Limited Liability Companies provide business owners with most of the personal liability protections of a corporation without the expense or complication of going through full incorporation. Deciding where to form an LLC is a step that requires a fair amount of research. Nevada and Delaware are among the most popular states for businesses to form LLCs. Both states provide favorable conditions for forming an LLC, which can include privacy for company members and tax benefits. Here are some of the main differences between establishing an LLC in Nevada, as opposed to Delaware.
If you form an LLC in Delaware, you're not required to list the names or addresses of members and managers. In Nevada, you're required to provide a list of manager and member names and addresses. This information is made available to the general public.
In Nevada, anyone can look up a company, and identify the names and addresses of the company's members and managers. Delaware LLCs need only identify the registered agent of the company. The registered agent is the person designated to receive tax and legal documents on behalf of the LLC.
Whether you form an LLC in Nevada or Delaware, you'll gain some amount of asset protection. However, Nevada goes further than Delaware in this area. Creditors' rights are restricted to the right to get a "charging order" for your percentage of ownership.
In Delaware, creditors can get a charging order against your ownership interests. Creditors can also seek "all appropriate orders" from a court to obtain distributions from your LLC. Finally, creditors have the right to have a foreclosure sale of your ownership interest.
When you form an LLC in Delaware, you're required to pay an initial filing fee of $90. You'll be responsible for paying $200 annually. This annual report fee is due by June 1st of every year, along with a copy of your annual report.
In Nevada, your initial filing fee is $75. Within 30 days of forming your LLC, you're required to pay an additional $125 and to file your report of members and managers. You'll pay $100 for a state business license within 30 days of forming your LLC.
In Nevada, you must pay an annual report fee of $125. Your annual report fee, along with your annual report, is due every year on the anniversary of your LLC formation.
If you form your LLC in Nevada, you won't be charged corporate or personal income tax. Nevada LLCs aren't required to pay a franchise tax.
Delaware LLCs are charged state taxes for doing business in the state. Delaware charges LLCs a flat fee franchise tax.
Delaware shares information regarding in-state LLCs with the IRS. Nevada doesn't share information with the IRS.
Nevada requires LLCs to purchase a $25 business license to conduct business in Nevada. This is a requirement, regardless of whether your LLC conducts business in the state.
You're not required to buy a business license in Delaware unless you plan on doing business in the state.