A limited Liability Company, normally referred to as a LLC, is a business structure that is a hybrid Partnership and Corporation.
Like a Partnership or Sole Proprietorship, income is reported on the owners’ personal tax returns but like a corporation it offers protection of personal assets for business liabilities.
A few Frequently Asked Questions about LLCs are:
Question: Do I need a lawyer to form a LLC in Nevada?
No. The State of Nevada allows the forming of a LLC by submitting an Articles of Organization with the Nevada Secretary of State and paying the appropriate fees. Among the required fees are a $75 filing fee, a $125 Annual Members filing fee and a $200 State Business License fee.
Question: Do I have to pay the State Business License if I am in another state?
Yes. Regardless of where your business may be physically located, the State of Nevada requires all business entities to pay an Annual State Business License. While you may object to paying this fee, the total fees for a Nevada entity is still much less then nearly every other state and you still enjoy the benefits of Nevada’s Corporation Shield of Assets Protections.
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Question: How many people do I need to form a Nevada LLC?
The State of Nevada only requires 1 person/entity to form LLC. It is not necessary that the the person/entity be a nature person. A LLC may be formed, managed and owned by one or more other LLCs, corporations or partnerships – or of course people.
Question: Do I need a Nevada Mailing Address for my LLC?
No. There is no requirement for a State of Nevada mailing address for the LLC, the Members or the Managers. The LLC is required to have a Registered Agent with a Nevada address.
Question: Am I required to file an Operating Agreement with the State of Nevada?
No. You are not required to file your Operating Agreement. However, in the event you do not have an Operating Agreement, Nevada Revised Statutes do specify certain default conditions for managing/controlling the LLC. The smarter way to handle the situation is to form an Operating Agreement in advance to keep the government out of your business. The NRS does allow, under some circumstances, that the Secretary of State’s office to demand a copy of your Operating Agreement.
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Question: Can any type business be formed as a LLC?
No. There are certain businesses, such as Banks, Insurance and Trust are prohibited from be LLCs. Other businesses may also be restricted, if necessary, check with Secretary of State.
Question: What is an Operating Agreement?
An Operating Agreement is a document that establishes the parameters by which the LLC will be formed, funded and operated. It can also handle issues such as transferring of ownership interests.
Question: What are some differences between LLC and Partnerships?
The biggest difference is the handling of Debt and Liabilities. In a partnership, all partners are generally considered equally liable for all the debts of the partnership regardless of which partner is responsible for incurring the debt. With a LLC, the members/owners are limited in their liabilities to the extent of their investment – protecting their personal assets from business debts. When it comes to taxation, LLCs and partnerships may be handled in nearly identical manners with the income being passed to the members for taxation on their personal income tax filings. The LLC, however, can have other flexibilities in the handling of profit through the use of the Operating Agreement to assign different percentages of profit to different members. LLCs also can enjoy many business expense tax deductions that are enjoyed by corporations.
Question: Are LLCs better then Sole Proprietorships?
Both have their advantages. The decision is a business management, a personal liability and a tax decision that should be considered carefully with the help of professionals - tax professionals and legal professionals.
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