Here are some tips for when you’re ready to open a business entity in Nevada:
1. When you are ready to open up a business entity (probably an LLC because they’re a lot easier to manage than a corporation), then when you’re forming it, if you don’t have an attorney form it then you want to make sure you have it managed by managers. Okay? Not managing members. And the reason for this is because if you have it managed by managing members, then the manager’s ownership in the company will be disclosed to the public. So, you want to make sure you check the box for manager, not managing member, because you don’t need to tell everybody who owns the company. Part of the purpose and having a business entity is for privacy. You don’t necessarily want anyone to know who owns the business entity.
2. Whenever you form a business entity, whether it be a corporation or an LLC, you will need to appoint a registered agent. That person is the person that accepts process throughout the year on behalf of your entity. Meaning if you’re sued, then the person that’s suing the company needs to look at the secretary of state online to see who the registered agent is, who’s registered for service of process. That entity or individual will be the one that’s literally served with the complaint.
The process server will go to that entity or person and serve them with a complaint on behalf of the business. So, you want to make sure that the person that you designate or the company that you designate is available during business hours, Monday through Friday 9:00 AM to 5:00 PM for service of process, and that’s actually a statutory requirement.
3.Many people when I ask people, okay, you have a business entity, what type of business entity do you have? Many times, they say, Oh, I have an S Corp. An S Corp is actually not a business entity at all. That isn’t even an option as a response to what kind of business entity do you have? An S Corp is a way to tax the business entities or it’s a type of taxation for the business entity. For example, you can have an LLC taxed as an S Corp, so it’s a tax election designation. There is no such thing as a, as an S Corp business entity.
4. The final tip that I wanted to talk about is operating agreements. So this of course is actually specific to LLCs because like I said, most people, that’s what they’re going to have. They’re going to have an LLC unless you’re a publicly traded company on New York stock exchange. Then maybe you’re going to have a corporation. But otherwise in Nevada, it’s just easier to do the LLC plus the fact that honestly it’s cheaper. The secretary of state charges less money to open up and renew LLCs than they do corporations.
With an LLC, you have what’s called an operating agreement. That outlines the rules of the game, the rules of the business. You don’t have to, it’s not required. However, if it’s more than one person that owns the business, then I would highly suggest that you have an operating agreement unless you are married or something like that. Unless there are certain situations where you might not need one. But for the most part, if it’s just you, obviously you don’t need an operating agreement because you’re not going to get in a fight with yourself. But once you get involved with another person, then I highly, highly recommend an operating agreement, which is generally done by an attorney because they’re customizable depending on the type of business and what kind of specific rules you want in place.