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How to Choose the Right Type of Business Entity for Your Nevada Business
There are different types of business organizations that are recognized by the state of Nevada. If you are either expanding your operations or if you are starting a new company, you should carefully consider what business structure is going to make the most sense for you.
There are substantial differences between different kinds of business entities. A Las Vegas business lawyer can provide advice to help you chose the right type of business entity for your Nevada business. Pintar Albiston LLP has extensive experience providing assistance to business startups as well as to small, midsize and large businesses that want to ensure they are making the most informed legal choices. Give us a call today to learn more about how to select the appropriate business entity type.
Choosing the Right Type of Business Entity for your Nevada Business
The first step to choosing the right type of business entity for your Nevada business is to consider the different kinds of business structures. Options available to you may include:
- Sole proprietorship: A very simple business type. You can simply begin operating the business with no additional legal steps required (other than any necessary licensing for the particular business type). You pay taxes on business income and declare losses on your personal return. You are 100 percent liable for all debts and judgments against the business.
- Partnership: Also a simple business type. A partnership agreement should be created when a business begins. Partners are personally taxed on business income and may declare losses on personal returns. All partners are 100 percent liable for judgments and business debts incurred by the company.
- Limited liability partnership: A modified type of partnership that provides some liability protection. Only the limited partners are protected from liability; the general partners remain responsible for debts and judgments. LLPs are not as widely used today because many companies instead become limited liability companies.
- Limited liability companies: Paperwork must be filed with the state to become an LLC. Forms are available from the Nevada Secretary of State. LLCs are pass-through entities, which means that income and losses again pass through to owners who pay taxes and declare losses on personal returns.
- C-corporations. C-corporations are the standard corporate type. The company exists separately from its owners and has its own legal identity. Articles of Incorporation must be filed (the forms are also on the page of the Nevada Secretary of State). There is a risk of double taxation because the company must pay taxes on its profits and owners are also taxed when dividends are paid and money from the company is distributed. Most large companies in the U.S. are C-corporations because transfer of ownership is simple and there are virtually no restrictions on who can own shares in a C-corporation.
- S-Corporations are an alternative type of corporation. After you file your incorporation paperwork, you must file an S-corp election form (Form 2553) with the IRS. You get liability protection just as with a C-corporation but eliminate the risk of double taxation since earnings and losses pass through to owners. There are ownership restrictions.
These are the major types of business organizations, as well as some basic information about the differences between them. Choosing the correct type of business entity for your Nevada business requires a detailed understanding of the pros and cons of different business structures. Call Pintar Albiston LLP today to get help from a Las Vegas business lawyer who knows the rules for different business types inside and out.