There are many reasons that you may consider creating an LLC in Nevada. Before you do so, however, you need to weigh the pros and cons as this state has a few important drawbacks compared to others. Some argue that Nevada’s appeal to limited liability companies is the result of a successful marketing campaign that causes people to ignore some of the negatives. While there are benefits to forming a Nevada LLC, many of them are limited by disadvantages.
Many people considering forming a limited liability company in Nevada will find the high fees off-putting. These fees are higher than those of many other states, thereby increasing your initial costs. Becoming a Nevada LLC requires payment of an annual fee that lets you appear on a manager list. This fee is $150 and helps the NV Secretary of State ensure the list of LLC managers in the state is updated.
In addition to that fee, you must pay an annual business license fee. Corporations pay $500 while LLCs pay $200. Without this fee, the State’s Secretary will view you in poor standing. Even submitting the required Articles of Organization entails a fee of $75.
To make it worse, not all fees are apparent during the formation process. In many cases, they will come as a surprise, especially if you have not done enough research. There are also potential fees for using registered agents. The fee varies from company to company but is typically worth it to make running your LLC easier.
Another concern for Nevada LLCs is privacy. This may seem like an odd disadvantage at first since many of the state’s businesses chose LLC status due to privacy rules. Those rules do in fact give shareholders and owners a degree of anonymity. However, the problem is officers, directors, and members have no such similar protections. In other words, Nevada’s privacy laws do not protect all parties in an LLC.
To further reduce any privacy benefits of a Nevada LLC, the LLCs must share certain information. The Articles of Organization must include the appointment of one or more directors for your company. These articles become part of public record. That means the only requirement to see the first director’s name would be to pay a fee.
You should also keep in mind that the Secretary of State will divulge the name of an LLC owner by request in the case of litigation. Some states do not even collect that information and would have no way of sharing it.
PUBLIC FILING REQUIREMENTS
To further limit the privacy of LLCs in Nevada, there is a requirement to list all officers and directors online. Not only does this reduce privacy, but you must pay a fee for it. The annual list appears online, with yearly updates from the Secretary of State. The online presence of such information means it is public and easy to find.
Owners who want to stay private can only do so if they are not a manager of the company. In contrast, some other states do not have requirements to disclose the directors or officers.
There are also tax concerns for Nevada LLCs. Since July 2015, NV has taxed revenue of gross receipts for companies earning $4 million or more. This also applies to LLCs. There may also be industry-specific taxes to consider. The state even utilizes majority ownership for taxes, so you will be responsible for taxes on LLC income over $4 million.