Nevada LLC Taxes

Taxes for your Nevada LLC

Recommendation:
We recommend speaking with a few accountants in Nevada to make sure you meet all your federal, state, and local tax obligations. For tips on finding an accountant for your Nevada LLC, please see our how to find an accountant guide.

Taxes are reported and paid on 3 levels:

• Federal
• State
• Local

The location, nature of the business, and how your Nevada LLC is treated for tax purposes will determine which federal, state, and local taxes apply.

Federal Taxes for your Nevada LLC

Federal taxes are filed with the IRS.

Most LLCs in Nevada with default tax elections are “tax-reporting” entities with the IRS and not “tax-paying” entities. Meaning, the LLC doesn’t file its own tax return with the IRS, but rather the profits and losses flow-through to the owners and the owners are responsible for filing them on their personal income return.

• Related article: Tax-reporting Entity vs Tax-paying Entity

By default, the IRS will tax your Nevada LLC based on the number of LLC Members (owners).

A Nevada LLC with 1 Member is taxed as a Disregarded Entity:

• If the LLC owner is an individual, the Nevada LLC is taxed like a Sole Proprietorship
• If the LLC owner is another company, the Nevada LLC is taxed like a branch/division of the parent company

Nevada LLC taxed as a Sole Proprietorship: The LLC doesn’t file its own federal return, but rather, the LLC owner reports and pays the taxes via their personal income tax return (Form 1040). The profits and losses from the business will likely be reported on a Schedule C. You may also need to include additional Schedules and Forms, depending on how the income is derived.

A Nevada LLC with 2 or more Members is taxed as a Partnership.

Nevada LLC taxed as a Partnership: The LLC is a tax-reporting entity and has to file its own federal information return (Form 1065) and issue K-1s to each LLC Member (reporting for their share of the profits). The K-1 is then attached to the owner’s personal income tax return (Form 1040).

The above types of taxation are referred to as the “default” tax elections. You don’t have to do anything to get them. When you apply for your EIN, you tell the IRS how many Members your LLC has, and that’s how they know what type of tax return to expect.

Besides the default tax elections, you can request that the IRS tax your LLC like a Corporation instead.

There are two types of corporate taxation for LLCs:

• LLC taxed as C-Corp
• LLC taxed as S-Corp

Nevada LLC taxed as a C-Corp: The LLC is treated like a C-Corporation for federal tax purposes. This is not a very common election, because an LLC/C-Corp faces double taxation. This election usually only makes sense for large companies that are looking to raise money, go public, or have large healthcare expenses. You can find more information here: LLC taxed as a C-Corp.

Nevada LLC taxed as an S-Corp: The LLC is treated like an S-Corporation for federal tax purposes. This is a popular election for saving money on self-employment taxes. It usually makes sense once the LLC’s net income is around $70,000 per year. This is usually not a good idea for businesses that are just starting out and haven’t generated a lot of profit yet. You can find more information here: LLC taxed as an S-Corp.

Nevada State Business License for LLC

Although this is often written about in the context of Nevada LLC taxes, we consider this an “annual requirement”.

Your Nevada LLC’s State Business License is first obtained when you file your Nevada LLC Articles of Organization.

Then it’s renewed every year when you file your Nevada LLC Annual List.

Nevada Taxpayer Information Packet

The Nevada Department of Taxation provides a lengthy, yet helpful, guide on taxation for your Nevada LLC:
Nevada Department of Taxation: Taxpayer Information Packet

State Taxes for your LLC (Nevada Department of Taxation)

State taxes are filed with the Nevada Department of Taxation, the agency which collects taxes and pays for public services in the state.

There are two ways you can register your Nevada LLC with the Department:

1. Inside of SilverFlume via the Common Business Registration (instructions)
2. Through the Department of Taxation’s website (Nevada Tax Center)

For more information, please see registering with the department and account maintenance.

State Income Tax (Personal)

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

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

As we discussed in our best state to form an LLC article, 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.

State Income Tax (Corporate)

While it’s very common to hear how Nevada has no corporate income tax, this also won’t apply to 95% of people.

Again, most Nevada LLCs are pass-through entities, so they don’t even pay taxes at the corporate level, neither federally nor at the state level.

So that means an LLC taxed as a Sole Proprietorship, an LLC taxed as a Partnership, and an LLC taxed as an S-Corp won’t have any state corporate income taxes to begin with.

The state corporate income tax will only apply to Nevada Corporations or to Nevada LLCs taxed as C-Corporations, which is not common for most of our readers.

Although most Nevada LLCs won’t have to pay state income tax, there may be other returns that must be filed and taxes that may be owed.

Commerce Tax Return

What is it? A Commerce Tax is a yearly tax imposed on Nevada LLCs for the privilege of doing business in Nevada.

