You have a phenomenal business idea, you’ve done some homework to verify your idea is viable, and now you’re ready to take the necessary steps to make your dream of starting a business in Nevada come true. Starting a business in Nevada offers the opportunity to take charge of your own professional destiny in a state known for entrepreneurial innovation and success.
What Are the Benefits of Starting a Business in Nevada?
According to the U.S. Small Business Administration Office of Advocacy’s 2018 Small Business Profile for Nevada, the state is home to over 250,000 small businesses, which employ nearly 500,000 people. Entrepreneurs find Nevada an attractive state to launch a business for many reasons, including:
Accessibility to the West Coast and California marketsNo state corporate or individual income taxNo state franchise taxFinancial incentives for hiring employees (through the Siver State Works program)How Do You Start a Business in Nevada?
Whether you’re starting a small business in Nevada or have your sights set on establishing a large enterprise there, it’s critical to know what you need to do to launch and operate a company that meets all of the state’s requirements. To help you through the process, I’m going to share many of the details you’ll have to address. Note that what I’m sharing here is not legal, accounting, or tax advice. If you need guidance on those issues, please seek advice from licensed professionals.
Here are the main steps for starting a business in Nevada:
1. Choose a business structure.
I can’t emphasize enough how critical it is to thoroughly research your options and get guidance from an accountant and-or attorney as you make this decision. The entity type you select for your business will have legal and tax implications. Which business structure will be best depends on your situation and your goals for your business.
Business Structures in Nevada
Sole ProprietorshipGeneral partnershipLimited Liability CompanyLimited PartnershipLimited Liability Limited PartnershipDomestic CorporationClose CorporationProfessional CorporationNonprofit CorporationNonprofit Cooperative CorporationCooperative AssociationLet’s visit some of the basics about some of the most commonly chosen entity types in Nevada.
Sole Proprietorships and General Partnerships
Sole Proprietorships and General Partnerships do not need to file formation documentation, but they must obtain a state business license, along with any other state or local licensing and permit requirements that apply to their location and type of business. In a Sole Proprietorship or Partnership, there is no legal or tax separation between business owners and the business. In addition to income tax, business owners must also pay self-employment taxes (12.4 percent Social Security Tax and 2.9 percent Medicare Tax).
Limited Liability Company (LLC)
Like sole proprietorships and partnerships, an LLC’s tax obligations pass through to the owners (known as members). From a legal perspective, an LLC is a separate entity from its members, so if the business gets sued or faces financial hardships, the owners receive some protection of their personal assets (home, bank accounts, etc.). Eligible LLCs have the option of filing for S Corporation tax status if they want to minimize their self-employment tax burden. With S Corp election, rather than all of the members’ income getting taxed for Social Security and Medicare, they only pay self-employment taxes on the compensation they receive as wages and salaries. Profits issued to them as distributions are not subject to self-employment taxes.
Limited Partnerships (LP
Limited Partnerships consist of “general” partners and “limited” partners. Owners considered general partners do not have a legal separation between themselves and the business. Limited partners, on the other hand, have personal liability for the business only to the amount of their investment in the company. LPs are taxed the same as general partnerships, with all profit and loss flowing through to the owners. Nevada allows LPs to choose whether they wish to be governed either by the law outlined in Chapter 87A of the Nevada Revised Statutes (NRS) or Chapter 88 of the NRS, the primary difference being the degree of division between the roles of general and limited partners.
Profit Corporations
Profit Corporations, also called C Corporations, are legal and tax-paying entities separate from their owners (shareholders). A C Corp reports and pays federal income tax on a corporate return. Corporations may sell stock to raise funds. Shareholders report tax via their individual tax returns on salaries and wages (if they work in the company) and profits paid to them as dividend income. Corporations that want to avoid the default “double taxation” (some company profits getting taxed once at the corporate level and then again at the individual level when they’re distributed to shareholders as dividends) can elect for S Corporation tax treatment if they meet the IRS’s specifications.
