LLC vs S-Corp in Nevada


Steve Goldstein
Steve Goldstein
Business Formation Expert
Steve Goldstein runs LLCBuddy, helping entrepreneurs set up their LLCs easily. He offers clear guides, articles, and FAQs to simplify the process. His team keeps everything accurate and current, focusing on state rules, registered agents, and compliance. Steve’s passion for helping businesses grow makes LLCBuddy a go-to resource for starting and managing an LLC.

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LLC vs. S Corp in Nevada

Making choices as an entrepreneur is a big challenge, especially when choosing what business structure to form in Nevada. When it comes to a business structure, you can choose whether to have a C-corporation, S-corporation, Sole Proprietorship or an LLC in Nevada. Before you start Nevada LLC filing, you must compare which structure suits you. You might be considering two popular options: a Limited Liability Company (LLC) or an S Corporation (S-Corp). Both of these structures offer distinct advantages and protections, but selecting the right one depends on various factors, including your business goals, tax preferences, and management style.

If you are confused with Nevada LLC vs. S-Corporation, and thinking which one is better and more suitable for the business that you will form, there are a few things that you should consider. Before we get through this article, you should understand what an LLC and S-Corporation mean in Nevada.

LLC vs. S-Corp: Definition

While forming an LLC, you must follow some major steps. It is a business structure that protects your personal assets from getting affected by business liabilities. On the other hand, the S Corp is not a conventional business structure, but it is tax status that your can file with the IRS. S Corp does not provide personal asset protection like an LLC. Here are the detailed definitions of the two-

What is an LLC in Nevada?

A limited liability company (LLC) is a formal business structure that provides personal asset protection. Under this structure, the LLC owner/member can save his/her personal assets in case the business is in debt or is being targeted with a lawsuit. In some special cases, if your company is legally sued, the other party can go after your personal assets. This is called piercing the corporate veil, where you become personally liable for the company’s debt.

Forming an LLC in Nevada gives you a pass-through tax benefit where you don’t have to pay an income tax based on your business revenue; instead, the income tax will be calculated based on your personal income.

What is an S-Corp in Nevada?

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

S-corp is a prominent alternative to the LLC. Unlike a conventional C-corp, S-corp is more suitable for small and medium businesses, such as businesses with 100 shareholders.

LLC Vs. S-Corporation: Which is More Preferable in Nevada?

In Nevada, forming a business is crucial since you need to be adequate in your decision, especially when you think if Nevada LLC or an S-Corporation in Nevada is preferable. An S-Corporation is a tax classification that some small businesses are qualified for, whereas an LLC is a legitimate company form. By submitting a document to the Internal Revenue Sector (IRS), corporations and LLCs can choose S-Corporation taxation. An S-Corporation can be less formal than forming an LLC and doesn’t normally provide the same protection. Also, unlike LLC, S-Corporation in Nevada doesn’t provide the same protections entrepreneurs seek from an LLC. It’s important to consider your options when launching a business from a legal and tax point of view.

It is better to consult a legal professional before you set up an LLC or S-corp. We shared basic differences and how you can form an LLC and S-corp. But it is always recommended to consult a professional before making any decision.

– LLCBuddy Editorial Team

Tax Difference Between Nevada LLC and S-Corp in Nevada

There is a difference between LLC and S-Corporation when it comes to paying taxes. Based on Federal and State Tax differences between the two, you can determine if S-Corporation or LLC in Nevada is suitable for your business.

Federal Taxes: There are a few federal tax factors to consider when selecting whether to operate an LLC or S-Corporation in Nevada. Tax differs in terms of Pass-Through Taxes and Self-Employment Taxes.

Pass-Through Taxes: LLC and S-Corporation in Nevada are the same in terms of pass-through taxation at the federal level. LLCs and S-Corporations do not pay federal income taxes as separate legal entities because of pass-through taxation. Only their owners are required to pay federal income taxes on their portions of the business income. The company does not pay twice the tax in this kind of taxation. Unlike LLCs and S-Corporations, C-Corporations in Nevada are mandated to have double taxation. It means that they must pay federal taxes at the entity level.

Self-Employment Taxes: Most LLC owners choose S-corporation taxation in Nevada to reduce their self-employment taxes. This is because if you own an S-corporation, you are not required to be self-employed. Instead, you can join the company as an employee and receive regular salary benefits. On the other hand, an LLC member must include their guaranteed payments and a portion of the LLC’s earnings in calculating their self-employment tax. Distribution of shares defines S-Corporation shareholders in terms of their corporate incomes.

