Why Incorporate in Nevada

One of the best states to form an LLC or Corporation entity

Launch Your nevada LLC

Why Incorporate in Nevada

  • Nevada is a prevalent choice as one of the best states to form an LLC or Corporation entity
  • A Nevada LLC is wildly popular for e-commerce sellers looking for an extra layer of asset protection to protect their home country entity. Product liability is a significant area of concern, and protecting the LLC manager and the entity veil is paramount.
  • There are several factors to consider when deciding if a Nevada LLC or Corporation is best for your situation.
  • As expected, there are several online blog posts, and their information seems to contradict each other, even those by attorneys and CPAs.

    This will help to clear up some of those contradictions. Pay attention to the difference between a U.S. resident vs. a non-U.S. resident forming a Nevada LLC.

Are you a U.S. Resident vs. Non-U.S. Resident?

  • If you are a U.S. resident and form an LLC in nevada and live in another state, that changes the benefits you believe you are getting when you form a nevada LLC. Does that mean you should form an LLC in your home state? Not necessarily.
  • It will help if you understand the advantages of formation and what happens when you foreign qualify to do business in your state (based upon some assumptions).
  • At this point, you will decide what advantages will be minimized or lost completely. Is it investing in two states?
  • In many cases, the answer may still be yes, although every website will say, “you should never pay two state fees. What a waste of money.”
  • I am sure, and as a business owner, you can find a better way to save $20-$50 per month (by being more productive, planning your day, less social media) that more than offsets the “two-state fees” concern.
  • A non-U.S. resident has the luxury to pick and choose which state would be best to launch their e-commerce business.
  • Although you are not required to have a U.S. entity to sell on, it is prevalent for many reasons, including separating liability from the foreign e-commerce business, obtaining product liability insurance, and investors more comfortable buying your U.S. brand from your U.S. company.
  • It is widespread for a U.K. resident to be selling on Amazon throughout the E.U. via a UK LTD, then expand to the U.S. and form a U.S. single-member LLC owned by the foreign U.K. limited company. There are many steps involved in the process, and knowing how to fill out the SS4 application for each entity is critical.
  • U.S. federal and state sales tax issues and concerns – more on that later – are still involved in each situation.

Nevada Advantages

Let’s address and dive deep into each of the Nevada advantages to see if it will benefit your situation, keeping in mind whether you are a U.S. or Non-U.S. resident.

Nevada State Taxes

Nevada does not have any state corporate income tax, but does have a commerce tax. The Commerce Tax is an annual tax passed by the Nevada Legislature during the 2015 Legislative Session. The tax is imposed on businesses with a Nevada gross revenue exceeding $4,000,000 in the taxable year. The Commerce Tax return is due 45 days following the end of the fiscal year (June 30).

Nevada Tax Proposal:

Nevada levies no state income tax on its residents. The state funds most of its budget with tax revenue from the gambling and hospitality industries, both highly susceptible to economic booms and busts. Sales tax did increase slightly in 2020. Effective January 1, 2020, the Clark County sales and use tax rate increased to 8.375%. This is an increase of 1/8 of 1 percent on the sale of all tangible personal property that is taxable.

Nevada Sales Tax:

The minimum combined 2020 sales tax rate for Clark County, Nevada, is 8.38%. This is the total of state and county sales tax rates. The Nevada state sales tax rate is currently 4.6%.

Before the marketplace law in Nevada was enacted in October of 2019, if you formed a Nevada LLC, that would create physical nexus, and sales tax registration was required to file sales tax returns. The LLC would collect and remit sales tax on sales to Nevada residents.

Do Amazon Sellers that form a Nevada LLC need to register for a sales tax permit in Nevada?


Nevada considers Amazon a marketplace facilitator, a vendor, and vendors must register for the sales tax permit after marketplace nexus. As an Amazon seller, you, even with a Nevada LLC, are NOT considered a vendor and, therefore, are NOT required to register for a sales tax permit.
The exemption is if your Nevada LLC sells a product subject to sales tax on a non-marketplace, such as your website or Shopify. Once you cross the economic thresholds of $100K in sales or 200 transactions (after November 1, 2018), the LLC will need to collect and remit sales tax on those sales, and registration is required.
Marketplace nexus also came into play after the 2018 U.S. Supreme Court case involving many states, who decided that it makes more sense to have the marketplace facilitator (i.e., Amazon, eBay, Etsy, Walmart) collect and remit the sales tax on behalf of sellers.
Nevada passed marketplace nexus in October of 2019. If you were an Amazon seller after October 2019, Amazon collects and remits sales tax on your behalf, and sales tax registration is NOT required.
The Nevada Department of Revenue has summarized the sales tax situation for Amazon sellers by saying:

With a Nevada LLC or Corporation, the seller will not need to register for a sales tax license as long as they are only incorporated in Nevada and have no physical or economic nexus in the state.
In the case of an out-of-state Amazon seller with inventory in Nevada, those sellers are considered to have a physical presence in the state prior to the implementation of the Marketplace Law. New sellers do not need to worry about their inventory being stored in the state because Amazon is now responsible for it since the Marketplace Law took effect.