All Nevada LLCs (regardless of revenue) used to have to file a Commerce Tax Return, however, that’s no longer the case due to Senate Bill 497.

Beginning in the 2018-2019 taxable year, LLCs with revenue below $4 million don’t have to file a Commerce Tax Return. LLCs with revenue over $4 million still must file a Commerce Tax Return.

For more information, please see the Nevada Department of Taxation:

• Commerce Tax News (see “As of June 13, 2019”)
• Filing Requirement FAQ

Modified Business Tax

What is it? A Modified Business Tax (MBT) is a tax for employers who are also liable to pay contributions under the Nevada Unemployment Compensation Law.

• 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
• The tax is based off of gross wages (including tips) your LLC pays minus health care benefits

How to 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:

• Benefits.gov: Nevada Unemployment Insurance
• Nevada Department of Taxation: Modified Business Tax
• Nevada Department of Taxation: Modified Business Tax Information & FAQs
• Nevada Department of Unemployment: Guide to online claimant self service

Unemployment Insurance Tax

Also known as: Unemployment Insurance or Unemployment Compensation Contributions

What is it? Unemployment Insurance 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).

• Unemployment insurance helps financially stabilize people as they look for their next job
• Unemployment insurance is funded through your LLC’s payroll taxes

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

Payroll Taxes

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

• Federal 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.

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.

If you need to hire a payroll company, we recommend Gusto Payroll. They’ll take care of all your payroll tax filings.

Nevada Sales Tax Permit

If your LLC will sell or transfer tangible personal property in Nevada, you’re required to obtain a Sales Tax Permit. You must display your Sales Tax Permit at your place of business.

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.

Sales Tax Permit fee: $15

How to register for a Sales Tax Permit:
As mentioned in our Nevada LLC filing forms lesson, we recommend using the Common Business Registration (via SilverFlume) to obtain your Nevada LLC’s Sales Tax Permit. Everything is done online and is much easier than submitting APP-01.01 by mail.

Collecting Sales Tax in Nevada

If your LLC will sell or transfer tangible personal property in Nevada, you’re required to collect sales tax from your buyers. Those collected taxes are then sent (“remitted”) to the Nevada Department of Taxation.

As per NRS 372.354, you should be holding the money collected in a separate bank account or a general ledger account.

Here are helpful resources from the Nevada Department of Taxation:

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

Destination-based sales tax:
Nevada is a destination-based sales tax state, meaning, for LLCs based and operating in Nevada, sales tax will be collected based on where your customers live.

Calculating sales tax:
Calculating sales tax and meeting your filing deadlines can be a headache for business owners. Your accountant may be able to help, but not all accountants handle sales tax.

Need help with sales tax? You can automate your Nevada sales tax filings with TaxJar. TaxJar helps online sellers as well as brick-and-mortar businesses in Nevada.

TaxJar also has helpful guides on state sales tax: Sales Tax Guide for Businesses.

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 page 9 of the Taxpayer Information Packet.

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

Additional Taxes

Depending on your type of business, your Nevada LLC may be responsible for additional tax filings, including, but not limited to the following:

• Cigarette Tax and Other Tobacco Products
• Intoxicating Liquor License and Tax
• Live Entertainment Tax
• Exhibition Facilities Fees
• Insurance Taxes
• Insurance Retaliatory Tax
• Estate Tax
• Property Tax
• Real Property Transfer Tax
• Short Term Lessor Tax
• Minerals Tax
• Transportation Connection Tax
• Fuel Tax
• Tire Tax

Local Taxes for your LLC

The city and/or county your Nevada LLC is located in or does business may also impose local taxes. You can contact local officials to know which taxes your Nevada LLC may be liable to pay: Nevada Counties. We also recommend speaking with an accountant.

Our Recommendation

Calculating your tax obligations federally (with the IRS), on the state-level (with Nevada), and locally (with your city or county), can be complicated and if done improperly can negatively impact your Nevada LLC.

We recommend that you get help from a local accountant once your Nevada LLC is formed. You can use Thumbtack, Yelp, or check out our How to Find an Accountant guide.

Hiring an accountant will not only help you keep your Nevada LLC in compliance, but it will also give you an advisor to go to for related business questions.

You’ll want someone who’s a good fit for your company, makes you feel comfortable, and is willing to answer all of your questions. It should be someone you like personally as well as professionally. We recommend talking with at least 2-3 accountants (and ideally meeting them in person) before making your final decision.

Federal & State Contact Information

If you have any questions about federal taxes, you can contact the IRS at 800-829-4933. Their hours are 7am to 7pm, Monday through Friday, Pacific Time.

If you have any questions about state taxes, you can contact the Nevada Department of Taxation at 866-962-3707. Their hours are 8am to 5pm, Monday through Friday, Pacific Time.

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.