New Nevada Laws Cost Businesses More Money and More Paperwork


Nevada lawmakers finalized the state’s new tax plan two days ago. If you own a Nevada LLC or Corporation, keep reading. You’ll want and need to know what’s changing and how it will impact you.

Initial and Annual List Filing Fees Rise

Nevada requires all newly formed companies to file an Initial List within 30 days of creation. That list sets out the directors and officers of a corporation, the Managers or Members of an LLC, and the General Partners of a Limited Partnership. The fee for that filing is going up. Effective July 1, 2015, add $25 to whatever amount you pay now, as the new rate kicks in. For most entities that means an increase from $125 to $150. Corporations can pay more, depending on their authorized capital amounts.

This $25/year increase carries over to your Annual Lists as well, and comes into effect on July 1, 2015. So, if your company has an upcoming Annual Report due, you may want to file early, and get one more year at the lower rate. Ask us how, if you aren’t sure how to file early, or if you aren’t sure if your company is eligible to file early.

Business License Fee Rises

Nevada also has a yearly business fee. It should be $100 per year, but for the past several yeaars has been temporarily increased to $200 per year. That $200 per year fee has now become the new permanent fee for LLCs and Limited Partnerships.

However – if you are operating a Nevada Corporation, the news isn’t so rosy. Corporations have had their yearly business license fee increased to $500, effective July 1st.

Why the huge change for Corporations? We’re not sure. It could be some kind of persisting belief that Corporations are more likely to be higher income entities than LLCs.

Either way, this kind of an increase makes it hard to continue recommending Nevada as a corporation destination, especially as close neighbor, Wyoming, offers a maintenance fee of just $50 per year.

What Are Your Options?

So what can you do, if you have a Nevada corporation and don’t want to pay the new higher fee?

  1. Consider relocating your company to Wyoming. The process is called a “domestication,” It’s simple, and costs less than $400, if you do it through us. That fee includes all state filing fees in Nevada and in Wyoming, plus the cost to deregister your business in Nevada, and includes your first year of resident agent service in Wyoming.
  2. If you can’t, or don’t want to leave Nevada, then consider converting your Nevada corporation to a Nevada LLC. This process is called a conversion, and is also a simple filing. We are charging our clients $475 to prepare and file the conversion documents, which includes the state filing fees. To that, you will also need to factor in the cost of the new List and License that will be due 30 days after the filing. Those fees aren’t extra, however, as you would be paying them in any event, when it’s renewal time for your Corporation. And, best of all, you can keep your existing tax classification, while still taking advantage of the lower fees to keep your company maintained.

In all cases, your company needs to be in good standing before you make the conversion. And, if you can get it done before the end of June, you can take advantage of the lower Annual List fee. Contact us today, to get started!

Nevada has a new Business Gross Receipts Tax

After years of trying, the Nevada government has finally found a way to implement a Gross Receipts Tax on Nevada businesses. As of July 1, 2015, all businesses – sole proprietorships, corporations, partnerships and LLCs – formed or registered into the state of Nevada will have to file a yearly Commerce Tax Return, reporting their gross revenue for the period July 1 to June 30th. The Commerce Tax Return will be due on August 14th each year, with the first tax return filing due August 14, 2016.

Gross receipts taxes are tough taxes to plan around, because they are based on gross income, usually before you deduct your cost of goods sold and many usual business expenses. And, with Nevada choosing to base everyone’s tax calculation on their own tax year (July 1-June 30), it means an extra calculation for everyone who operates on a different year-end.

However, while everyone will have to file a return, not everyone will have to pay the tax. The first $4 million in gross revenues is exempt for all businesses. If your business has more than $4m in gross revenues, there is no backwards tax calculation. If your gross revenues are $4.1 million, you will only make the tax calculation on the excess $100,000. Plus, the state is only looking for income that is directly connected to Nevada. A Nevada LLC that is actively buying and selling real estate in Georgia, for example, won’t have the Commerce Tax applying to their income. Plus, for businesses located and working here in Nevada, who are already paying the Modified Business Tax on their payroll, you’ll be able to offset half of your Commerce Tax against future years’ Modified Business Tax (i.e., 50% of what you will pay in 2016 will be credited towards your 2017 Modified Business Tax amount).

How much you pay depends on your business type. The rates range from less than 1/10th of a percent to about 3/10ths of a percent.

Should You Reconsider your Nevada Virtual Office?

If you use a Nevada address and perhaps run a virtual office, you’ll want to take a look at how the new Commerce Tax could affect you. For example, many Internet businesses who are involved in affiliate marketing use Nevada as their corporate home to avoid complications from states who attempt to levy sales tax on Internet purchases based on where the affiliate marketers are located, rather than the business itself. You may know this as the infamous “Amazon Tax.” In your case, you are purposefully declaring Nevada as your business’s tax home. That declaration will bring you under the Commerce Tax, even if you reside in New York, North Carolina, etc. So you’ll want to take a look at your situation with your tax advisors and see if there is a negative impact you need to plan for.

Changes to Nevada’s Payroll Tax (Modified Business Tax)

The last major tax change of note concerns Nevada’s payroll tax. This is an existing tax based on business’s gross payroll, and is intended only to impact businesses that pay wages here. As of July 1st, 2015, businesses will pay Modified Business Tax at the rate of 1.475% on the quarterly portion of their payroll that exceeds $50,000. However, if your in mining, and already caught up in the Net Proceeds of Minerals Tax, your MBT rate will be 2%, and will apply to your entire payroll, as it already does to financial institutions.

Are the Days of Nevada Incorporations Over?

Nevada has long been a hub of incorporations, along with Delaware and Wyoming. While these changes don’t help to promote Nevada as a business incorporation destination (especially if you are forming a corporation), they are not so onerous as to make Nevada immediately dismissible, either. We anticipate that while corporation formations will decrease, directly as a result of the new higher license fee, LLC formations should continue, especially as LLCs can make corporation elections for taxes, yet pay only the LLC fees each year.

Can We Help?

If you’ve got questions about what you’ve read, or whether Nevada is or should be the state for you, we can help! We’ve been in business for more than 10 years, and can provide resident agent service in all 50 states. If you are looking for a quality, full-service and affordable resident agent or mailing service, why not contact us for a free quote? You can reach us at info@smartbusinessincorporation.com.

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