How to Start an S-Corporation in Nevada (2024 Guide)

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Start an S-Corporation in Nevada

If you want to start an LLC in Nevada, there are things that you should consider. Nevada is the home to a thriving business community, making it an attractive location for entrepreneurs. One popular business structure is the S-Corporation, which offers several tax and operational advantages. This comprehensive guide will explore the process of starting an S-Corporation in Nevada, including the costs, steps, advantages, and disadvantages associated with this business structure.

Webinarcare Editorial Team will help you gain knowledge through thorough research and market study. Before starting your S-corp, all the steps in this article must guide you.

How to Form an S-Corporation in Nevada

What is an S-Corporation?

An S-Corporation is a type of corporation that elects to be taxed under Subchapter S of the Internal Revenue Code. This tax treatment allows S-Corporations to enjoy pass-through taxation, meaning the corporation’s income, deductions, and credits flow through to the shareholders, who report this information on their individual tax returns. This structure helps to avoid the double taxation experienced by C-Corporations.

An S corporation (S corp) is not a type of corporate entity, unlike a limited liability company (LLC) or other companies. It’s a tax classification that might result in significant financial savings for corporations and LLCs but in different ways. S-corp is similar to LLC, except that the IRS treats it as a corporation for tax purposes.

Limitations and Requirements of S-Corp

As you have decided to have an S-Corp structure for your business, you must know the limitations and requirements to qualify for S-Corp status. We have listed some important points to consider following for your reference-

  • Be a domestic corporation.
  • Not be an ineligible corporation, such as specific financial institutions, insurance providers, or domestic corporations engaged in overseas sales.
  • Have just one type of stock.
  • Have a maximum of 100 shareholders or members.
  • Have only permitted individuals, certain trusts, and estates as stockholders or members.

You can apply for an S-Corp in Nevada if qualified for the limitations and requirements.

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How to Form an S-Corporation in Nevada?

To create S-Corp in Nevada, you must follow the below guidelines that include forming a business name, hiring a Registered Agent, filing your Articles of Organization, creating an operating agreement, requesting an EIN, and filing a form 2553.

Step 1: Register a Business Name in Nevada

After you have decided on the idea to start an S-Corp in Nevada, deciding the name for your corporation is significant. Legal procedures should be taken into account when choosing your partnership name. Choose a business name that will enable you to develop a strong brand identity.

If you want to set up an S-Corp, there is a complete guide on Nevada Business Name Search for a proper business name. Here are some guidelines you must follow while naming your S-corp.

  • Avoid profanities
  • The name should be available, and no other entity should have the same name in Nevada.
  • Limit of restricted words that need a license in Nevada
  • Do not use a business name that sounds like a government agency or entity (like “police,” “county,” and “state”)

Step 2: Hire a Registered Agent

The next step in starting an S-corp in Nevada is hiring a Registered Agent, a person that accepts legal paperwork on behalf of your business. This person or business will receive important tax forms, legal documents (such as subpoenas), all notices of lawsuits, and other official government correspondence. Forming an LLC with an S-corp will be easier if you have Registered Agent in Nevada.

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Step 3: File For Articles of Organization

The Articles of Organization is an important document to start your limited liability company (LLC). Nevada Articles of Organization is a simple document that contains the business name and address as well as the name and address of the person who received lawsuits on behalf of the organization. For the Articles of Organization to be filed in NH Secretary of State, you need to pay a filing fee of $75. In Nevada, the filing fee of forming an LLC is $425.

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Step 4: Creating an Operating Agreement

After you have filed your Articles of Organization, the next step is to create an operating agreement in Nevada. The operating agreement is essential and necessary since it will cover your corporation’s important documentation and rules. The operating agreements usually include the following:

  • Article I: Organization
  • Article II: Management and Voting
  • Article III: Capital Contributions
  • Article IV: Distributions
  • Article V: Membership Changes
  • Article VI: Dissolution

After creating the LLC operating agreement, you can benefit in several ways since it will discuss how decisions for the business will be made, including management and member voting structure.

Step 5: Request for an EIN

After documenting the operating agreement, you should get or request an Employer Identification Number (EIN). An EIN will serve as the tax ID for your general partnership. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in Nevada can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that the Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

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Step 6: File Form 2553 for your S-Corp Business

Once you have obtained your EIN and Articles of Organization to form an S-Corp, you must file Form 2553, Election by a Small Business Corporation, to apply for S-corp status. Filing a form 2553 should be done 75 days after the formation of your S-Corp, or at most 75 days after the beginning of the tax year in which the election is to take effect.