In conclusion, if a new out-of-state Marketplace seller chose Nevada as their state of incorporation and will not make any direct sales, they do not need to register for a sales tax license in the state.
The exception for Amazon sellers: If you are selling on Amazon and your website or a Shopify store and cross economic nexus with either $100K or 200 transactions, registration for sales tax is required

Go to this link to learn more about our sister brand’s sales tax registration services, Sales Tax System. Suppose you are behind on sales tax in nevada or other states. In that case, we can help you determine your past liability and registration dates with our sales tax nexus analysis service.

The Circle of Liability

In nevada, when you form an LLC, the manager or member’s name (depending upon how the LLC is managed) will NOT show up in the state’s records. This is an advantage of the privacy that nevada offers.

Privacy is an essential tool in asset protection. It is best described as the “icing on the cake” in terms of protecting your assets. It is not the starting point, but its privacy does bring in an extra layer of protection from the standpoint it may take longer and cost more money to determine the owner of a nevada LLC.

The mistake entrepreneurs make with privacy is thinking that their company somehow cannot be sued if their name does not show up in the LLC record. That is not accurate. A registered agent’s purpose is to accept service of process against a company and forward it to the contact on file at the registered agent’s office.

If someone is suing your company, it does not matter if they don’t know you are the “owner” or member. If your LLC is served with a lawsuit, you, as the owner, will still need to hire an attorney to represent your LLC and defend your company against the lawsuit.

If someone is searching for you specifically to find out what assets you may have in an LLC, then not having your name in state records is advantageous.

E-commerce sellers have product liability, and the company must be the first line of defense against a lawsuit.

Ideally, you have product liability insurance as the first line of defense, your legal entity as the second line. Amazon, for example, only requires product liability insurance once you surpass $1 million in gross sales, but they don’t enforce the policy.

Most Amazon sellers’ only line of defense is having a separate legal entity. That is why LLC formalities and protecting the LLC veil is so essential. Once someone or a company sues your LLC, they determine it was you or an “alter ego” (common with a single-member, disregarded LLC that is owned by one person), and they pierce the LLC veil. They are now going after your personal assets.

If you are a non-resident living in another country, you may conclude no one will come after you in your home country, as that may be difficult. But, you don’t want to have a massive judgment against you in the U.S., in the largest e-commerce market in the world.

There is a big difference between wanting privacy from other “pesky” e-commerce sellers attempting to determine what products you sell and your company or brand name.

Many Amazon sellers teach how to make money on Amazon, and they give examples, but won’t talk about their products because they don’t want their students to compete with them. This is the same experience if you go to an e-commerce event. Most sellers will not talk about their products, only about how long they have been selling and tips they have picked up at the event.

Suppose you sell a product online. In that case, you will have issues with other competitors or people that copy your product (even if protected properly) or report your product as violating Amazon’s terms of service (TOS) policies. Privacy will not protect you in this situation.

If you are a big brand name behind your training course and are the CEO of the corporation you formed in nevada, there is no benefit to not having your name in state records because you already shared with the world that you are the CEO.

At this point, you might be wondering, “Can I buy insurance for this piercing of the corporate veil?” You can buy E & O, business liability, but there is NO insurance on protecting the corporate veil.

Let me ask you this; if the insurance company could make money on it, would they sell it to you? Of course, but they don't. What does that tell you?

Now, the Best Solution is to Incorporate in Nevada.

Nevada is very pro-business, and Nevada's corporate veil has only been pierced two times in the last 41 years.

Now I will tell you there have been many cases where a Nevada corporation did not operate properly, meaning they did not do all of their formalities, thinly capitalized the company, and even commingled funds.

Still, Nevada protected the corporate veil because the owners did NOT commit outright fraud! Nevada will protect you, the business owner. Does this make sense?

Is My LLC Name the Same as my Amazon Storefront and Amazon Brand Name?

No. Your LLC name could be your Amazon storefront name, and your product name could be a DBA name filed under the LLC. You will want to do a comprehensive trademark search for your LLC and product names (if different) and protect them accordingly.

Nevada Piercing the Entity Veil

When You Form A Separate Legal Entity, The #1 Advantage Is To Separate Your Personal And Business Assets. The Legal Entity You Form Will Provide A Barrier To Shield Your Personal Assets From Any Business Lawsuits.

If Your Business Is Sued, You May Lose All Your Business Assets; But Your Personal Assets Should Be Protected If Your Entity Is Properly Formed And Maintained.

