Resident Agents of Nevada

Nevada LLC

The limited liability company (LLC) is not a partnership or a corporation. It is really a hybrid between the partnership and the corporation. It is a distinct entity created by state statute that offers business an alternative to partnerships and corporations by combining the corporate advantage of limited liability with the pass-through tax advantage of a partnership. The structure of the Nevada LLC is extremely flexible, and is a matter of contract among its members. The LLC in Nevada is similar to (1) a general partnership with limited liability; (2) a limited partnership where all owners participate in management and all have limited liability; and (3) an S corporation without the ownership and tax restrictions. Because of the limited liability feature and the formality involved in its formation, a Nevada LLC is more nearly related to a corporation than a partnership.

One owner Nevada LLCs are generally treated the same as sole proprietorships. Profits are reported on Schedule C as part of your individual 1040 tax return. Self-employment taxes on Nevada LLC net income must be paid just as you would with any self-employment business.

Multiple owner Nevada LLCs - Limited Liability Companies are treated as a partnership by the IRS. The tax return that the LLC in Nevada completes and files is IRS Form 1065, Partnership Information Return. On this form, Nevada LLC profits are reported and allocated to each of the owners according to the LLC's operating agreement. Each owner is given a Schedule K-1, which shows each owner's share of LLC income or loss. The owner then reports and pays taxes on this income on the owner's annual 1040 income tax return.

Please note that as with a sole proprietorship, all profits of the Nevada LLC are taxed to the owners, even if they are not actually distributed by the LLC. This situation could happen when the LLC needs to use its profits to meet ongoing expenses.

There is a possible third tax treatment that a Nevada LLC could elect if it did not want pass-through taxation. The LLC may elect to be taxed as a corporation by completing IRS Form 8832 and checking the corporate income tax treatment box. After making this election, the Nevada LLC is taxed as a C corporation by the federal government. Because the corporate income tax rates for the first $75,000 of corporate taxable income are lower than the individual income tax rates that apply to the taxable income of non-corporate taxpayers, it is possible a net income tax savings can result from this tax election.

The state income tax treatment of Nevada LLC profits typically mirrors the IRS tax treatment as discussed above. Some states have different rules and for specific information on your state rules visit your state's web site.