Nevada finished up its legislative session recently. Small businesses received 3 separate breaks:
- Secretary of State Filing Fees did NOT increase – in a state that has no personal or corporate income tax, one of the only ways to raise money is by raising fees. But Nevada managed to avoid raising fees for Articles, Annual Reports and all other corporate documentation.
- Modified Business Tax Threshold Increased – For true Nevada businesses, plus those that treat themselves as Nevada-based (meaning they opt to have a Nevada payroll), we saw a decrease in the quarterly Modified Business Tax. If you have a payroll of less than $62,500 in a quarter, you are now exempt from paying the 1.17% tax on gross wages for that quarter. You may still need to file a return though, even if only to report a zero-due balance.
- Home-Based Business Exemption Survives – If you’ve got a Nevada company that is also a home-based businesses, you could qualify for a break on the $200/year Business License. As long as your business has net earnings of about $29,000 or less, you can claim an exemption from paying the $200/year license fee (or any late fees, if you happen to fall into default).
While #3 isn’t technically new, the exemption wasn’t widely-known until the Secretary of State also became responsible for collecting the Nevada Business License fee, and took their Annual Report filing system online. The Secretary of State reported numerous abuses of the exemption earlier this year, primarily by businesses that are not home-based (such as a bowling alley, in one instance) claiming the exemption. Legislators introduced a bill which would have eliminated the exemption for everyone except unincorporated Sole Proprietorships, but it failed to pass, meaning it won’t come up again until the 2013 session.
If you have a Nevada entity and you meet the #3 exclusion, make sure you take advantage of it when you file your Annual List! And, if you’ve got a 3rd party resident agent looking after your filings, make sure you specifically ask them to elect the exemption when filing your Annual List.
There are many variables when you’re structuring a business. That’s why it’s hard to go through a quick-service website. Unless you talk to someone who’s got some knowledge and experience on both the tax and the legal side, it’s hard to know what you don’t know. And that can leave you vulnerable.
Got questions? Contact us! We’re here for you.