What Tax Advantages Does Nevada Offer Businesses?
Why are so many California business owners moving to Nevada? This state’s major cities like Las Vegas and Reno have taken great strides to make sure the Silver State is incredibly business-friendly. Nevada has a vibrant economy and non-stop tourism that make it attractive to business owners, but the main reason entrepreneurs are moving here to start their companies is the tax benefits.
Nevada offers company owners a favorable tax climate. The state has plenty of skilled workers, over 300 days per year of sunshine, and affordable commercial properties, along with a Business Court system that minimizes the risks for owners. It’s easy to see why this is quickly becoming the number-one destination for company relocation.
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What Tax Advantages Does Nevada Offer Businesses?
Nevada’s economy is strong, and many attribute this to tax conditions that improve business growth. Ready to learn more about the tax advantages business owners will benefit from in Nevada? When it comes to tax benefits, no business or personal tax is just the beginning.
Business Income Tax
In other states, high business income tax has led to lowered rates of business growth. You will find the opposite is true for Nevada, where no business income tax has resulted in greater success for the companies that move here. Whether you are a domestic or foreign corporation, in Nevada you won’t have to pay state taxes on the profits you worked so hard to earn.
Nevada is one state that doesn’t believe owners should have to pay a tax for having the privilege of owning a business there. This is a state that understands they are privileged for having so many owners choose to do business here. That’s why there’s no state franchise tax (also known as a privilege tax) here.
Ten states currently tax inventory, and Nevada is not one of them. Whether you are selling goods here or holding them to transport them elsewhere, you will be able to do so without paying tax on those goods. In fact, Nevada has a total of 12 Foreign Trade Zone sites, and this has helped to attract retail giants like Amazon to the state.
As an employer, you can expect to pay a payroll tax that includes State Unemployment, Federal Unemployment, Social Security, and Medicare. While there is a payroll tax in Nevada, at 0.7% it is minimal compared to many other states. For example, the payroll tax is 0.9% in nearby California. Once you do the math you’ll realize that 0.2% means big savings for business owners.
Employer Health Insurance Deduction
Nevada also allows tax deductions for your employer-provided health insurance. This includes vision and dental plans the employee provides as well.
Taft-Hartley Trust Deduction
If you participate in a Taft-Hartley Trust employee welfare benefit plan, that is also deductible. This is a multiemployer fund used in the construction, food, retail, warehouse, and trucking industries.
Corporate Share Tax
If you own corporate stock in an LLC in Nevada, you are in luck because you won’t have to pay a state tax on your corporate shares. You may still have to pay a gross receipts tax, but in the end you’ll still come out ahead compared to other states. Paying corporate share tax at the Federal level is unavoidable, so skipping it at the State level is attractive to the business owners who relocate here.
Individual State Income Tax
As a business owner in Nevada, your employees will not be subjected to an individual state income tax because the Nevada constitution prohibits it. That means they’ll get to keep more of their paycheck.
In Nevada there is no state gift tax. As a business owner, you’d be able to transfer your assets to someone else if you wanted them to take over without paying a state tax penalty. On top of that, the person you transferred your assets to wouldn’t be on the hook for inheritance tax.
If you want to leave your Nevada business to an heir, you’ll be able to do so with no state estate tax.
Why Is Nevada So Good for Business?
The Silver State has gone a long way to make this a business-friendly environment. In addition to the tax benefits, there are other reasons Nevada is an ideal state for your company.
Nevada’s Business Court
One way Nevada is exceptionally business-friendly is their court system. The state’s Business Court handles a number of different lawsuit issues that affect companies including:
- Ownership disputes
- Copyright infringement
- Stockholder vs. public company cases
Delaware’s Court of Chancery is a non-jury trial court that was developed to make fair decisions for LLCs, corporations, and other business entities in the state. Their court system is why they are considered to be one of the best places to do business in the country.
Nevada’s Business Court is based on the Delaware model, with the goal of helping businesses by speeding up the court process. When your company is on the line, a drawn-out court process will cost you money and possibly even put you out of business.
If you are a business owner who has ever been taken to court or has sued, you know how important a speedy court process is. The courts alone are a powerful argument for moving your company to Nevada.
