If you intend to start a business, choosing the right structure can have important and far-reaching consequences. One of the most popular formations is the limited liability company, or LLC. An LLC is governed by the laws of the state in which it was formed, so if you’re considering forming an LLC, it’s important to choose the right state for your needs. Delaware has long been recommended as the most advantageous state in which to form an LLC, but Nevada has become a very popular choice in recent years as well. Here’s what you need to know about the advantages of setting up your LLC in The Silver State.
Favorable Tax Laws
Creating a more favorable tax situation is often the primary goal of forming an LLC, and Nevada’s tax laws are among the most business-friendly in the nation. Nevada levies virtually no state taxes, so by forming your LLC there, you and your business can escape personal income taxes, corporate income taxes, unitary taxes, estate taxes, franchise taxes on income and more. However, if you are based in another state, it’s important to be aware that you may be subject to your home state’s taxes and regulations depending on the organization of your business and finances. When in doubt, consult a professional advisor to ensure you receive the maximum benefit from your LLC formation.
Nevada LLCs enjoy some of the best privacy protections of any in the country. Nevada has no Information Sharing Agreement in place with the Internal Revenue Service, and information regarding owners and shareholders of LLCs is not required to be made publicly available. If you wish to remain anonymous, you can designate an attorney or another person of your choice as the person of record. This degree of privacy is highly useful when it comes to avoiding frivolous litigation and overzealous creditors. These protections are also reinforced by established case law in the state, which offers additional legal protection for the privacy rights of LLC owners. Bear in mind, however, that officers and directors must be listed annually, so anyone operating in these roles is not extended the same level of privacy.
The regulations regarding LLC formation in Nevada are relatively straightforward and highly flexible. You need not be a Nevada resident in order to charter in the state, and your LLC can be formed as a single-member entity if you choose. Nevada also supports the inclusion of so-called “noneconomic members,” which refers to any members who do not have an ownership stake but are nonetheless granted voting rights and managerial duties. This is a convenient solution if you wish to establish an LLC in Nevada and delegate day-to-day operations to someone outside the ownership structure.
Superior Asset Protection
In a Nevada LLC, your assets are subject to several layers of protection. Liability is limited to the company itself, so you’ll never be held personally responsible for your company’s liabilities unless you’ve engaged in fraudulent activities or signed a personal guarantee to a lender. There’s also no requirement to list a company’s assets publicly, so as long as you manage your assets wisely, there will be no way to connect them to you except through privacy-protected IRS filings.
Additionally, Nevada permits the formation of series LLCs. A series LLC provides a way to separate all member assets and interests into distinct series, providing individual protection for each. For instance, a property developer may wish to organize each of its holdings into distinct series, ensuring that its assets in one holding cannot be used to satisfy debts associated with another.
If you’re planning to charter an LLC and you’re in need of rapid approval, your options may be limited in some states. In Nevada, however, you can secure expedited approval so long as you’re willing to pay an additional fee. The standard approval process typically takes several days, but for $125 per form, you can have your application processed within 24 hours. Still not fast enough? Nevada also offers two-hour and one-hour expedited processing, though these will cost you $500 and $1,000 per form, respectively. Despite the cost, this rush processing is invaluable if you need your LLC established right away.
Delaware remains a popular and well-regarded state in which to charter an LLC for business purposes, but Nevada offers many benefits of its own. If you’re willing to pay fees that are somewhat higher than average, you’ll be able to take advantage of the excellent tax environment and the strong privacy and asset protections that Nevada has to offer.
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