Nevada is home to over 300,000 small businesses that account for 99.2% of the businesses in the state, employing 42.5% of Nevada's workforce. Known for its business-friendly tax structure and strategic location, Nevada offers significant opportunities for businesses. The state's economy thrives on industries like tourism, entertainment, and technology, providing a dynamic environment for growth. With no state income tax and incentives for businesses of all sizes, Nevada presents a highly favorable option for entrepreneurs. The state also exhibits a variation in its top three industries when compared to other states, with transportation & warehousing playing a much more significant role. Nevada also boasts some of the most diversity in business ownership, with 45% of businesses owned by women, over 7% of businesses owned by veterans, almost 20% of businesses owned by Hispanic individuals, and 24.3% of businesses owned by BIPoC individuals.
Here's a primer on how to start a business in Nevada.
Costs associated with forming a business varies by business entity type and by state the business was formed in. We aim to cover here the basic costs specific to the state for starting a business. We also touch upon other costs in order to stay compliant and continue to doing business in the state, such as paying various state taxes or complying with local minimum wage laws when hiring in-state.
We cover in broad strokes the following costs:
There are several types of business structures you can choose from when forming your business. Which is best for your business depends on a variety of factors, like ownership in the business, taxation, and more.
No State Filing: There are two types of structures which can be automatically formed without any filing with the state. Sole proprietorship and general partnership falls into this category, and they are a popular form of self-employment.
Formed or Incorporated: Three most common business entities that require some formation or incorporation with the state are corporation, limited liability partnership (LLP), and limited liability company (LLC). Each structure has its own one-time formation or set-up cost.
Nevada offers the basic entity types that businesses can choose from in any state when filing for a domestic entity setup: Corporation (for profit and nonprofit), LLP, and LLC. There are additional variations for each of these entity types as well as other structures. Nevada for example easily allows for foreign entities to form foreign corporations and LLCs online, which not every state offers.
There are some unique features of entity formation in Nevada worth calling out. For example, Limited Liability Partnerships and Limited Partnerships can either be formed under NRS 87A (can exist forever) vs. NRS 88 (has a dissolution date). Another example is the need for unincorporated entities most notably Sole Proprietorship and General Partnership to get a license with the state in order to do business. Most states do not have this requirement.
Nevada allows for the formation of professional corporations or LLCs. The name of a professional corporation must contain the words “Professional Corporation,” or the abbreviation “Prof. Corp.,” “P.C.,” or “PC,” or the word “Chartered” or the abbreviation “Chtd.,” or “Limited” or the abbreviation “Ltd.” The name must also contain the last name of one or more of its current or former stockholders. The name of a professional limited-liability company must contain the words “Professional Limited-Liability Company” or the abbreviations “Prof. L.L.C.,” “Prof. LLC,” “P.L.L.C.,” “PLLC,” or the word “Chartered” or the abbreviation “Chtd.,” or “Limited” or the abbreviation “Ltd.” Like the corporation, this name must also contain the last name of one or more of its current or former members.
Domestic and foreign entities can be formed predominantly online at Silver Flume Nevada's Business Portal operated by Nevada's Secretary of State. Follow their New Business Checklist to form an entity.
Across all US states, the average cost of formation is roughly $100 with some states costing as little as ~$50 to create a corporation and some as high as $500+ to form an LLC.
Here are the formation costs (up to date at the time of this writing) for three most common entity types for businesses filed with the state:
Franchise taxes are state fees that businesses pay in order to have the right to operate in those states. They are paid in addition to state and federal income taxes. Failure to file can cause a business to lose its good standing with the state, making it difficult to operate, get loans, and may cost the business clients if clients require this information.
Here are the franchise tax fees for each business entity structure in this state as of the time of this writing.
Taxes, taxes, and more taxes. Although income taxes may seem far off concern when starting a business, the truth is that not withholding enough for income taxes is a material cost to business owners. Here we briefly cover state income taxes. For a better overview of self-employment taxes, you can read more on Small Business Tax Planning.