If your LLS-Corp has passed the deadline of 75 days, you must also file Form 8832, Entity Classification Election, to opt to be taxed as a corporation. Then you would send Form 2553 and Form 8832 jointly by certified mail from the USPS.

In Nevada, you can file your form 2553 in the Department of the Treasury Internal Revenue Service Center – Ogden, UT 84201 Fax: 855-214-7520 .

Costs of Forming an S-Corporation

There are several costs associated with forming an S-Corporation in Nevada, including:

  1. Filing Fees: When forming a corporation in Nevada, you must file Articles of Incorporation with the Nevada Secretary of State and pay a filing fee of $75 for filing online, fax, in person and by mail.
  2. Statement of Information: After forming the corporation, you must file a Statement of Information (Form SI-550) within 90 days and pay a filing fee (currently $25). This statement must be filed annually after that.
  3. Franchise Tax: S-Corporations in Nevada are subject to the annual franchise tax, which is the greater of a minimum tax (currently $800) or a calculated tax based on the corporation’s net income.
  4. Other Costs: Depending on the nature of your business, additional costs may include obtaining licenses and permits, registered agent services, and professional fees for legal and accounting services.

Advantages of Forming an S-Corporation

There are numerous advantages to incorporating an S-Corp, but you should be aware of certain problems. Consider the following benefits of an S corporation:

Pass-through Taxation

S-Corporations enjoy pass-through taxation, which helps to avoid the double taxation faced by C-Corporations. This can result in potential tax savings for shareholders. Pass-through taxation is a tax system where the income, deductions, and credits generated by a business entity, such as Nevada General Partnership, limited liability company (LLC), or S-Corporation, are passed through to individual owners or shareholders instead of being taxed at the corporate level.

In this system, business profits and losses are reported on the owners’ or shareholders’ individual tax returns, and taxes are paid at their individual income tax rates. This avoids the issue of double taxation, which occurs in C-Corporations where income is taxed at both the corporate level and again when distributed to shareholders as dividends. Pass-through taxation is generally advantageous for small businesses and their owners, as it simplifies tax filings and often results in lower overall taxes.

Limited Liability Protection

Shareholders of an S-Corporation have limited liability protection, meaning their personal assets are protected from the corporation’s debts and obligations. Limited liability protection in an S-Corporation refers to the legal separation between the personal assets of the shareholders (owners) and the business assets, which protects shareholders from being personally responsible for the company’s debts and legal obligations.

In an S-Corporation, shareholders’ personal assets, such as their homes, cars, and personal savings, are not at risk if the business faces financial difficulties or lawsuits. The shareholders’ liability is limited to the amount they have invested in the company. This limited liability is a significant advantage of incorporating a business as an S-Corporation, as it provides a safeguard for the personal financial well-being of the business owners.

It is important to note that limited liability protection can only be supported if the shareholders maintain proper corporate formalities, such as keeping separate business and personal finances, holding regular shareholder meetings, and maintaining accurate business records. In such cases, courts may “pierce the corporate veil” and hold shareholders personally liable for the company’s debts and obligations.

Transferability of Shares

Shares in an S-Corporation are more easily transferable than those in an LLC, allowing for greater flexibility in ownership changes. Transferability of shares in an S-Corporation refers to the ability of shareholders to sell, gift, or otherwise transfer their ownership interest in the company to another person or entity. This is an important aspect of an S-Corporation’s structure, as it allows for flexibility in ownership and the potential for raising capital through the sale of shares.

However, there are certain restrictions on the transferability of shares in an S-Corporation, which are imposed by the Internal Revenue Service (IRS) to maintain the company’s eligibility for S-Corp status:

  • Shareholders: The number of shareholders in an S-Corporation is limited to a maximum of 100. Only individuals, certain trusts, and estates can be shareholders; other corporations and partnerships are generally not allowed.
  • Eligible Shareholders: Only U.S. citizens and resident aliens can be shareholders in an S-Corporation. Non-resident aliens are not allowed to hold shares.
  • One Class of Stock: S-Corporations can only have one class of stock. All shares must have the same rights and privileges, such as voting rights and distribution preferences. However, differences in voting rights are allowed if they are not tied to economic rights (e.g., distribution preferences).
  • Perpetual Existence: Perpetual existence refers to the concept that a business entity, such as an S-Corporation, can continue to exist indefinitely, regardless of changes in ownership or management. This means the corporation can outlive its original founders and shareholders and continue to operate even if individual shareholders pass away or decide to sell their shares.