Consider the scenario where you are the only owner of an LLC in Nevada with a $150,000 annual profit. And let’s say that $100,000 is a fair wage in your location for someone doing the same job as you. Under the default LLC taxation, you must pay self-employment taxes on the entire $150,000 profit. But, if your company is taxed as a Nevada S-Corp, you will only be responsible for paying payroll taxes on the standard wage of $100,000. Income tax will still apply to the remaining $50,000.

Nevada State Taxes: At the state level, there aren’t any significant tax differences between regular LLCs and S Corporation LLCs. In terms of the annual LLC fee in Nevada, it costs $0 because it is not mandatory that can be paid to the NH Secretary of State. Of course, before forming the whole LLC, you must pay the initial fee of $425.

On the other hand, you also need to pay taxes if you form an S-Corporation in Nevada; besides, you must pay the S-Corp filing fee and an annual report fee after a year of establishing your S-Corp. You must also go to the NH Secretary of State to pay this.

How do Nevada LLCs and S-Corporations Handle Liability Protection?

In Nevada, you have no personal responsibility for the financial and legal liabilities of an LLC you will form. An S-Corporation does not provide liability protection because it is a tax designation rather than a distinct business entity. Whatever liability defense an S-Corporation provides is provided by the underlying business entity that chose the tax status. You will have the liability protection the LLC offers if it chooses S-Corporation status for tax purposes.

LLC Vs. S Corporation Ownership Requirements Comparison

Strict ownership requirements exist for LLCs and S-Corporations in Nevada. LLC ownership regulations are strict because a new member can only be accepted with the approval of all existing members. On the other hand, S-Corporation ownership regulations are also strict because only specific people are permitted to become shareholders. Also, an S-Corporation can’t have more than 100 shareholders and needs one class of stock.

The following are the reasons why some cannot be shareholders in the S-Corporation in Nevada.

  • Insurance business
  • Domestic and International sales corporations
  • Partnerships
  • Corporations
  • Unauthorized Immigrants
  • Certain financial institutions

Although you know most of the reasons regarding the ownership requirements of both LLC and S-Corporation, you should still seek legal advice in preparation for your business and it is best to visit LLCBuddy for your Nevada LLC or Nevada S-Corp.

Which is Easier to File in Nevada: LLCs or S-Corporations?

Filing an LLC or S-Corporation in Nevada takes time and preparation. Even though it is not as easy as it seems, something manageable still makes it not difficult. LLC and S-Corporation can be filed by Nevada Registered Agent. However, in order to establish an LLC in Nevada, you must submit a Articles of Organization to the Nevada Secretary of State. Your Articles of Organization must contain information for your LLC, along with payment of the associated filing fee.

In addition, you need to submit more papers to make the Nevada S-Corporation election. File a Form 8832 to inform the Internal Revenue Sector (IRS) that you prefer to tax your LLC as a corporation rather than a partnership. Then you will then submit Form 2553 to choose S-Corporation status.

Do not forget that you must submit annual tax returns and reports after creating your LLC in order to maintain legal compliance.

Important Information

Who Pays More Taxes, an LLC or S-Corporation?

Taxes differ for LLC and S-Corporation in Nevada because it depends on the tax purposes and how much profit will be generated. Usually, LLCs are frequently taxed at personal rates and LLC owners can elect to be treated as a separate company with its own federal tax identification number.

On the other hand, owners of S-Corporations must receive a salary that includes Social Security and Medicare taxes. The owner, however, can get dividend income or some of the leftover profits, but not as an employee; thus, they won’t be subject to Social Security and Medicare taxes on that money.

Should I Convert an LLC to S-Corporation?

Since your business assets are separated from your personal assets if you’re a sole proprietor, it may be advisable to form an LLC. You are not restricted to modifying the structure of your LLC to an S-Corporation. Although an S-corporation must have a board of directors, a maximum of 100 shareholders, and adhere to more regulations, it would be ideal for more companies with more shareholders.

How to Structure an LLC to S-Corporation?

