privacy to the owners of the company.

Along with this, owners of the Nevada LLC and shareholders of the corporation don’t need to identify them in front of the public record which is the game changer for many entrepreneurs. It also provides shelter from the prying eyes of the government, the unscrupulous creditors and frivolous litigation. However, it is vital to maintain the track records of your taxes, as it is a compliance requirement so that you wouldn’t expect anything wrong with your business.

Step 4: Obtain Permits and Licenses

After you have completed the initial tasks of opening a business, incorporating it and following the necessary tax obligations that authorizes your company to do business with easily in Nevada, the next step is to obtain the specific licenses and permits. These business licenses and permits are a part of initial and annual report filing in Nevada, making this step an important part of opening a Nevada LLC.

There many other permits and licenses that might apply to your business depending on the type of services or product that you are about to offer through your business. Check out the government website for learning more about the various permits and licenses as per the services/products offered by your company.

Step 5: Open Company Bank Accounts

Keeping your personal and business finances separate is not only a practical idea but it’s essential in order to stay away from any legal system problems. In fact, it is the one of the most natural step for starting a new business in Nevada. All you need to do is just search for the best banking institution which will assist you in boosting your finances.

There is a lot of competition in the banking market, but you have to choose the right bank institution for your Nevada LLC. Opening a separate bank account for your company will also help you in maintaining clear and accurate bookkeeping for your finances and in presenting a professional picture in front of the public record with more ease. Moreover, it will also provide your business with more credibility for both customers and creditors which is especially important when you are starting a Nevada LLC.

Step 6: Choose a Business Location

Setting up a place for your business entity is another critical point for starting a business in Nevada. Location decisions also have significant impacts on the costs and revenues. You need to think about your overall setup, location, and equipment, and make sure you are selecting the right place for your business according to the demands of your goods and services.

Of course, it’s not easy to pick up a location especially in Nevada, when there are astounding nightlife along with the tourism and gaming industries in Las Vegas. Nevertheless, areas around Reno and Carson City, with Phoenix and Salt Lake City and more importantly, Battle Mountain to the north makes the choices more complicated.

If you are not able to figure out the perfect place choice for your business entity, you can easily hire an expert firm such as the Inc Paradise for assisting you with preparing the permits and licenses for your Nevada LLC.

Step 7: Finances Your Business Structure

Since Nevada is a western U.S. state defined by its 24-hour casinos and entertainment for which its largest city, Las Vegas, is famed, it is well known for being economically strong. As a matter of fact, starting a small business does not require a lot of money, but you would still need some amount to open up the business due to the legal obligations that come from both the state and the federal government.

But you don’t need to worry about finances in Nevada since there are many banks and investors that can help you by providing capital to your business. Using the internet and networking with entrepreneurs in Nevada would help you find the right investors as per the requirements of your company.

Do a proper research work before applying to any business institution and investors because your goal is to work through the options and create a plan for setting up the capital you need to get your business off the ground.

Step 8: Design a Business Website

The next step is to give your brand a digital presence via a website. Although it can cost you a substantial amount of funds, investing in website design can generate an outstanding profit for your business.

Moreover, it helps to set apart your business from the competitors, and the logos usually identify it. It will also help you in establishing the credibility for your business. As it is the best and easiest way to reach your customers nowadays. Many customers now search for the online information before purchasing anything, and your site may get the first chance in making a good impression on buyers.

Step 9: Brand yourself and Advertise

Before starting a Nevada LLC, you need to start attracting customers and clients to your business. Your only real challenge is establishing real connections with your niche. You can choose any traditional and conventional way of marketing your products and services.

The very first thing that you should do is create a logo that will help people in identifying your brand. Moreover, it is advised to use the same logo to be consistent while using it across all the social media platforms, as well as on your website. Make sure to keep all the digital assets up-to-date with compelling content about your business and industry.

Step 10: Continue Learning & Stay Encouraged

In order to maintain your success, you need to embark all your dreams, time, struggle, and hard-earned money. If somehow you lose hope on half of the way, motivate yourself every day, or employ someone to do so, but you need this to keep you going and your business going as well.

Conclusion

So, once you have completed all these steps for starting a Nevada LLC, keep this thing in mind that success doesn’t happen overnight. You need to work hard for your company in order to increase the chances of your progress. Start with the plan you’ve created to work on your business consistently, as mistakes are going to happen, and you have to learn from them.

If you can learn from your mistakes and keep a balance in limiting your mistakes and moving forward as soon as possible, then you will become a sensation in no time. If you are ready with the business plan for starting Nevada LLC, contact Inc Paradise for the business registration and for incorporating your business.

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