Nevada is so welcoming to businesses that they’ve even developed their own business portal, SilverFlume. As a business owner in this state this will be your one-stop source for everything you need to conduct transactions with county, municipal, and state agencies.
You can use the portal to handle:
- Other government transactions
As a business owner, SilverFlume will save you a lot of time along with sparing you the headache of doing tons of paperwork.
In Southern Nevada alone, there is an incredible 46 million square feet of commercial property space, and rental and lease rates are currently affordable. The commercial real estate market is healthy in the greater Clark County area as well as in the north of the state in the Reno and Sparks area, but properties are being snapped up quickly.
This state’s population and job growth continue to grow, providing an increasingly diverse set of opportunities for business owners. If you’ve been thinking about starting a business or relocating to Nevada and you want a great property, now is the time to make your move, before costs reach national averages.
Related: Is Commercial Real Estate a Good Investment in Las Vegas?
Benefits of Starting a Business in (or Relocating to) Nevada
There’s a reason so many people are choosing to do business in Nevada. Both Money and Forbes have named the Silver State one of the most business-friendly in the country. Nevada offers one of the nation’s lowest tax burdens, both for businesses and for individuals. It is one of six states that do not have a corporate income tax and one of only four that don’t have personal income tax.
If you’re thinking about starting or moving your business here, you’ll be in good company. Companies from many different industries are thriving in Nevada. MGM Resorts International, Bally Technologies, Allegiant Air, AMERCO, and many other major companies have their headquarters here, along with 254,337 small businesses, 48,357 with 1 to 499 employees, 42,140 with 1 to 20, and 205,980 non-employer firms.
Things to Consider When Moving to Nevada for Tax Reasons
Some business owners consider forming an LLC in Nevada for tax purposes while they continue to reside and do business in their home state, believing it will result in tax benefits. The truth is, not only will you most likely not benefit from doing this, you may actually end up paying even more in fees, fines, and penalties due to strict California tax laws.
To benefit from Nevada’s tax laws and the other benefits the state offers to business owners, your best bet is to relocate.
Related: How Much Does Office Space Cost in Las Vegas?
Your Nevada Business Checklist
Before you hire movers so you can start a business in Nevada, make sure you’ve checked the following items off your to-do list:
- Have you decided on a business structure? You’ll need to choose between a DBA, a corporation, and an LLC.
- Have you chosen a name for your business? You’ll need to search the SilverFlume website to make sure the name you’d like to use isn’t already taken.
- Have you obtained an FEIN or EIN number? This number will identify you to the federal government for tax purposes. You can get this number directly from the IRS’s website.
- Have you obtained the necessary business permits? If you’re operating a business in Nevada, you are required to have a business permit.
Are you ready to start your business in Nevada? These are the basic steps you’ll need to take to get started.
How to File a DBA in Nevada
If you decide a DBA (Doing Business As) is the right choice for your business, you’ll need to file it with the county where you plan to do business. You’ll also need to visit SilverFlume to check to see if your desired name is available. You’ll need to contact your county recorder’s office to find out which forms you’ll need and what the process is, as it differs from county to county. Expect to pay a notary and filing fees.
How to Form an LLC in Nevada
If you decide an LLC is the best choice, you’ll need to visit the Nevada Secretary of State website to file the Articles of Organization for a limited-liability company. When you do this, you’ll need to file your Nevada State Business License and your Initial List of Managers at that time. Expect to hire a registered professional agent and to pay three separate filing fees.
How to Incorporate in Nevada
So you’ve decided to form a corporation in Nevada. You’ll need to fill out the Articles of Incorporation with the state department. Like the LLC, you can also expect to hire a professional registered agent and to pay filing fees. You will also need to appoint directors.
To Move Your Existing California Business
If you’re moving an existing business, you can also expect to go through a process. What that process will entail and how much the fees will be will depend on whether you’re a DBA, an LLC, or a corporation.
The California Secretary of State’s office can help you obtain the authorization you’ll need to relocate your corporate headquarters from California to Nevada.
If you’re ready to look into moving your business to Nevada, the first step is to download the 2019 Las Vegas Commercial Real Estate Market Report. This free report will tell you everything you need to know about the state of the market in Southern Nevada and Northern Nevada before you invest.