Incorporator The Journal of U.S. Formation
Start Free Quiz
Editorial 8 MIN READ

Nevada in September 2020: the fee schedule has not moved, the applications have

Four years into the Commerce Tax and six months into the pandemic, the $425 number still holds

The Editors
Staff, Incorporator.org
8 min read Updated
Contents 6 sections
  1. What Nevada charges in 2020
  2. The Commerce Tax, four years in
  3. What pandemic 2020 has done to the filing volume
  4. How maintenance actually runs
  5. Who Nevada makes sense for in late 2020
  6. Sources

Nevada LLC costs $425 to form in September 2020 and $350 a year to keep. Those are the same numbers that applied in June 2016. The fee schedule at the Secretary of State has been static through a legislative session, a Commerce Tax rollout, and a pandemic that has pushed new business applications in Nevada to their highest levels in more than a decade.

The stability of the Nevada LLC fee schedule is itself the story. The state has made its money elsewhere (gaming, sales tax, a gross-receipts tax on larger entities) and has left formation and annual filings priced where they were five years ago. For someone choosing a state in the fall of 2020, the arithmetic is the same one we walked through in our June 2016 Nevada guide. What has changed is who is filing, and at what volume.

What Nevada charges in 2020

Formation is three line items that the Secretary of State bills together. The Articles of Organization are $75. The Initial List of Managers or Managing Members is $150, due with the Articles. The State Business License is $200, also due with the Articles. The package total is $425 for the first year, and that is what your registered agent will quote you if they are being straight with you. A quoted price of $75 means someone is burying the other $350.

Renewal is the Annual List at $150 and the State Business License renewal at $200, for $350 a year. Both are due on or before the last day of the LLC's anniversary month. Miss it and the Secretary of State adds a $175 late penalty and moves the entity into default status. A default entity cannot sue, cannot obtain a certificate of good standing, and cannot be used to open a bank account or close on a property. Reinstatement requires paying the accumulated fees plus the penalty, which is why a lapsed Nevada LLC that sits for two renewal cycles costs roughly $875 to bring current.

Corporations in Nevada pay on a sliding scale tied to authorized stock. The minimum Articles of Incorporation fee is $75 for a corporation authorizing up to $75,000 in total par-value stock; above that, the fee rises in steps to a ceiling of $35,000 for corporations authorizing more than $1 billion. The Initial List for a corporation is $150, same as for an LLC, and the State Business License is the same $200. Most Nevada corporations that are not acting as holding vehicles for tangible asset portfolios file at the $75 minimum and leave authorized shares low.

Expedited processing in Nevada is quoted as an add-on to the base filing fee. 24-hour service is $125, two-hour is $500, one-hour is $1,000. If you are a transactional lawyer closing a deal this week and someone just noticed the holding LLC has not been formed, the two-hour tier exists for that.

The Commerce Tax, four years in

Nevada's Commerce Tax (NRS Chapter 363C) took effect for the fiscal year beginning July 1, 2015 and produced its first filings in August 2016. It is a gross-receipts tax imposed on business entities with Nevada gross revenue above $4,000,000 in a taxable year, with rates assigned by NAICS category and running from the low single digits of a basis point to roughly one-third of one percent for a handful of high-margin categories.

The $4,000,000 floor is the important number. NRS 363C.200 imposes the tax on any business entity whose Nevada gross revenue for the year exceeds that figure; the Department of Taxation does not require a return from entities at or below the threshold. The original statute contemplated a zero-tax return at sub-threshold levels, but the 2019 legislature trimmed the rule so that entities below $4 million neither compute nor file. For a typical new LLC formed in 2020, the Commerce Tax is therefore a non-event in the first year and for most years after; it becomes real when Nevada-sourced revenue crosses $4 million.

Returns are due 45 days after the end of the fiscal year, which in Nevada's case means August 14 (or the next business day). Filers compute Nevada gross revenue, subtract $4,000,000, and multiply by the rate assigned to their NAICS category. Retail runs at 0.111 percent of the excess; construction at 0.083 percent; accommodation at 0.200 percent; finance and insurance at 0.111 percent; the rate table assigns an analog for each category. A 25 percent credit against the Modified Business Tax for Commerce Tax paid in the prior year is available to entities that pay both, which softens the stacked-tax concern that drove much of the 2015 debate.

For a Nevada LLC that will never cross $4 million in in-state receipts, the Commerce Tax belongs in the same conceptual bucket as Delaware's corporate franchise tax from the perspective of a pass-through operator: real for a subset of entities, irrelevant to most filings.