2. Name your business.
After you’ve identified a name that you want to use for your business, check to make sure it’s not already in use (or reserved by) another business in the state. CorpNet’s free name search tool can help you do that. If you think you may want to use your business name in other states eventually, doing a trademark search is beneficial, too.
When you register your entity with the state, your name will become official. The state allows entrepreneurs to reserve a business name for 90 days. If you know the name you want but aren’t quite ready to launch your business, you can reserve the name for 90 days
Businesses may also file a Fictitious Firm Name Form in the counties where they do business if they intend to market their company under a name that’s different from the legal name of the entity. This is also known as a“Doing Business As” (DBA). Sole Proprietorships and General Partnerships commonly file DBAs when they want to use a business name that’s more creative than their legal name (which must include their first and last name). For example, let’s say George Ortiz starts a business ergonomics consulting services firm and opts to run it as a Sole Proprietorship. If he wants to use the name “Exceptional Ergonomics” rather than something like “George Ortiz Business Ergonomics Consulting,” he must file a DBA.
3. Designate a registered agent.
Registered business entities (e.g., LLCs and C Corporations) in the state of Nevada must appoint a registered agent (an approved individual or registered agent services provider) who will accept service of all legal paperwork on behalf of the company. The registered agent must reside or be located in Nevada and have a physical street address where they will receive paperwork for your business. As you look into registered agents in Nevada, I hope you’ll consider CorpNet’s registered agent services. We provide our services in Nevada and everywhere else in the United States, too.
4. Find a business location.
If your business will serve customers at a physical location, the location you choose will have a direct impact on your success. Carefully research the zoning, licensing, and permit requirements of the jurisdiction you’re interested in. (See Step 6 for more information about that) Also, connect with the local government authorities to explore if any programs exist that provide credits or incentives for locating your business in the area. The Nevada Department of Business and Industry offers a handy way to connect with local governments throughout the state by following the links on the map provided in its “Guide to Starting and Growing a Business in Nevada.”
5. Register your business.
After deciding on a business structure, choosing a business name and verifying that it’s available for use, and designating a registered agent, entrepreneurs must register their business entity with the state. Nevada has an online portal (called “Silverflume”) that handles all business registration and licensing. To save yourself the effort, CorpNet is here to complete the paperwork and file it for you.
In addition to filing the proper formation documents (like Articles of Organization or Articles of Incorporation), there may be other state reports and documentation, as well.
Current Nevada state filing fees to submit business formation paperwork are as follows:
LLC – Articles of Organization, $75; Initial List of Managers or Managing Members, $150; Nevada Business License, $200Limited Partnership (Chapter 87A) – Certificate of Limited Partnership, $75; Initial and Annual List of General Partners, $150; Nevada Business License, $200Limited Partnership (Chapter 88) – Certificate of Limited Partnership, $75; Initial and Annual List of General Partners, $150; Nevada Business License, $200Corporation – Articles of Incorporation, Fees (starting at $75) are based on the number of shares authorized; Initial List of Officers, $150; Nevada Business License, $500Note that although sol
6. Obtain an EIN (Employer Identification Number).
An EIN is a unique nine-digit identification that businesses must have to hire employees, open a business bank account, and file certain reports. Individuals with a Social Security Number (SSN) or an Individual Tax ID Number (ITIN) can obtain an EIN for free from the IRS. CorpNet can assist you by filling out and filing IRS Form SS-4 to request your company’s EIN.
7. Open a business bank account.
With your EIN in place, you can establish the bank and credit card accounts you’ll need for depositing your business income and paying expenses. This is extremely important to ensure you maintain separation between your personal and business finances. Failing to keep those monies separate can cause not only bookkeeping headaches but also legal problems. If you start using business funds for personal purchases or otherwise commingle finances, a court may determine you’ve “pierced the corporate veil” that shields owners of LLCs and corporations from liabilities of the business.