This characteristic of an S-Corporation provides stability and continuity for the business, as it ensures that the corporation’s operations, contracts, and legal obligations remain unaffected by changes in ownership. It also makes it easier for the company to attract investors and raise capital. Potential investors can be confident that the business will continue to exist even if the original owners are no longer involved.

Disadvantages of Forming an S-Corporation

Despite these advantages, moving to an S corporation only sometimes makes sense – or at the very least, necessitates a thorough review of certain situations. The following issues may arise in particular:

Restrictions on Shareholders

S-Corporations are subject to specific restrictions, such as a maximum of 100 shareholders and limitations on the types of eligible shareholders (e.g., only individuals, certain trusts, and estates).

Single Class of Stock

S-Corporations are limited to issuing only one class of stock, which can limit flexibility in raising capital or creating different ownership structures. A single class of stock in an S-Corporation refers to the requirement that the corporation only issues one type of stock with equal rights and characteristics for all shareholders. This means that all shares of stock must have the same economic rights, such as dividend distribution preferences and liquidation rights, as well as voting rights. The single class of stock requirement is one of the key criteria the Internal Revenue Service (IRS) sets for a corporation to qualify for S-Corp status.

Increased Complexity

Forming and maintaining an S-Corporation requires more paperwork, record-keeping, and compliance with state and federal regulations than simpler structures like LLCs.

Franchise Tax

S-Corporations in Nevada are subject to the annual franchise tax, which can financially burden some businesses.

In an Nevada S-Corporation context, the franchise tax is usually based on the company’s income, net worth, or a combination of both. Since S-Corporations are pass-through entities for federal income tax purposes, meaning that their income is not taxed at the corporate level but rather passed through to individual shareholders, they may be exempt from or subject to lower franchise tax rates in some states than traditional C-Corporations.

However, S-Corporations must still comply with Nevada franchise tax requirements, which may include annual filings and tax payments. It is crucial for S-Corporation owners to understand the specific rules and regulations in their state of operation and to consult with a tax professional to ensure compliance and minimize their tax.

