Nevada LLC Taxes

After you start a Nevada LLC, there are two main types of ongoing filings. The first is the Annual List with the state, and the other is taxes.

Paying taxes is an important part of running a business, but figuring out which taxes you need to pay can be a pain.

This lesson will provide you with general resources and the basics of Nevada LLC tax filing requirements.

What taxes does a Limited Liability Company pay in Nevada?

Each LLC has a different tax situation, so the taxes paid for a Nevada LLC varies.

The amount of taxes owed for your LLC depends on rules like:

• how your LLC is taxed
• state and local tax rules
• any sales and use tax requirements, or
• whether you have employees

Additionally, some business types are required to register for industry-specific taxes.

Pro Tip: We recommend hiring an accountant to ensure your LLC meets all of its tax obligations.

We also recommend getting an EIN Number for your LLC. An EIN is also called a Federal Tax Identification Number. They mean the same thing.

Not only will an EIN number be used to open an LLC bank account, but it will also be used for filing taxes with the local, state, and federal governments.

LLC pass-through taxation (Who pays the taxes?)

By default, LLCs don’t pay taxes.

Instead, the LLC Members are responsible for reporting the income (or losses) on their personal 1040 tax return. The Members pay taxes on any LLC profits. This is because of LLC pass-through taxation.

Simply put, pass-through taxation means the responsibility for reporting tax information from an LLC “passes through” the LLC to the LLC Members.

How are LLCs taxed in Nevada?

By default, a Nevada LLC is taxed by the Internal Revenue Service (IRS) based on the number of Members the LLC has. Then the Nevada Department of Taxation honors this.

An LLC with 1 owner (Single-Member LLC) is taxed like a Sole Proprietorship.

An LLC with 2 or more owners (Multi-Member LLC) is taxed like a Partnership.

The above are referred to as the “default status“. Meaning, they are automatically applied based on the number of LLC Members.

Alternatively, you have the option of requesting an “elective status” for your LLC. This is done by filing an extra form with the IRS. Once granted, this elective status means the IRS will treat your LLC as a Corporation (either an S-Corporation or C-Corporation) for tax purposes.

Note: Your Nevada LLC Operating Agreement should also include information about how your LLC is taxed.

Federal Income Taxes

There are several different options for how the IRS can treat your LLC for tax purposes.

Single-Member LLC taxes (default status)

The IRS treats all Single-Member LLCs as Disregarded Entities for tax purposes. This just means that the IRS doesn’t expect the LLC to file its own federal income tax return.

Instead, the owner of the Single-Member LLC files the return (and pays the federal income taxes).

How the LLC pays federal income tax is determined by who owns the LLC:

• If the LLC is owned by an individual, the LLC is taxed like a Sole Proprietorship.
• If the LLC is owned by another company, the LLC is taxed as a branch/division of the parent company.

Multi-Member LLC taxes (default status)

If an LLC has two or more owners, the LLC is taxed like a Partnership.

The LLC needs to file a 1065 Partnership Return and issue a Schedule K-1 to the LLC owners.

The K-1s report each owner’s distributive share of profits. And the K-1 income “flows through” to the owners. The income taxes are then paid by each owner on their personal income tax return (Form 1040).

Husband and Wife LLC taxes

In community property states like Nevada, a husband and wife LLC has the option to file taxes as a Single-Member LLC (aka Qualified Joint Venture) instead of a Multi-Member LLC.

On your EIN Application, you can choose to have your husband and wife Nevada LLC taxed as a Qualified Joint Venture. If you already have an EIN for your LLC, you can send a letter to the IRS requesting that your LLC be taxed as a Qualified Joint Venture.

Otherwise, a husband and wife Nevada LLC will be taxed in the default status as a Partnership.

Electing to have your LLC taxed as a Corporation

Instead of the default statuses above, a Limited Liability Company (LLC) can be taxed like a Corporation.