8. Seek funding for your business.
If you will need to secure funding to get your business off the ground, make sure you have a well-written, thorough business plan that includes financial projections. Keep in mind that some lending institutions and investors might be hesitant to lend money to businesses that aren’t formally registered as entities with the state—this is something to think about as you choose your business structure! Besides banks, credit unions, and private investors, here are some resources that you might find helpful as you look for financing:
9. Obtain a Nevada State Business License and any other required licenses and permits.
Nevada State Business License
Every business (including sole proprietorships and general partnerships) must obtain an annual business license. The annual fee for Corporations is $500 and $200 for all other business entity types. The yearly renewal deadline is the last day of the anniversary month when the business license was initially filed.
It’s also critical to determine the county and local city licensing requirements. Depending on location and type of business, you may need to obtain a county license as well as one or more city licenses. Licensing fees vary depending on the jurisdiction and type of business.
Industry-Specific Licenses and Permits in Nevada
The state also requires businesses in certain industries to obtain special state licenses and permits. Below, I’ve listed several affected industries and the agencies to contact for information:
Professional Licenses in Nevada
Also, business owners and workers may need a professional license from either the state or an independent board to legally provide their services.
Zoning Rules in Nevada Counties and Local Jurisdictions
Check with your county and zoning district about any ordinances and codes you must comply with where your business will be located.
CorpNet can help you through the process of identifying the business licenses and permits you’ll need, and we can take care of filing your applications with the appropriate agencies, as well.
10. Establish the necessary Tax accounts with the Nevada Department of Taxation
Staying in compliance with all state, local, and federal taxes is essential. In addition to Federal income tax, there are other state and local taxes businesses may need to pay. Check with the Nevada Department of Taxation to find out if you will need a resale certificate, exemption certificate, or must pay use tax. The Nevada state sales tax is 6.85 percent, and local sales tax rates vary. Note that the state sometimes requires businesses to secure a surety bond to guarantee that they will make all due payments on time.
Businesses that hire employees must also pay unemployment insurance and workers compensation coverage.
11. Start networking and marketing.
Don’t adopt a “build it and they will come” mindset. Succeeding in business requires getting the word out and spreading awareness about your company. Consider a combination of “old school” and new media strategies to build your brand.
Nevada’s Department of Business and Industry has a calendar of networking and training events where you can meet others in the business community. Face-to-face networking opportunities offer an excellent way to build and nurture business relationships, which can result in quality referrals. Also, consider getting press releases out to local newspapers, radio stations, and TV stations, which could spark media interest in showcasing your business in feature articles and news segments.
Embrace the power of digital marketing, as well. Create a website that can serve as your company’s digital hub and central location for finding information about what you offer. Also, maintain active and engaging social media accounts. I encourage you to explore some of the advertising opportunities through social media. Facebook, for example, enables businesses to create ads and target them to particular audiences at a very reasonable cost.
12. Hire staff.
If you will need employees to work in your business, develop job descriptions and decide what qualifications and skills you will look for job candidates. Make sure you understand all hiring and human resources related laws and payroll responsibilities. You can find a lot of information online, and it can be helpful to get guidance from one or more of the following: attorney, accountant, human resources consultant.
13. Keep a compliance checklist.
To avoid additional fees, penalties, and risk losing your status of good standing with the state, make sure you keep all of your ongoing business compliance requirements in order. Our online portal, the CorpNet Business Information Zone (BIZ), is a tool that can make the task simple and hassle-free.
Resources for Starting a Business in Nevada
In addition to attorneys, accountants, tax advisors, business consultants, and other professionals that can help you make mission-critical decisions when starting a business in Nevada, other resources are available that have Nevada-specific entrepreneurial information. Several of them include:
And, of course, CorpNet is here to help you with all of your registration paperwork when starting a business in Nevada and compliance filings year after year. Contact us today about our registered agent services, obtaining an EIN, forming an LLC or incorporating, applying for business licenses and permits, and more!