Forming a limited liability company in Nevada can be a good option for certain businesses, but it does come with a few disadvantages that you should keep in mind - from high fees to other factors.
In fact, Wyoming offers many of the same, if not more, advantages as Nevada, but at a fraction of the cost. Nevada has successfully ran a marketing campaign which allows it to, frankly, over charge for its limited liability companies. If you are only seeking anonymity, then a New Mexico LLC is the most affordable option.
Find a comparison of Nevada, New Mexico, Wyoming and Delaware LLCs here.
Nevada LLC Fees
Note, not all of these fees are disclosed during formation. They surprise you later on and expect you to pay.
There is also an annual fee for a business license, which comes out to $200 for an LLC or $500 for a corporation. You must file this fee so you remain in the Secretary of State’s good standing. You will also have to pay a fee to submit your Articles of Organization, which is $75.
Many potential LLCs in Nevada may be put off by the relatively high fees. To become an LLC in the state, you must pay an annual manager list filling fee. This fee amounts to $150, which goes toward ensuring the Secretary of State in Nevada has an updated list of all LLC managers within the state (which is one way they are less private than New Mexico companies).
There may also be additional fees if you choose to use registered agents. Many businesses do so, as registered agents can forward you government correspondence such as services of process. The fee that a registered agent will charge varies by company. We only charge $119 to act as your registered agent in New Mexico.
Nevada LLC Privacy
Many businesses in Nevada choose to become an LLC due to the state’s privacy rules. These rules help protect owners as well as shareholders, giving them some level of anonymity. There are not any protections, however, for members, directors, or officers. As such, these privacy rules will not protect everyone in the LLC.
Additionally, to some extent, Nevada LLCs must actively participate in this lack of privacy. That is because your Articles of Organization require LLCs to appoint an initial director or directors for the company. Since the Articles of Organization are in public records, anyone who pays the appropriate fee is able to view the name of this initial director.
Public Filings
To further limit the privacy benefits associated with an LLC in Nevada, you must submit a list including the LLC’s directors and officers online. This is done annually and also involves paying a fee. The Nevada Secretary of State posts the information submitted in this list online. As such, this information is part of the public database, and anyone can find it with ease.
The only way for an owner to remain private is in situations when they choose not to act in the form of a manager in the company. This requirement for a list of directors and officers is in sharp contrast to certain other states that do not require you to disclose either officers nor directors.
Secretary of State Disclosures
Even with the previously mentioned privacy concerns related to forming an LLC in Nevada, it is important to note that litigation taking place across multiple states can disrupt your remaining privacy within Nevada. This is because NV keeps track of the owners of limited liability companies and is willing to divulge them by request. In other words, those who live outside of Nevada and face litigation may find NV’s corporate offices all to willing to share private information.
On the other hand, New Mexico’s Secretary never requests this information. This means they cannot provide it by request because they don’t have it. For these reasons, New Mexico's LLC offers better privacy and anonymity.
Taxes
Beginning in July of 2015, the state of Nevada has taxed all businesses earning at least $4 million in revenue via gross receipts. These taxes can apply to LLCs as well as other types of businesses. You may also have to worry about taxes specific to your industry, the modified version of a business tax some LLCs must pay, and sales tax. Businesses that must pay the tax will not receive deductions for any expenses that could apply. Furthermore, Nevada uses majority ownership when determining taxes. As such, you must pay taxes on any of your LLC income that is beyond the $4 million mark. Learn more about New Mexico LLC taxes
Advantages
While the above disadvantages are worth considering before registering your LLC in Nevada, you should also consider the other side of the coin. Nevada does not charge income tax on shares or profits of small LLCs. Additionally, discounting the exceptions mentioned above, Nevada LLCs provide some degree of privacy since shareholders and owners of an LLC in Nevada do not go on public record. This allows for anonymity and privacy to a limited extent. They also offer many of the same asset protection benefits as a Wyoming LLC.
Before choosing whether or not to form a limited liability company in Nevada, you should carefully weigh your options and consider the ramifications, both good and bad. You may find our comparison of NV, Wyoming, Delaware and New Mexico, our list of New Mexico LLC advantages here and learn about our New Mexico LLC formation service.