To structure an LLC to S-Corporation in Nevada, you must submit Form 2553, Election by a Small Business Corporation, to the IRS in order to choose S-corp taxation. Filing a form 2553 should be done 75 days after the formation of your S-Corp, or not more than 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, in order 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 .

FAQs

What is the difference between an LLC and an S-Corp in Nevada?
An LLC in Nevada is a type of business structure that offers limited liability protection to owners, also known as members, while an S-Corp is a type of corporation that offers the same protection. The main differences between the two are the tax structure, management structure, and ownership structure.
What are the advantages of forming an LLC in Nevada?
There are several advantages to forming an LLC in Nevada, including limited liability protection, flexible management structure, tax advantages, and the ability to open a business bank account.
What are the advantages of forming an S-Corp in Nevada?
The main advantages of forming an S-Corp in Nevada are limited liability protection, tax savings, and asset protection. Additionally, an S-Corp can help establish credibility with customers, investors, and suppliers.
What are the filing requirements for an LLC in Nevada?
The filing requirements for an LLC in Nevada include the submission of Articles of Organization to the Secretary of State and payment of the filing fee. You may also need to register with the Nevada Department of Taxation and obtain an Employer Identification Number (EIN) from the IRS.
What are the filing requirements for an S-Corp in Nevada?
The filing requirements for an S-Corp in Nevada include the submission of Articles of Incorporation to the Secretary of State, an Employer Identification Number (EIN) from the IRS, and the completion of annual filings.
What are the tax implications of forming an LLC in Nevada?
An LLC in Nevada is generally treated as a pass-through entity, meaning that any profits or losses are passed through to the owners and reported on their individual tax returns. Additionally, members may be responsible for paying Nevada’s modified business tax.
What are the tax implications of forming an S-Corp in Nevada?
An S-Corp in Nevada is treated differently for tax purposes than an LLC. S-Corp profits are subject to both corporate and personal income taxes, but owners may also be able to take advantage of certain tax deductions.
What are the legal requirements for operating an LLC in Nevada?
The legal requirements for operating an LLC in Nevada include the filing of annual reports to the Secretary of State, the adoption of an operating agreement, and the payment of taxes and fees. Additionally, members may need to obtain licenses or permits depending on the type of business they are conducting.
What are the legal requirements for operating an S-Corp in Nevada?
The legal requirements for operating an S-Corp in Nevada include the filing of annual reports to the Secretary of State, the adoption of corporate bylaws, and the payment of taxes and fees. Additionally, shareholders may need to obtain licenses or permits depending on the type of business they are conducting.
What are the benefits of forming an LLC in Nevada?
LLCs formed in Nevada can offer protection from personal liability for business debts, flexible management structures, and the ability to choose how you would like to be taxed.
What are the benefits of forming an S-Corp in Nevada?
S-corps in Nevada may benefit from lower self-employment taxes, the ability to have more than one class of stock, and the ability to have more than one owner.
What are the fees associated with forming an LLC in Nevada?
The fee for forming an LLC in Nevada is a one-time filing fee of $75. Additionally, there is an annual list fee of $150.00.
What are the fees associated with forming an S-Corp in Nevada?
The fee for forming an S-Corp in Nevada is a one-time filing fee of $125. Additionally, there is an annual list fee of $100.00.
What is the minimum number of members required to form an LLC in Nevada?
There is no minimum number of members required to form an LLC in Nevada.
What is the minimum number of stockholders required to form an S-Corp in Nevada?
The minimum number of stockholders required to form an S-Corp in Nevada is one.
What types of taxes does an LLC in Nevada need to pay?
An LLC in Nevada is not subject to corporate income tax and is generally only subject to paying payroll taxes on wages paid to employees.
What types of taxes does an S-Corp in Nevada need to pay?
An S-Corp in Nevada is subject to corporate income taxes and must also pay payroll taxes on wages paid to employees.
Are LLCs in Nevada required to have an Operating Agreement?
Though not legally required, it is highly recommended that LLCs in Nevada have an Operating Agreement to outline the rules and responsibilities of the members.
Are S-Corps in Nevada required to have a Shareholder Agreement?
Though not legally required, it is highly recommended that S-Corps in Nevada have a Shareholder Agreement to outline the rules and responsibilities of the shareholders.
What is the name availability search period for LLCs in Nevada?
The name availability search period for LLCs in Nevada is 15 days.
What is the name availability search period for S-Corps in Nevada?
The name availability search period for S-Corps in Nevada is 10 days.
Are LLCs in Nevada required to have an annual meeting?
LLCs in Nevada are not required to have an annual meeting.
Are S-Corps in Nevada required to have an annual meeting?
S-Corps in Nevada are required to have an annual meeting of shareholders for the purpose of electing directors and discussing the corporation’s affairs.
What is the filing deadline for LLCs in Nevada?
The filing deadline for LLCs in Nevada is March 15th of each year.
What is the filing deadline for S-Corps in Nevada?
The filing deadline for S-Corps in Nevada is April 15th of each year.
Does Nevada have any special laws for LLCs?
Yes, Nevada does have special laws for LLCs, such as the Nevada Revised Statutes Chapter 86.
Does Nevada have any special laws for S-Corps?
Yes, Nevada does have special laws for S-Corps, such as the Nevada Revised Statutes Chapter 78.
Can an LLC in Nevada have foreign members?
Yes, an LLC in Nevada can have foreign members.
Can an S-Corp in Nevada have foreign shareholders?
Yes, an S-Corp in Nevada can have foreign shareholders.
Is there a publication requirement for LLCs in Nevada?
Yes, LLCs in Nevada are required to publish a notice of the formation of the LLC in a newspaper of general circulation in the county of the LLC’s registered office.
Is there a publication requirement for S-Corps in Nevada?
No, there is no publication requirement for S-Corps in Nevada.
Is there a minimum capital requirement for LLCs in Nevada?
No, there is no minimum capital requirement for LLCs in Nevada.
Is there a minimum capital requirement for S-Corps in Nevada?
No, there is no minimum capital requirement for S-Corps in Nevada.
What are the differences between an LLC and an S-Corp in Nevada?
The main differences between an LLC and an S-Corp in Nevada are in the way they are taxed, the number of members or shareholders they can have, and the management structure of the company.

