Start an S Corporation in Nevada

Taxes are a significant expense for small business owners. But did you know that if you choose your tax designation carefully, you could reduce the amount you pay?

Start an S corporation in Nevada, and you could cut the amount of money you owe the IRS. This guide will take you through setting up an S corp in Nevada for your business entity.

S Corporation in Nevada: Key Points

• You must elect S corp status for your LLC or C corporation within 75 days of creating your business.

• Electing S corp status for your business allows you to take advantage of pass-through taxation and prevent double taxation.

• Nevada doesn’t charge a franchise tax on corporate income. Still, businesses with gross revenue exceeding $4 million must pay a commerce tax.

What Is an S Corporation?

“S corporation” refers to a tax designation applicable to limited liability companies (LLCs) or C corporations that choose to be taxed under Internal Revenue Service (IRS) tax code Subchapter S. It is not a business structure itself. Eligible Nevada businesses that elect S corp status experience significant savings on self-employment tax and avoid double taxation.

Tax Considerations for an S Corporation in Nevada

Electing S corp status allows for reduced business taxes. Income, losses, and deductions are passed through to company shareholders. Those shareholders then report their share of profits and losses on their personal income tax returns. This eliminates double taxation, which refers to being taxed twice for income on your individual and corporate tax returns. 

S corporation tax treatment also significantly reduces self-employment tax.

Nevada Tax Treatment of S Corporations

Electing S corp status in Nevada means saving on federal taxes for your business. You also benefit from the protection of personal assets and the reduction of self-employment tax. 

To file for S corp status, you must own an LLC or C corporation and file IRS Form 2553.[1]

Nevada Franchise Tax for S Corporations

Nevada does not have a franchise tax for businesses. However, any Nevada business with gross revenue of more than $4 million must pay Commerce Tax for the privilege of doing business in the state.[2]

Pass-Through Taxation

Pass-through taxation occurs when business owners pay most company taxes on their personal income tax returns. The income generated by the company “passes through” to the various owners, who each pay taxes on their share of company earnings. Taxes paid in this manner at the personal level tend to be lower.

In addition to enabling small business owners to pay lower taxes, S corp status allows them to avoid double taxation. If a company doesn’t elect S corp status, the business must pay corporate taxes on revenue. Shareholders are then taxed again at a later date when there are distributions or sales of stock.

Requirements for Forming an S Corporation in Nevada

Before electing s corp status for your limited liability company, check your company’s eligibility. Not all businesses qualify. For example, financial institutions such as insurance companies, banks, and credit unions cannot become S corporations. If most of a company’s revenue comes from exports, the business is also not eligible.

All S corp shareholders are considered employees. That means they must receive reasonable salaries in line with their positions, so you must run payroll. Additionally, you must adhere to the following IRS requirements for S corporations:[3]

• Be an eligible domestic corporation (Limited liability company (LLC) or Corporation)

• Have only allowable shareholders (individuals, estates, and certain trusts)

• Shareholders are U.S. citizens or resident aliens

• The business has no more than 100 shareholders

• The business has only one class of stock

How to File as an S Corp in Nevada in 6 Steps

Before filing as an S corporation in Nevada and gaining S corp status, you must form an LLC or a C corporation

Step 1: Choose a Business Name

Before setting up an S corporation in Nevada, you must choose your business name. Your name should describe your product or service and be easy to remember and search. Don’t choose a name that sounds like another company.

Complete a business name search to ensure that another company in Nevada is not using your business name. With Swyft Filing’s free business name search, you can quickly and easily see if your chosen name is available. Or search on the Nevada Secretary of State business portal.[4] This will also check for existing trademarks for your chosen business name.

Also, follow these additional Nevada business name reservation regulations:

• Include a designator such as “a limited liability company” or “LLC”

• Avoid misleading wording that makes people think your company is connected to a state or government agency

• Be aware of restricted words that require pre-approval by certain state agencies and departments[5]

• Consider reserving your business name URL, even if you aren’t ready to set up a website

Protect your business name by filing for a name trademark with the United States Patent and Trademark Office (USPTO) or the Nevada Secretary of State.[6] [7] Trademarking through the state is less expensive and a faster process. Still, it doesn’t provide as much protection as a federal trademark.

Step 2: Appoint Directors and a Registered Agent

Nevada law requires that you appoint a registered agent for your company. A registered agent is an organization or individual authorized to receive official documents and correspondence for your business. These may include federal, state, and local notices.

Someone from your company, such as one of your S corporation’s shareholders, can serve as a registered agent. But know that a Nevada registered agent must have a physical address in the state and be present at that location from 9 am to 5 pm, Monday through Friday. This is often not possible for S corp directors.