Note: We recommend speaking with an accountant before making a corporate election.

There are two types of corporate elections:

• S-Corporation
• C-Corporation

LLC taxed as an S-Corporation (elective status)

By filing Form 2553 with the IRS, your LLC can request to be taxed like an S-Corporation.

Being taxed as an S-Corp can help businesses (with established profits) save money on self-employment taxes.

LLC taxed as an C-Corporation (elective status)

By filing Form 8832 with the IRS, your LLC can request to be taxed like a C-Corporation.

Being taxed as a C-Corp can help large employers save money on healthcare fringe benefits.

Nevada State Income Tax for Nevada LLCs

Most Nevada LLCs are pass-through tax entities. This means the reporting responsibility flows through to the individual LLC owners.

And Nevada doesn’t have state-level income tax and they don’t require Partnership Returns. This means you don’t have to file a state-level income tax return for your Nevada LLC income.

That said, while Nevada doesn’t have state income tax, this will only apply to Nevada residents.

A good rule to remember is: “taxes are paid where the money is made“. This means that if you form an LLC in Nevada, but you reside and do business in California, then the “tax advantages” of Nevada don’t apply.

You’ll actually need to file an information return with the Nevada Department of Taxation, apportion your income to California, and then file and pay your taxes in California.

Commerce Tax Return

The Nevada Commerce Tax is a yearly tax imposed on Nevada LLCs for the privilege of doing business in Nevada.

However, this only applies to LLCs with revenue over $4 million. This means that LLCs with revenue under $4 million don’t have to file a Commerce Tax Return.

For more information, please see the Nevada Department of Taxation: Filing Requirement FAQ.

There are other types of Nevada business tax that apply to certain industries and types of businesses.

We recommend hiring an accountant to prepare and file your state income taxes.

You can also contact the Nevada Department of Taxation for more information about Nevada state taxes.

Local Income Tax for Nevada LLCs

You and/or your LLC may need to file and pay income taxes with your local municipality (town, city, county, etc.).

We recommend hiring an accountant to prepare and file your local income taxes.

You can also contact your municipality to check on their requirements.

Nevada Sales Tax

If you sell products to consumers in Nevada, you’re required to collect sales tax and get a Seller’s Permit.

A Seller’s Permit is the license that allows you to collect sales tax on retail sales in the state where you do business. It’s sometimes also called a:

• resale license
• wholesale license
• sales tax permit/license
• reseller permit

They all mean the same thing and we may use these terms interchangeably. The Seller’s Permit is $15 and you can get it from the Nevada Department of Taxation (DOT). Then, you must display your Seller’s Permit at your place of business where customers can see it.If you have multiple storefronts/locations, you’ll need a separate Sales Tax Permit for each location. Similarly, if you move locations in Nevada, you’ll need a new Sales Tax Permit.

We recommend using the Common Business Registration (via SilverFlume) to get your Nevada Seller’s Permit.

And per Nevada law, you should be holding the money collected in a separate bank account or a general ledger account.

You can read more information about Nevada sales tax from these Nevada DOT resources:

• Sales Tax Information & FAQs
• Sales & Use Tax Publications

For more information on permits, read Nevada Business Licenses and Permits.

And if you have any questions about whether you need a Seller’s Permit, you can contact the Nevada Department of Taxation at 866-962-3707. Their hours are 8am to 5pm, Monday through Friday, Pacific Time.

Nevada Resale Certificate

A Resale Certificate is used when your Nevada LLC purchases goods from another business for the purpose of resale.

For example: Let’s say you manufacture and sell baseball hats. If you’re buying fabric from a distributor, by presenting your Resale Certificate, you don’t have to pay sales tax on your purchase of the fabric.

Why? Because the end consumer buying the baseball hats will be the one who pays the sales tax. You were not the end consumer in the purchasing of the fabric.

You can download a Resale Certificate from the Taxpayer Information Packet.

