Under Nevada law, certain professionals can create a business entity for the purpose of providing specific professional services, such as:
- Architecture, interior design, residential design, engineering and landscape architecture, or any combination thereof
- Medicine, homeopathy, osteopathy, chiropractic, psychology, or any combination thereof
- Mental health services
- Any type of personal service that may only be performed legally pursuant to a license, certificate of registration, or other legal authorization.
If you’re considering starting a business to provide professional services in Nevada, there are a number of things that you need to know.
Is a Nevada professional corporation the right business structure for you?
The two professional entities available in Nevada are the professional corporation (PC) and professional limited liability company (PLLC). If you want to provide a professional service that requires licensure to complete, a professional entity is the type of business you’re looking for. While Nevada PLLCs are easier to form and provide certain tax benefits, PLLCs can’t issue stocks. Instead, they provide membership interests to members of the PLLC to signify ownership.
As a general matter, PLLCs are “pass-through” entities, meaning that the individual members are taxed on their personal income from the PLLC. PCs generally operate as normal corporations, meaning they’re “double taxed” — taxed at both the corporate level and the individual level. However, a PC can sometimes elect a special tax status that essentially makes it a pass-through entity like a PLLC.
Choose a name for your Nevada PC
Nevada law requires the name of Nevada professional corporations to contain the words “professional corporation” or an abbreviation of the phrase, including:
- Prof. Corp.
Alternatively, the words “chartered” and “limited” or an abbreviation of either word, will satisfy the statutory requirements. Additionally, the law requires corporate names to include the last name of one or more of its current or former stockholders.
Business owners are prohibited from using certain words in the name of their entity, known as restricted words. The Nevada Secretary of State provides a comprehensive list of the words that are prohibited.
After meeting the statutory requirements for your Nevada PC, determine whether your preferred name is still available. Visit Nevada’s online business portal and use the Business Search tool to determine whether the name you want is already being used by another business.
Even if you aren’t ready to form your Nevada PC, ZenBusiness provides a name reservation service to help reserve your preferred business name with the state and prevent someone else from taking your name.
Additionally, ZenBusiness offers a domain name registration service that secures and registers your chosen domain name, so it can be used to establish a website, email address, or advertisements. Registering your domain name prevents someone else from purchasing the domain name and helps promote your business.
Select a Nevada registered agent
Nevada law requires Nevada PCs to name a registered agent who physically resides in the state of Nevada and is available during business hours to accept service of process and other legal notices. Three kinds of registered agent representation will satisfy the statutory requirements:
- Commercial registered agent: Any registered agent representing 10 or more entities is considered a commercial registered agent. A commercial registered agent is required to file a Commercial Registered Agent Registration with the state.
- Noncommercial registered agent: Any individual or entity with a physical address in the state of Nevada can serve as a noncommercial registered agent, as long as they’re not acting as a registered agent for 10 or more entities. No registration or fee is required to obtain this status.
- Title of office or other position with entity: If your Nevada PC has a physical address in Nevada, it can serve as its own registered agent by setting forth a specific office or position within the entity as the registered agent.
ZenBusiness offers a registered agent service to connect you with a qualified Nevada agent who can satisfy the obligations of a registered agent while you focus on running your business.
Complete Articles of Incorporation for your Nevada PC
Completing your Articles of Incorporation is required to legally form your Nevada PC. The Secretary of State provides an instruction list for completing the Articles of Incorporation for a Nevada PC. Nevada authorizes “incorporators” to file the Articles of Incorporation for Nevada professional corporations and requires incorporators to be licensed to perform the professional service offered by the PC.
Nevada requires the Articles of Incorporation for a Nevada PC to contain:
- The name of the PC
- The registered agent’s name and address
- The number of shares the PC has authority to issue
- Name and addresses of incorporators, the person or persons charged with organizing the corporation
- Signatures from incorporators and registered agent
- The profession to be practiced by means of the PC
- The names and post office boxes or street addresses of the original stockholders and directors of the PC
- A certificate from the regulating board of the profession to be practiced showing that each of the directors, and each of the stockholders who is a natural person, is licensed to practice the profession
Business owners can include additional restrictions on the transfer of an owner’s interest in a Nevada PC.
Establish a corporate record in Nevada
Nevada professional corporations need to maintain a corporate record containing important organizational documents, tax and financial records, and annual meeting information.
Designate a Nevada PC board of directors
An incorporator is the individual who takes responsibility for filing the Articles of Incorporation with the Secretary of States and officially starting the corporation’s existence. An important part of filing Articles is naming the initial directors of the PC. The board of directors plays a vital role in the management of a new business. The board holds meetings, provides oversight, and appoints officers within the PC.
In addition to the names and addresses of every director, the incorporator must include a certificate from a regulatory body showing that each director is licensed or registered as required. After this, the incorporator should assign any rights in the corporation to the board of directors as a corporate formality after the PC is formed and of record.
Create Nevada corporate bylaws
The incorporators or initial directors of a Nevada PC can adopt corporate bylaws. Corporate bylaws set out the procedures and rules for how the PC will conduct business. While Nevada law doesn’t require PCs to adopt corporate bylaws, bylaws help businesses run smoothly and outline important processes. The bylaws should be filed in the corporate record.
