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Don’t Start Your Las Vegas Business in a Bind

With one of the most favorable tax situations in the country, Nevada is at the top of list for many start-up and ongoing enterprises. The state has no income franchise tax, no unitary tax and no corporate income tax. Nevada residents are not saddled with any personal income tax, gift taxes, inheritance or estate taxes, the real estate market is competitive, and there is a ready workforce.

So you’d think Nevada and cities like Reno, Tahoe, and Las Vegas would be booming with businesses. But with some of the highest consumption (sales, liquor, gaming, gasoline, etc) and unemployment taxes, Nevada is in hot competition with other western states, such as Texas, Wyoming, South Dakota, and Washington. Las Vegas to the rescue!!

In 2010, the city of Las Vegas joined forces with to make downtown Las Vegas a magnet haven for nongaming businesses. The first step, selling City Hall to the Resort Gaming Group who then leased the building to who expects to move-in in 2012. The second step, utilizing founder Tony Hsieh (pronounced “Shay”) as Las Vegas’ unofficial ambassador for new and unusual start-up entrepreneurs. The third step, making the revitalization of downtown Las Vegas a top priority and offering nongaming enterprises a vast array of free and low-cost services which start with developing a business plan to obtaining the necessary business licenses and incorporation.

But when contemplating a new business, one of the most important considerations is the business structure. In Nevada, and by proxy Las Vegas, one of the most popular business structures for new start-ups is the Limited Liability Company, or LLC, which is recognized in all 50 states.

Like the Subchapter S and C Corporation, an LLC is an entity separate from the individual owners. Unlike the C Corporation (whose income is taxed to the corporation and its stockholders), but like the Subchapter S, for tax purposes the company’s income, or loss, passes through to the owners who then report the income, or loss, on their personal income tax returns. Double taxation is nixed. Another advantage of the Nevada LLC over the C and Subchapter S Corporations is annual meetings are not required, and all earnings do not have to be distributed and do not have to be distributed based on the ratio of ownership.

Another big advantage of a Nevada LLC is the reduced restrictions on who can own the company. With a Subchapter S Corporation, the number of owner shareholders is limited to 75. Furthermore owner shareholders can not be a nonresident alien or another corporation, including an LLC. With a Nevada LLC the number of owners is unlimited and can include resident aliens and other corporations.

There is also a big disadvantage to establishing a Nevada LLC – self-employment taxes. LLC owners are deemed to be self-employed and are therefore must pay self-employment tax on all the company’s net income. With a C corporation owners are never liable for self-employment tax and in Nevada there is no personal income tax on their wages. With a Subchapter S corporation, self-employment tax is only due on wages paid.

To ensure you select the correct entity for your new Las Vegas business, consult Lagomarsino Law. Contact our office for a free confidential case review and receive a response within hours. Call Toll Free 866-414-0400.