However, we’ve made a more user-friendly version here: LLC University: Nevada Resale Certificate.

Nevada LLC Payroll Taxes

If your Nevada LLC will have employees, you must submit payroll taxes. Payroll taxes are essentially a group of taxes and filings, including:

• Federal income tax withholding
• State income tax withholding
• Social Security tax
• Medicare tax
• Federal unemployment taxes (FUTA)
• State unemployment taxes (SUTA)
• Local/county deductions
• Employee deductions

As an employer in Nevada, you need to set up payroll, withhold payroll taxes from employees’ paychecks, and then submit those filings and taxes to various state and government agencies. One of these taxes is the Modified Business Tax.

Unemployment Insurance Tax

Nevada Unemployment Insurance Tax is also known as Unemployment Insurance or Unemployment Compensation Contributions.

This tax is paid by employers and administered by the Nevada Employment Security Division (ESD). The money is used to financially support people who become unemployed or get fired (through no fault of their own).

For more information, please see the following resources:

• Nevada Unemployment Insurance: FAQs
• Nevada Unemployment Insurance: Unemployment Insurance Information
• Nevada Unemployment Insurance: Guide to Online Employer Self-Service
• Benefits.gov: Nevada Unemployment Insurance

Modified Business Tax

The Nevada Modified Business Tax (MBT) is a tax for businesses that have employees subject to Nevada’s unemployment compensation laws. The tax is based on gross wages (including tips) that your LLC pays, minus health care benefits.

How do I know if I need to pay the MBT?

If your Nevada LLC will have employees (and is subject to Nevada’s unemployment compensation laws), you’re also responsible for paying a Modified Business Tax.

How do I register for Modified Business Tax?

Your Nevada LLC will automatically be registered to pay Modified Business Tax (payable to the Department of Taxation) when you register for Unemployment Compensation.

You’ll register for Unemployment Compensation with the Nevada Employment Security Division (ESD).

For more information, please see the following resources:

• Nevada Department of Taxation: Modified Business Tax
• Nevada Department of Taxation: Modified Business Tax Information & FAQs

Although you can file payroll taxes yourself, the calculations can be burdensome and very complex. And if done improperly can lead to penalties and fines. Most people hire a payroll company or ask their accountant for help.

Our favorite payroll company is Gusto Payroll. They’ll automate and take care of your payroll taxes.

For more Nevada payroll tax resources, please see the references section at the bottom of this page.

Managing your books & staying organized

You can keep track of income and expenses using Microsoft Excel or Google Sheets. Or you can use software to help automate things and save time.

The accounting software we recommend is Quickbooks Online.

Working with an accountant

As you can see, figuring out the different types of taxes you owe can be complicated, let alone how to properly fill out all the forms. And doing taxes improperly or missing deadlines can be harmful to your business

We strongly recommend working with an experienced accountant in Nevada to help make sure you file your federal, state, and local taxes correctly.

Check out our guide on how to find an accountant.

Nevada Department of Taxation Contact Information

There are other types of Nevada business tax that apply to certain industries and types of businesses.

You can contact the Nevada Department of Taxation at 866-962-3707 for more information about Nevada state taxes. Their hours are 8am to 5pm, Monday through Friday, Pacific Time.

Nevada LLC Taxes FAQs

Matt Horwitz

Founder & Educator, LLC University®

Matt Horwitz has been the leading expert on LLC education for the past decade. He founded LLC University in 2010 after realizing people needed simple and actionable instructions to start an LLC that other companies weren't offering. He's cited by Entrepreneur Magazine, Yahoo Finance, and the US Chamber of Commerce, and was featured by CNBC and InventRight.
 
Matt holds a Bachelor's Degree in business from Drexel University with a concentration in business law. He performs extensive research and analysis to convert state laws into simple instructions anyone can follow to form their LLC - all for free! Read more about Matt Horwitz and LLC University.