When you act as your own registered agent, it’s essential to understand that your privacy is compromised. Your address becomes a matter of public record. Many business owners find hiring an outside registered agent service, such as the one provided by Swyft Filings, is the best option.

Step 3: File Articles of Organization

The Articles of Organization officially register your LLC in Nevada. You file them with the Nevada Secretary of State through NRS 86-Articles of Organization Limited-Liability Company.[8] The filing fee is $75. 

You must also file an Initial List of Managers or Managing Members. That costs $150. You also need a State Business License, which costs $200.[9]

The Articles of Organization for Nevada, also known as the Certificate of Formation, requires the following information:

• Name of LLC you’re registering 

• Principal business address

• Registered agent name, address, and signature

• Whether the company is member- or manager-managed

• Name and address of each manager or managing member

• Dissolution date of the company if it isn’t intended to be permanent

• Purpose of the company

• Name, address, and signature of the organizer

• Name and signature of the manager or member

You must file an Annual List of Officers and renew your State Business License annually for your business to remain active. There is a fee of $200 for the annual list, and the State Business License costs $150 to renew. 

The payments and renewal forms must be submitted by the last day of the anniversary month when the business license was initially filed.

Step 4: Create an S Corp Operating Agreement

An operating agreement is a legal document outlining bylaws, including business owner duties and responsibilities. The operating agreement is vital, as it stipulates operational information, including the distribution of company profits and shareholder contributions to the LLC.

Nevada doesn’t require you to file an operating agreement, but creating one is still a good idea.

The agreement also spells out how decisions for the LLC are made and how finances will be handled. Once all parties sign the operating agreement, it is legally binding.

The S corp operating agreement should include the following:

• Names of LLC members

• Duties of LLC members

• Economic interests of members regarding profits and property

• Profit distribution protocol for members

• Voting procedures and requirements

• Whether LLC interests are transferable to third parties

• LLC manager authority and responsibilities

• How can the LLC be dissolved if necessary

Step 5: Apply for an Employer Identification Number

You must obtain an employer identification number (EIN) from the IRS before electing S corp status. EINs are similar to social security numbers for businesses.

The IRS can identify your business and track employment and income taxes with this number. You also require an EIN to begin business operations and conduct banking in the company’s name.

Swyft Filings can obtain your free EIN for you, or you can apply on the IRS's website.[10]

Your company will also be assigned a Nevada Business Identification number. You must use this number with other government agencies when filling out registration information.

Step 6: File Form 2553 for S Corporation Election

The final and most crucial step in this process is to file IRS Form 2553.[11] This form allows you to elect S corp status for your business entity.

Fill out and file form 2553 with the following:

• EIN for your company

• Date of incorporation

• State of incorporation

• S corp election date

• The tax year you selected

• Whether you are treating family members as one shareholder

• Main contact information

• Shareholders’ names and addresses

• Percentage of stock owned by shareholders

• Fiscal year selection

• Signatures

If you fail to file Form 2553 before the deadline, you’ll need to file Form 8832, Entity Classification Election, alongside Form 2553 to be taxed as an S corporation.[12]

Nevada S Corp vs. Nevada LLC

There are pros and cons of S corporation election that require consideration. Regarding tax purposes, you may find that remaining a limited liability company is best for your business. Decide if S corp status is right for your business by considering the advantages and disadvantages.

Advantages of Starting an LLC in Nevada

A Nevada LLC is one of the most accessible corporate structures to start and maintain. LLCs aren’t required to hold annual meetings and record minutes like corporations are. There are no restrictions on the type of management structure you must set up or the number of members you may have in your limited liability company.

This is not the case with an S corporation.

Asset protection is one of the top reasons many small business owners open an LLC. This business designation means your personal belongings, including your home, car, and savings, can’t be seized to pay for company debt.

A Nevada LLC also has the advantage of pass-through taxation. Company profits and losses go to shareholders and are taxed on their personal income tax returns rather than at the corporate level. This results in avoiding double taxation at the individual and corporate levels. If these benefits sound appealing, setting up your LLC with Swyft Filings is easy.

Disadvantages of Starting an LLC in Nevada

Setting up and maintaining an LLC in Nevada is considerably more expensive than forming a sole proprietorship. The initial setup cost is $425, and then you must pay $350 annually to keep your business in good standing. You must also file annual reports and pay for a registered agent service if you choose not to act as your own agent.

Advantages of Forming an S Corporation in Nevada

S corporation election offers personal asset protection just like LLCs. That means if your business owes a debt, your personal assets are protected.