Pass-Through Entities: Pass-through entities are boon to small business owners. A pass-through entity is a business structure where income passes directly to the owners or investors, and they report it on their personal tax returns. This allows the business to avoid paying corporate taxes, making it a more tax-efficient option for small businesses. This also makes filing taxes significantly simpler as only one return is needed.
By default, sole proprietorships, LLCs, and partnerships are considered pass-through entities. In the case of LLCs, LLCs are usually referred to as disregarded entities. However, owners can choose to get their LLC be recognized and treated differently for tax purposes with the IRS.
Corporate Income Tax: Most states (44 out of 50) levy a corporate income tax.
C-Corps pay a C-Corp state income tax rate. If the income tax is pass-through, as with S-Corps, use your personal income tax rate.
Limited Liability Companies: For LLCs, the tax rate depends on the how you set up the LLC business structure.
Business owners who sell goods or services within a state are typically required to collect and remit state sales tax. Each state has different rules regarding what is taxable, so it’s crucial to understand the state’s specific requirements. Most businesses aren't at significant risk of non-compliance with sales tax until they reach the state's economic nexus threshold.
Economic nexus refers to the threshold of sales or transactions in a state that, once exceeded, obligates a business to collect sales tax, even if they don't have a physical presence there. Once a business achieves economic nexus, they must register with the state’s tax authority and start collecting sales tax on applicable sales. Failing to comply with these requirements can result in penalties and back taxes. Economic nexus is particular important when it comes to online sales for e-commerce companies.
The state base rate is 6.85%, however, counties can leverage their own sales tax. which can bring the total as high as 8.375%. See a detailed breakdown by county here.
If you're considering hiring employees for in-person work, then knowing your state's employment laws are important.
One important to factor is knowing the local minimum wage, which varies depending on state and sometimes even by city or county. Note that in addition to the hourly rate, employers should also consider payroll taxes, workers’ compensation insurance, and potential benefits costs.
Here we just provide a review in the table below costs specific to the state, namely the state's specific minimum wage, any applicable exceptions to the minimum wage, and recurring payroll taxes.
*Corporation Filing Fee Note: The fee for submitting Articles of Incorporation starts at $75 and increases incrementally based on the total number of authorized shares of the company. The maximum filing fee caps off at $35,000. A full schedule of the incrementally increasing fee can be seen here, on page 11.
**DBA Filing Fee Note: DBAs are registered with the county. There may be slight variation in process and fee, please contact your county for more information.
***Corporation Annual Fee Note: Nevada requires corporations to annually update two registrations (annual list and annual license), for a combined total of $650.
****General State Business License Note: Sole proprietorships and general partnerships will need to obtain a general business license for $200 when forming and every year after. Every other entity type will pay the formation fee specific to their organization, and then will annually pay the $200 general business license fee along with any other annual report fees due.
Business Entity Searches can be completed here. Their online service also allows for the submission of annual reports.
SilverFlume also allows for the request of Certificates of Good Standing.
Visit the Nevada Business Resource Hub for more information on topics like access to capital, starting & growing your business, and finding local business mentors.
The idea of starting a business can be exciting, but the plethora of choices, jargon, and costs associated with the pure act of setting up a business with the state can be an unnecessarily daunting and time-consuming process.
Although this guide can't setup your business entity for you, it provides an overview so you can get a head start. We hope this article has sheds light on the essential costs involved and provides guidance on how to manage them effectively, setting you on a path towards entrepreneurial success.
DISCLAIMER: Information on this site is for educational purposes only. LeHerring LLC does not provide, legal, accounting, tax or investment advice. Although care has been taken in preparing the information provided to you, we are not responsible for any errors or omissions, and we accept no liability whatsoever for any loss or damage you may incur. Always seek financial and/or legal counsel relating to your specific circumstances as needed for any and all questions and concerns you now have or may have in the future.
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