What pandemic 2020 has done to the filing volume

The more interesting 2020 story is not the price of a Nevada filing. It is the volume. New business applications in the United States began climbing in May, reached year-over-year growth above 80 percent by July, and have continued to run well above the 2017 to 2019 baseline through the summer. The Census Bureau's Business Formation Statistics, which track applications for employer identification numbers by state and week, show Nevada tracking the national surge and then some.

Two dynamics are worth keeping separate. First, Nevada's tourism and hospitality employment collapsed in the spring, producing the deepest unemployment spike of any state. A share of the new-formation surge reflects displaced workers opening LLCs to do contract work that used to come through a W-2. Second, the state's long-running appeal to out-of-state founders (privacy, no personal income tax, the marketing infrastructure of the registered-agent industry) has not weakened. Nevada is still getting the remote-founder filings it got in 2019, plus a domestic wave.

The fee schedule has therefore remained static through a period when the state could plausibly have raised filing fees and still captured record volume. The Secretary of State's office has not signaled any change. The 2021 session of the legislature will convene in February and will consider a budget shaped by pandemic revenue losses; at that point the question is open. For a founder filing in September 2020 the quoted price is the quoted price, and the state has not hinted at a mid-cycle adjustment.

How maintenance actually runs

A Nevada LLC's year has a small number of calendar events and one recurring mailing that founders should not throw away.

The Annual List and State Business License renewal are one combined filing, due in the anniversary month. The Secretary of State sends a courtesy notice roughly sixty days before the deadline. If you have a registered agent of any competence, they send you a separate notice thirty days out and will file for you on authorization. The state does not require a physical business in Nevada; a registered agent's address is sufficient for the filing.

The State Business License is a state-level obligation distinct from any local business license. If your Nevada LLC actually operates in Clark County or Washoe County (or any other Nevada locality), a local license is an additional filing and fee. Out-of-state founders whose Nevada LLC is a holding or contract vehicle with no Nevada presence do not owe a local license.

Nevada does not levy a personal income tax and does not levy a corporate income tax. The Modified Business Tax (a payroll tax) runs at 1.378 percent on general-business taxable wages above the quarterly threshold; the financial-institutions rate is higher. For an LLC with no Nevada payroll, the Modified Business Tax is zero and the annual cost is the $350 renewal. For an LLC with employees in Nevada, the MBT becomes a real line item.

Foreign qualification remains Nevada's most-quoted gotcha. If your Nevada LLC is operating in California, Oregon, Washington, Arizona, or any other state in substance, those states want you registered as a foreign LLC and collecting their franchise taxes and fees. California in particular enforces this aggressively; its $800 minimum franchise tax applies to any LLC doing business in California, Nevada certificate notwithstanding. The Nevada privacy pitch does not survive foreign qualification, which is why we continue to tell California-based operators that forming in Nevada to escape the $800 is usually self-deception.

Who Nevada makes sense for in late 2020

The short answer has not changed. Nevada works for three kinds of entities, and the fee math of 2020 reinforces rather than alters that list.

The first is a holding vehicle with a real Nevada nexus: property in the state, operations in the state, or an anchoring family or business reason to be there. For these entities the $350 a year is unobjectionable and the no-income-tax environment is substantive.

The second is an entity whose operators genuinely live in Nevada. For a Las Vegas or Reno-based founder, forming at home is the correct default and the fee schedule is fine.

The third is a category the pandemic has expanded: remote contract vehicles formed by Nevada residents who took on 1099 work in 2020. For this group Nevada is the home state, the fee schedule is competitive with the median, and the Commerce Tax will not apply at the revenue scales in play.

The category Nevada does not make sense for is the out-of-state operator whose business lives somewhere else. If your LLC does business in California, Texas, or New York in substance, form there. The Nevada privacy and no-income-tax pitch is a marketing layer that the foreign-qualification rules of the operating state will remove, and you will end up paying Nevada's $350 plus the other state's filings.

If you are forming in September 2020 and the business is genuinely Nevada-based, file this week, use a commercial registered agent at the middle of the price range, and calendar the anniversary-month renewal now. If you are forming in Nevada because a formation service's homepage said it was cheaper, read the invoice again. The $75 filing fee is a line item inside a $425 transaction, and the $425 transaction is the one that matters.

Sources

Keep reading

More from the journal.