Tax savings are the main advantage of forming an S corp in Nevada. You benefit from pass-through taxation and only pay personal income tax and self-employment tax on a reasonable salary. Remaining profits are allocated to each shareholder and aren’t subject to self-employment tax, resulting in significant tax savings.

Disadvantages of Forming an S Corporation in Nevada

With an S corporation, you are only allowed 100 shareholders and one class of stock. This tax treatment may only work if your company is growing slowly. You must also be a U.S. citizen or resident alien. If you work with international partners, S corp status is often not a good choice.

S corp status also requires additional paperwork, so you must invest time to complete those tasks. Additionally, because of the tax benefits inherent in S corp status, the IRS tends to more closely watch companies that opt for this designation to ensure compliance.

Get the Legal Benefits of an LLC With the Tax Benefits of an S Corp

S corps combine the personal asset protection of LLCs with additional tax advantages. You can save significant money with this business entity’s pass-through taxation and reduced self-employment tax costs.

Ready to File for S Corp Status in Nevada?

Consider using our business formation services to ensure your company is set up for S corp status correctly. Our specialists will accurately and efficiently set up your S corporation. It’s quick and easy to get started with Swyft Filings.

Frequently Asked Questions

What is an S Corporation in Nevada?

An S corporation is an IRS tax election, not a formal business entity. Eligible companies can elect S corp status. S corporations offer pass-through taxation, allowing losses and income to flow through the company shareholders’ tax returns. They then pay taxes on a reasonable salary, paying much less self-employment tax.

Does Nevada recognize S corporations?

Yes, Nevada recognizes S corporations in good standing.

What is the turnaround time for filing for S corp status with the IRS?

According to the IRS, a business should receive a determination as to whether their election for S corp status is approved 60 days after filing Form 2553.

What is the difference between an S corp and an LLC?

LLCs and S corporations feature pass-through income and the ability to write off losses on personal tax returns. However, S corps offer more tax savings. 

S corp shareholders only have to pay personal and self-employment taxes on a reasonable salary. The remaining profits are withdrawn as a distribution without self-employment tax.

What are the requirements for an S corporation in Nevada?

To qualify for s corp status in Nevada, a business must be an LLC with no more than 100 shareholders and offer only one form of stock. All S corp shareholders must be U.S. citizens or resident aliens.

Are taxes for LLCs and S corps the same?

Taxes for LLCs and S corps are not the same. Both types of businesses pay pass-through taxes via the shareholders’ personal income tax returns. Still, S corp status offers more tax savings. 

S corporation owners only pay tax on a reasonable salary. In contrast, LLC shareholders pay self-employment and personal income tax on the total amount earned. This is generally a higher tax burden.

What is the S corp tax rate?

The S corporation tax rate is dictated by shareholder personal tax rates, which currently run between 10% to 37%.[13]

How do I dissolve an S corporation in Nevada?

Dissolve an S corp in Nevada with the Nevada Secretary of State. You will need to complete the Certificate of Dissolution/Withdrawal Profit Corporation.[14] If you don't want to do this yourself, you can dissolve an S Corp with our online service.

Bibliography

1. Internal Revenue Service.“About Form 2553, Election by a Small Business Corporation.”  Accessed February 4, 2023.

2. State of Nevada Department of Taxation.“What is Commerce Tax?” Accessed February 4, 2023.

3. Internal Revenue Service. “S Corporations.” Accessed February 4, 2023.

4. SilverFlume, Nevada’s Business Portal. “Nevada Business Search.” Accessed February 4, 2023.

5. Nevada Secretary of State.“Restricted Word List.” Accessed February 4, 2023.

6. United States Patent and Trademark Office.“Trademark basics.” Accessed February 4, 2023.

7. Nevada Secretary of State. “Trademarks.” Accessed February 6, 2023.

8. Nevada Secretary of State. “Articles of Organization Limited Liability Company.” Accessed February 6, 2023.

9. Nevada Secretary of State. “State Business License Only.” Accessed February 6, 2023.

10. Internal Revenue Service.“Apply for an Employer Identification Number (EIN) Online.” Accessed February 6, 2023.

11. Internal Revenue Service.“Form 2553.” Accessed February 6, 2023.

12. Internal Revenue Service. “Form 8832.” Accessed February 6, 2023.

13. Internal Revenue Service. “IRS provides tax inflation adjustments for tax year 2022.” Accessed February 6, 2023.

14. Nevada Secretary of State. “Corporation – Close a Business.” Accessed February 6, 2023.