FAQs

What is an S-Corporation?
An S-Corporation is a type of corporation that is defined by the IRS, providing special taxation treatment.
What paperwork do I need to file to create an S-Corporation, specifically in Nevada?
The state of Nevada requires you to file Articles of Incorporation, and other required documents to form an S-corporation.
Can anyone incorporate a company in Nevada?
Yes, anyone can incorporate a company in Nevada.
How do I register my Nevada corporation for taxes specifically?
You can register for state and local taxes on the Nevada Taxation Department website.
Is there a lot of paperwork that needs to be filled out when I incorporate in Nevada?
Though there is a little more paperwork when forming an S-corporation in Nevada relative to other states, it is not prohibitively overwhelming.
Would it make more sense to incorporate in a state like Delaware that is known for favorable corporate tax benefits instead of Nevada?
In some situations, it would make more sense to incorporate in Delaware than Nevada, assuming you tend to incur more Corporate income taxes filing in Nevada.
Do I need to have a legal background to start an S-Corporation in Nevada?
No, legal background not needed.
Can a foreigner incorporate a business in Nevada?
Yes, a foreigner can incorporate a business in Nevada.
How long does it take to register a Corporation in Nevada?
E-Filing registration typically takes only 1 to 2 business days in Nevada.
Are there any residency requirements to incorporate in Nevada?
There are no residency requirements to incorporate or partake in Nevada S-Corporations.
Does Nevada have a personal income tax or corporate income tax?
Nevada does not have a corporate income tax but has a sales tax and other taxes.
Are S-Corporations taxed differently from C-Corporations in Nevada?
Yes; S-Corps business income is taxed on the owners’ personal tax returns, while C-Corps are taxed on the business level.
What is the benefit of forming an S-Corporation in Nevada rather than an LLC?
Incorporation limits liability while protecting the company structure legally and ease of borrowing larger sums of funds in incorporation.
What is a registered agent, and do I need one to start an S-Corporation in Nevada?
A registered agent is someone who can accept mail and legal notices on behalf of a business. And, it’s essential to have one when you orchestrate a business formation.
Do S-Corporations pay taxes in Nevada?
S-Corps do not pay separate state corporate or personal income taxes in Nevada
What is Nevada’s annual registration process for S-Corporations?
There is no specific annual renewal for S-Corps; you need to assure gross revenue remains low in critical eligibility amounts.
Why should I incorporate my business in Nevada?
Because Nevada offers an extensive list of advantages, which means if handling benefits remains a priority, you will be able to market better.
What is business license type, and who regulates it in Nevada?
Business licenses in Nevada are local, typically a “DBA” regulated by the Secretary of State in your preferred city or county.
Does Nevada allow In-State LLC to turn into S-Corp legally?
Yes, it is possible to elect for an In-State LLC to choose to be taxed as an S-Corp.
If I already formed a Nevada corporation, can I revoke that and reform the company following Incorporating requirements?
Yes, you can switch to a different corporation entity like an S-Corporation to lower taxes—assuming eligibility base rates met.
Can an actively used Nevada corporation be revoked to evade issues like debts accumulated over an unknown successor period?
No, you will continue to have a responsibility for debt even after cancellation of corporation holdings.
What is NRS Chapter 78, and why is that important for forming a corporation in Nevada?
The NRS Chapter 78 Nevada Revised Statutes; that maintains the instructions, requirements, and the relevant amount of the tax system followed.
Does forming an S-Corporation in Nevada require a personal bonding company?
No personal bonding company required in S-Corporations formation in Nevada.
Does Nevada recognize Subchapter S Corporations?
Federal Tax entities often known as a Subchapter S, which is what an S Corporation can apply to when filing returns in Nevada.
Is it necessary to get an Employer Identification Number (EIN) in Nevada?
It is essential to get an EIN in Nevada when you’re filing for an S-Corporation.
Are there specific tax deadlines or registration dates after forming an S-Corporation in Nevada?
Nevada has specific subchapter S, Registrations that allow both licensing formation groups to eliminate possible penalties and comply with all necessary filings with the Secretary of State.
What’s a Certificate of Good Standings, and Is A Good Standing required in Nevada for a Subchapter S Corporation?
In general, a Certificate of Good Standing is proof that your organization/entity is authorized and compliant We suggest taking action against performing this habitually hence becoming enforceable requirement over the contract.
What is an s-corporation?
An s-corporation is a type of corporation that is taxed differently than traditional corporations.
Is Nevada a good state to form an s-corporation?
Yes, Nevada is ranked as one of the top states to form an s-corporation due to its favorable tax laws and business-friendly environment.
What are the tax benefits of forming an s-corporation in Nevada?
S-corporations in Nevada are not subject to state income tax or corporate income tax.
Can a foreigner own an s-corporation in Nevada?
Yes, a foreigner can own an s-corporation in Nevada but must also work with an immigration lawyer or consultant to obtain proper visas and obtain the legally required certifications.
What is the minimum number of shareholders required to form an s-corporation in Nevada?
There must be at least one shareholder to form an s-corporation in Nevada.
What is the procedure for incorporating in Nevada as an s-corporation?
To form an s-corporation in Nevada, you must file Articles of Incorporation with the Nevada Secretary of State, receive approval, create bylaws, and obtain any necessary registrations and licenses from the State or Local Chambers of Commerce, Business Organizations, etc.
What is the filing fee for starting an s-corporation in Nevada?
The filing fee for starting an S-Corporation in Nevada is $75.
What is a registered agent, and do I need one for my s-corporation in Nevada?
A registered agent is a person or business that acts as a corporation’s point of contact with the state and is required for all corporations in Nevada.
Does Nevada require s-corporations to file an annual report?
Yes, Nevada requires s-corporations to file an annual report, which is due on the last day of the anniversary month of the corporation’s formation.
Can an s-corporation in Nevada have more than one class of stock?
S-corporations in Nevada can only have one class of stock.
What are the requirements for an s-corporation to qualify for tax exemption in Nevada?
An s-corporation must meet certain criteria to qualify for tax exemption in Nevada, including having 100 or fewer shareholders, not having any nonresident aliens as shareholders, and meeting other technical requirements as set forth by the Internal Revenue Code.
What business licenses and registrations are required for s-corporations in Nevada?
S-corporations in Nevada must obtain all necessary state and local licenses and business registrations required in their line of business.
Are there any limitations on the amount of income a shareholder can take as salary from an s-corporation in Nevada?
No, there are no limitations on the amount of income a shareholder can take as salary from an s-corporation in Nevada.
Can an s-corporation in Nevada issue stock options to employees?
Yes, s-corporations in Nevada can issue stock options to their employees.
What are the legal obligations of officers and directors of an s-corporation in Nevada?
Officers and directors of s-corporations in Nevada have a fiduciary responsibility to act in the best interest of the corporation and shareholders.
Are s-corporations in Nevada required to carry insurance?
S-corporations in Nevada are not required by law to carry insurance, but it is often advisable.
How long does it take to form an s-corporation in Nevada?
The process of forming an s-corporation in Nevada usually takes between one and five business days.
What is the process for dissolving an s-corporation in Nevada?
To dissolve an s-corporation in Nevada, you must file articles of dissolution and notify any creditors and shareholders.
Can I change my s-corporation to a different type of corporation in Nevada?
Yes, a corporation can make changes to its status by filing an amendment with the Secretary of State’s office.
What type of tax returns are required for an s-corporation in Nevada?
S-corporations in Nevada are required to file annually both Internal Revenue Service and state income tax returns.
What role do shareholders play in s-corporations in Nevada?
Shareholders play an important role in s-corporations in Nevada as they are often owners and decision makers.
Can I sell my shares in an s-corporation in Nevada?
Yes, shares of an s-corporation in Nevada can be sold or transferred to another person.
What are my personal liabilities as an owner of an s-corporation in Nevada?
Owners of s-corporations in Nevada are generally not personally liable for the debts and obligations of the corporation.
Is it possible to convert an existing LLC to an s-corporation in Nevada?
Yes, it is possible to convert an existing LLC in Nevada to an s-corporation by filing the appropriate forms.
Can I use an s-corporation to save money on my taxes in Nevada?
Yes, s-corporations in Nevada can offer significant tax benefits to their owners and may result in lower overall tax liability.
What are the formalities around holding shareholder meetings for s-corporations in Nevada?
S-corporations in Nevada must hold at least one shareholder meeting each year unless unanimous written consent is obtained from all the shareholders.
What are the failed return penalties and how does it affect s-corporations in Nevada?
Failed return penalties are subject to everything in Late Filing the report, varying $50 to $1250 for every tax year an s-corporation fail to files in proper status.
Can non-US residents own an s-corporation in Nevada?
Yes, any individual or entity can own an S-Corporation in Nevada regardless of previous American residency.
What does my new s-corporation need to do after being launched with Nevada?
An s-corporation in Nevada needs to open a bank account, obtain any necessary permits and licenses and establish general business operations, ideated by your business-specific needs.

