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Choosing a business structure is the first step to forming your new business. The Nevada S Corporation (S Corp) can help small business owners save money on their income taxes. The S Corporation isn’t a legal entity type or business structure. Instead, S Corporation status is elective federal tax treatment. Therefore, the Nevada S Corporation filing requirements start with forming a corporation or limited liability company (LLC). Then, you’ll file Form 2553 with the IRS for your business to elect S Corp status.
We can help you form a company as an S Corp. If you’re ready to form your Nevada S Corp, we can help. Get started with our Nevada LLC Formation Service or Nevada Corporation Formation Service. Finally, we can help you manage your business throughout your company’s lifetime with our specially-tailored products and services.
The first step to starting a business is to choose a name. Your name must be unique from all other Nevada businesses. Once you’ve decided, you can reserve your name with the Nevada Secretary of State for 90 days. We can help when you use our Name Reservation Service.
Every Nevada business needs to name a registered agent. The state will send legal notices to the address of your registered agent. The agent must reside or be located in Nevada. You can choose a reliable individual or a company formed for this purpose.
A corporation’s directors and an LLC’s managers make governing decisions about the company. One of the first things the directors or managers will do is write corporate bylaws or an LLC Operating Agreement. We offer an Operating Agreement Template for LLCs as part of our formation plans.
Before you can begin doing business in Nevada, you need to file your formation documents with the Nevada Secretary of State. Corporations complete Articles of Incorporation, and LLCs complete Articles of Organization. Once you pay the accompanying filing fee your business legally exists.
Because the S Corp is a federal tax election, you must file Form 2553 with the IRS to elect S Corp status. If you formed a Nevada LLC, you must first elect to be taxed as a corporation. Then, you can file Form 2553 “Election by a Small Business Incorporation.” A Nevada corporation need only file Form 2553 to elect S Corp status.
The IRS has specific requirements before a business may elect S Corp status. Qualified business corporations must:
Your company must maintain these qualifications to continue filing as an S Corp. The IRS requires businesses to make their initial S Corp election by filing Form 2553 within two months and 15 days of the start of the tax year (or any time during the previous tax year).
The decision to elect S Corp status is unique to your business. Only you can know what’s right for you and your shareholders. We’ve put together a few pros and cons of the S Corp for you to consider.
One benefit of creating an S Corporation is personal asset protection. You’ll also get pass-through taxation and tax-favorable characterization of income. This can reduce your tax liability. The S Corp also allows for the cash method of accounting.
The cons of an S Corp include higher formation and maintenance expenses, tighter tax qualification obligations, and stock ownership restrictions. You may experience tighter IRS scrutiny. Also, the S Corp isn’t as flexible with allocating income and loss as other business types. And because Nevada doesn’t have state income taxes, the S Corp doesn’t provide state-level benefits.
One of the most important things to know is that the IRS has default rules for taxing the different business types unless you file an election. The second thing to know is that the benefit of the S Corp election might be limited because there are no state income taxes in Nevada.
S Corporations are basically small business corporations that have limited shareholders but aren’t subject to corporate double taxation.
The IRS taxes corporations as C Corps by default. C Corps are subject to “double taxation,” meaning they pay corporate income taxes and withhold employment taxes from their employees’ wages. On the other hand, S Corporations have the benefit of “pass-through” taxation. Instead of paying taxes at the corporate level, the IRS taxes the corporation shareholders on the business’s profits and losses through their individual returns.
To create an S Corporation, you first need to form a business that falls within the limitations identified above. Then, file Form 2553 with the IRS within the proper timeframe.
Yes, LLCs can choose S Corp status to obtain tax benefits for their owners. By default, the IRS taxes an LLC as a sole proprietorship or a general partnership. These entities are known as “pass-through entities” because the business passes its profits and losses to the owners to pay income tax on their individual returns.
So if an LLC already uses pass-through taxation by default, what benefit does the S Corp election have for the LLC owner? When you receive income from the LLC without the S Corp election, you have to pay self-employment taxes on that income. Instead, the S Corp election allows you to pay yourself a reasonable salary, and the LLC will withhold employment taxes for you. This saves you money because you don’t have to pay self-employment tax.
We understand the choices you have to make as a new business owner. When you’ve decided to form an S Corp, let us help. Our business experts will help ensure you’ve met all the filing requirements for forming a Nevada S Corp. When you form your business with us, we’ll be here to help with compliance throughout the lifetime of your business.
Disclaimer: The content on this page is for information purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
When you create a Nevada S Corp, you’ll get pass-through taxation and won’t need to pay corporate income taxes. You’ll also pay employment taxes on your salary rather than self-employment taxes.
The name of your S Corporation should match its underlying business structure. If you formed a corporation, include words like “Co.” or “Inc.” If you formed an LLC, include the words “limited liability company,” “Limited,” or “LLC” in your business name.
No, you should continue to identify your LLC as an LLC after you make the S Corporation election. The LLC designation in your name will alert consumers to the owner’s limited liability.
The S Corporation should file Schedule K-1 with the IRS, which identifies each owner’s share of the business’s profits and losses. You’ll calculate the S Corp taxes on your individual return based on your share.