Also Read

Why Nevada LLC Vs S Corp is So Important

First and foremost, it’s important to note that both entities offer limited liability protection, which is one of the main reasons individuals opt to form a business entity. Limited liability protection means that the owners’ personal assets are separate from the business’s debts and liabilities. However, there are some differences in the level of protection each entity type offers.

A Nevada LLC provides limited liability protection to its members, meaning that their personal assets are shielded from the debts and lawsuits of the business. This makes the LLC an ideal choice for businesses that are at a higher risk of being sued, such as those in the real estate or construction industries. Additionally, Nevada LLCs offer more flexibility in terms of management structure and profit sharing, making them a popular choice for small businesses.

On the other hand, an S Corp also provides limited liability protection to its owners, but with some key differences. S Corps are required to follow certain formalities, such as holding regular meetings and maintaining detailed corporate records. While this may seem burdensome to some, it also offers a level of structure and compliance that can be beneficial in the long run.

One of the main advantages of an S Corp is the potential tax savings it can offer. S Corps are pass-through entities, meaning that the business itself does not pay taxes; instead, the profits and losses are “passed through” to the owners, who report them on their individual tax returns. This can lead to significant tax savings for business owners, as they may be able to reduce their taxable income by deducting business expenses.

Another key difference between a Nevada LLC and an S Corp is the ability to attract investors. S Corps are restricted in the number and type of shareholders they can have, making them less attractive to investors looking to inject capital into the business. On the other hand, Nevada LLCs have more flexibility in terms of ownership structure, which can make them a more appealing option for those seeking outside investment.

Ultimately, the decision between forming a Nevada LLC or an S Corp will depend on a variety of factors, including the nature of the business, the owners’ goals and preferences, and the specific needs of the business. It’s important to consult with a qualified attorney or accountant to fully understand the implications of each entity type and make an informed decision.

In conclusion, choosing between a Nevada LLC and an S Corp is an important decision that can have a significant impact on your business’ success. By weighing the advantages and disadvantages of each entity type and considering your specific circumstances, you can ensure that you make the right choice for your business.

Conclusion

Even though you can choose a different corporate structure, consider whether it will primarily assist your organization. Striking the perfect balance between corporate benefits and legal protection that suits your particular needs is important. In forming an LLC or S-Corp in Nevada, you must be aware that every detail is well-formed so that starting your business will be successful. And, if you would like us to help you form a Nevada LLC and S-Corp in Nevada, read our other business guides.

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