Also Read

Why You Should Start Nevada S Corp

One of the most significant advantages of running your business as an S Corp in Nevada is the tax benefits it provides. Unlike other business structures, S Corporations are considered pass-through entities, meaning that the profits and losses from the business are passed through to the shareholders who report them on their individual tax returns. This can result in substantial tax savings for business owners, especially when compared to other types of corporations.

Furthermore, Nevada boasts a business-friendly environment with no state corporate income tax or personal income tax. This means that as an S Corp in Nevada, you won’t have to worry about paying corporate taxes on your profits, allowing you to reinvest more money back into your business. Additionally, Nevada offers a favorable regulatory environment for businesses, making it easier to start and operate your company without unnecessary red tape or bureaucracy.

Another advantage of choosing to start a Nevada S Corp is the limited liability protection it offers to shareholders. By structuring your company as an S Corp, you can shield your personal assets from business debts and liabilities, reducing your risk exposure in case of unforeseen circumstances. This protection can provide you with peace of mind and allow you to focus on growing your business without worrying about the potential financial risks.

Additionally, running your business as an S Corp in Nevada can provide credibility and legitimacy to your company. S Corporations are generally perceived as more established and reputable in the business world, which can help attract investors, clients, and suppliers to your business. This enhanced credibility can also open up new opportunities for growth and expansion, allowing you to take your business to the next level.

In conclusion, starting a Nevada S Corporation can offer a wide range of benefits and advantages to business owners looking to maximize their potential for success. From tax savings and limited liability protection to a business-friendly environment and enhanced credibility, choosing to structure your company as an S Corp in Nevada can be a strategic and smart move for your business. If you’re looking to grow and thrive in today’s competitive business landscape, then starting a Nevada S Corp might just be the key to unlocking your business’s full potential.

Conclusion

Forming an S-Corporation in Nevada can be a beneficial decision for small business owners seeking liability protection, pass-through taxation, and easier transfer of ownership. By meeting the requirements set by the IRS and following the necessary steps, business owners can take advantage of an S-Corp’s unique structure and benefits. However, it is essential to consider the potential drawbacks, such as increased paperwork and limitations on ownership, before making a final decision. Consulting with a legal or financial professional can help business owners determine if an S-Corporation is right for their needs and goals.

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