Hold your first board meeting
After designating an initial board of directors and creating bylaws, you can hold your first board meeting for your Nevada PC. The first board meeting may address topics such as:
- Reviewing and approving bylaws
- Designating officers to manage day-to-day operations
- Choosing a bank for your Nevada PC
- Approving issuance of stocks
- Determining whether the company will elect to be taxed as a C corporation or S corporation
Keep a detailed record of your discussions and decisions during the meeting, known as the meeting minutes, which will be distributed to all board members for their review and approval after the meeting. File copies of meeting minutes in the corporate record after every meeting.
Nevada PC tax obligations
Nevada PCs have to stay up to date on their taxes to maintain good standing with the state.
Federal Tax Obligations
PCs pay federal taxes as either a C corporation or an S corporation. PCs are C corporations by default, meaning that the PC is taxed twice — once at the corporate level and again on the shareholders’ individual tax returns. S corporations, on the other hand, eliminate the double taxation element, resulting in shareholders being taxed only on their individual tax returns. However, to qualify as an S corporation, the Nevada PC must have fewer than 100 shareholders, have zero foreign shareholders, not be owned by another business entity, and issue only one class of stock.
State Tax Obligations
Nevada, unlike most states, doesn’t have a state income tax. However, Nevada businesses whose gross revenue in a taxable year exceeds $4 million are required to file a Nevada Commerce Tax return. The Nevada Commerce Tax is a tax on the “privilege of engaging in business” in the state of Nevada.
Additionally, Nevada businesses are subject to a modified business tax (MDT), which is a quarterly tax applicable to businesses that have employees.
Local Tax Obligations
Depending on the location of your Nevada PC, you might be subject to municipal or county taxes. Contact your local revenue department to determine whether you have any local tax obligations for your Nevada PC.
Obtain Nevada business licenses and permits
Nevada requires all businesses operating within the state to maintain a state business license. The application for the business license is included in the list of officers and directors form that must be filed when the entity is incorporated. To maintain the license, an annual fee is required.
Additionally, local governments may require industry-specific permits to legally do business in the area. There is no central location to determine what permits and licenses you need to run your business. But ZenBusiness can do the research for you and provide a summary of the licenses and permits your business needs to operate.
Because of the nature of PCs, it’s also crucial that every member keeps his or her professional license up to date.
Acquire insurance for your Nevada PC
Before engaging in business operations, obtain insurance for your Nevada PC.
General Business Insurance
General business insurance, also referred to as general liability insurance, protects your Nevada PC from bodily injury claims, property damage claims, and other legal claims that can put your business or your business’s assets in jeopardy. This coverage isn’t required, but is strongly recommended.
Workers’ Compensation Insurance
Nevada PCs that have employees are required to secure and maintain workers’ compensation insurance. This insurance covers medical expenses, lost wages, and disability compensation for injured employees.
Depending on your business industry, obtaining malpractice insurance is recommended. While Nevada doesn’t require medical malpractice insurance, it does require legal malpractice insurance. Even when malpractice insurance isn’t required, it can help protect the PC from serious liability issues in the event of individual malpractice suits.
Open a bank account for your Nevada PC
To open a business bank account, you need an employer identification number (EIN). An EIN is essentially a social security number for a business that allows the IRS to identify your business easily. ZenBusiness can secure your EIN for you and take one more task off your plate.
ZenBusiness can help you run and maintain your Nevada PC
ZenBusiness offers services that can assist you in running and maintaining your Nevada PC. Some of our services can help you:
- Reserve a business name
- Find a registered agent
- Apply for an EIN
- Secure a business domain name
- Stay compliant with state filing requirements
Don’t let the small details of starting or growing your business slow you down. ZenBusiness can provide the assistance you need to simplify operating your business.
Nevada Professional Corporation FAQ
- What are the filing fees for a Nevada PC?
Filing fees change frequently. Visit the Nevada Secretary of State website for the most up-to-date information regarding pricing. The filing fee is also included on the Instructions for Articles of Incorporation for Nevada PCs provided by the Secretary of State.
- Do I need a lawyer to form a Nevada PC?
A lawyer isn’t required to form a Nevada PC. However, questions about legal obligations or consequences are best answered by a licensed Nevada attorney.
- Does Nevada have other professional entity types?
Other than a professional corporation, Nevada offers a PLLC, which is also a professional entity.
- Can professionals from different fields form a Nevada PC together?
Nevada law requires PCs to be formed for the purpose of rendering one specific type of professional service. However, professionals in the same industry with different specialties can form a PC together. For example, a PC providing architectural services can include a professional architect and a professional interior designer as members of the PC.
- Will I be taxed as an S corporation or a C corporation in Nevada?
The default taxation format for a Nevada PC is to be taxed as a C corporation. However, PCs that meet certain requirements may be eligible to elect S corporation tax status. With S corporation status, a PC’s profits are taxed only at the individual level, similar to an LLC.