Nevada was built on the entrepreneurial spirit of free-thinking pioneers. That spirit is very much alive today. (Nev. Commission on Economic Development).
Several inducements make Nevada a LLC friendly venue. Well-known as having a “pro business climate”, the state promotes several reasons for choosing Nevada to base your LLC. Incentives include the absence of income tax at the personal and company levels, minimal reporting requirements and nominal annual fees.
NRS Chapter 86, Limited-Liability Companies has been enacted by Nevada’s legislature authorizing Nevada LLC composition, formation and management. An index to this Act is located at Nevada LLC Laws .
Fundamentals of instituting and maintaining an LLC in Nevada generally consist of: filing Articles of Organization; payment of formation fees; ratifying an operating agreement; meeting annual filing requirements and paying periodic fees to the State. For more information on formation procedure, please refer to the article to form a Nevada LLC .
Properly forming a LLC in Nevada results in personal protection to members and managers. By complying with Nevada’s relatively non-obtrusive disclosure and maintenance provisions, limited liability protection from business debts can be extended perpetually.
An LLC may be formed in Nevada for any “lawful purpose”, and is created when articles of organization are filed with the Secretary of State. The effective date of incorporation begins on the date which the articles are filed by that office.
Restrictions governing LLC business objectives can be included in its operating agreement or in its articles of organization.
Certain issues should be addressed before submitting the formation documents. Whether the LLC will be managed by members or managers is of key importance.
Electing a manager-managed structure for an LLC may result in some of the profit owners not having “final say” in management decisions. If the final decision makers concerning business operations will be the same individuals that receive company profits, then a member-managed structure is usually the least complicated method. With a member-managed composition, all the members also possess management rights.
Unless the articles provide otherwise, Nevada LLC management vests in the members “in proportion to their contribution to its capital”. If management rights are to be shared equally between the members, then the Articles need to so state.
Conversely, the articles may provide that management will vest in a manager or managers “who may but need not be members”. In the instance of a manager-managed LLC, Nevada law provides the managers will have the responsibilities “set out in the operating agreement”.
Interests in a Nevada LLC are transferable, but an operating agreement can limit this transferability. For example, the operating agreement might give members the first right of refusal to purchase a selling member’s rights before they can be transferred to a non-member.
A registered agent located in Nevada is required for every LLC. While the primary purpose of the registered agent is to receive legal notice for the company, (See NRS Statute 86.261) it is extremely important to understand agents serve an equally important role of keeping certain records.
The agent should keep certified copies of the articles of organization and the effective operating agreement of the company. You can view NRS Statute 86.241 for the documentation agents are responsible for maintainingfor the company.
In Nevada, the registered office of an LLC will be that of its registered agent. The LLC may conduct business from a separate address, but for jurisdictional purposes, the Secretary of State will send any notices to the LLC at its registered office.
As with corporations, a Nevada LLC has perpetual existence, unless it chooses to designate a specific date for dissolution. The LLC can continue to exist regardless of the status of the individual members, even after the death of its last member. If the LLC is to dissolve at a predetermined date, then the dissolution date can be indicated in the LLC’s articles of organization or in its operating agreement (NRS 86.155).
Under Nevada Revised Statute 86.286 an LLC may, but is not required to adopt an operating agreement. However under NRS 86.291 managers of a member-managed LLC have rights “accorded to them by the members and set out in the operating agreement”. If an LLC does ratify an operating agreement, then it must be by unanimous agreement of all the members and the operating agreement must be in writing. Unless an operating agreement states to the contrary, it can be amended only by unanimous agreement of the persons who are members at the time of amendment (NRS 86.286).
An operating agreement is binding between the members and managers, and is not filed with the Secretary of State.
While a limited liability company is usually less unwieldy than a corporation, an operating agreement can be complex. The degree of complexity is dependent on the agreement of the entrepreneurs incorporating the company.
When compared to incorporating, LLCs are usually less expensive to start and operate. In addition to the state filing fee, an LLC is required to file a List of Managers or Members. The cost is $125.00 and it must be filed by the last day of the first month which the articles of organization are filed.
The company may also need to file Articles of Amendment or Amended Articles of Organization in some instances. When the management composition or company name changes, such filings are necessary.
Annual franchise fees are not imposed by Nevada, but an annual business licensing fee is charged, and Nevada requires periodic filings of a List of Managers or Members. Nevada also requires a LLC to obtain and keep a certified copy of the articles of organization.
Few other administrative requirements exist. However, nominal fees are imposed for simple mandatory notices which need to be filed if the company’s address or registered agent changes. A Nevada LLC should also maintain adequate accounting and licensing records.
We provide Nevada LLC formation services to business owners, startups, entrepreneurs, attorneys and investors. Engage this firm, by starting your Nevada LLC online. The details will remain confidential. You can have us call you to go over everything with you and proceed directly to setting up the company.