Unfortunately, Should You Lose A Lawsuit And Not Have Insurance To Absorb The Initial Judgment (Which Is The Case For Most Who Form An LLC Or Corporation), Your Entity Veil Would Be Pierced, And The Lawsuit Would Attach To You, Personally. This Could Be Financially Devastating. Your Personal Finances Would Become Paralyzed. Let Us Explain.

If You Are Going To Apply For Any Personal Financing, A Car Loan, Refinancing Your Home, Purchasing A New Home, Being Asked, "Are You Currently Involved In Any Lawsuits,” Or “Do You Have Any Outstanding Judgments Against You" Will Immediately Cancel Your Financing Opportunity.

This Is What It Means To Be Financially Paralyzed, Which Is The Main Reason Why You Should Form A Separate Legal Entity Instead Of Operating Your Business As A Sole Proprietorship.

The Ability To Protect Your Entity Veil Is Essential, Especially If The Owners Include Partners Or Another Company.

  • Draft Plan of Conversion

    The LLC attorney must draft a plan of conversion.

  • Draft Plan of Conversion

    The LLC attorney must draft a plan of conversion.

  • Draft Plan of Conversion

    The LLC attorney must draft a plan of conversion.

  • Draft Plan of Conversion

    The LLC attorney must draft a plan of conversion.

16 Points Why Incorporate in Nevada?

Why incorporate Nevada when it’s easier, cheaper, and simpler to incorporate in your home state? Here are 16 reasons to consider incorporating Nevada when you have a growing business and want an extra layer of protection and complexity for your assets

1. The Charging Order as the sole remedy.

In states such as Arizona, Nevada, nevada, and Texas, with the strongest charging order laws, a charging order against the LLC owner’s interest is the sole remedy for a creditor seeking to attach the LLC interest to satisfy a judgment. In these states, ALL a creditor would get with a charging order is a right to receive any distributions made to the debtor/owner IF the LLC makes a distribution. The creditor would not get any management, ownership, or voting rights with that charging order.

2. Allow to Foreclose on the Membership Interest.

These states allow the creditor also to take the next step and foreclose on the charging order. Still, those states are also clear that getting a charging order and foreclosure are the exclusive remedies for a creditor seeking to satisfy a judgment against a debtor’s interest in an LLC. These states include California, Illinois, Hawaii, and Illinois.

3. Additional remedies are available.

Finally, states like Colorado, Indiana, Massachusetts, New York, and Missouri do not expressly limit a creditor’s rights to the charging order or foreclosure. The jury is out on whether a creditor in these states could seek additional remedies, such as forcing the LLC’s dissolution.


Single-Member LLC Charging Order Protection

Now, if you form a nevada LLC and foreign register in another state, the charging order may not hold up in that other state for a corporation. If an LLC, that would not be the case.
Like California and Delaware, some states allow a creditor to foreclose on the membership interest if they do not appear to receive any distributions!

That means after receiving the charging order. Suppose no money is paid or distributed to the creditors. In that case, the creditors can go back to the court, after some time, and ask to foreclose on the membership interest, which means they can get control of the ownership, which may give them control of the company with all the assets (if 51% or more).
There are a couple of states that do not have the charging order protection for LLCs. Those include Nebraska and Pennsylvania. Even those states do not have this protection because LLC acts contain a rule that members cannot transfer their voting and other management rights without the other members’ consent. This provides a specific layer of protection.

The big question that does come into play is will a single-member LLC have the charging order protection just like a two-member LLC?
Now, if you form a nevada LLC and foreign register in another state, the charging order may not hold up in that other state for a corporation. If an LLC, that would not be the case.

The charging order originally came from limited partnerships. It was designed so if one partner were sued for something unrelated to the operating business, it would not negatively affect the other partners – meaning if one partner were sued in a limited partnership, that would not bring down the entire business or create a new partner, the creditor.
After LLCs were created (in 1977) and became more popular in the late ’90s, no one ever seemed to address whether or not the charging order protection would apply to a single-member LLC.
After all, there is only one member, and you are not negatively affecting another member. The first case (“Albright”) came up in 2003, in Colorado, where a lady owned a single-member LLC that owned a rental property.
She filed personal bankruptcy, and the judge ignored the charging order, removed the rental out of the LLC, and put it into personal bankruptcy.

That was the first case where the charging order was ignored. Since there was no partner to affect negatively, the judge said he would take the property into bankruptcy court (meaning the LLC ownership that held the rental property). The other case was in Florida, in 2010, the Olmstead v. Federal Trade Commission case. Again the charging order was ignored on a single-member LLC.

Which States does Single-Members LLC Provide the Charging Order Protection?

The states with a single-member LLC charging order protection include Alaska, Delaware, Nevada, South Dakota, and nevada. In the other states, you may want to consider an LLC with two members.

E-Commerce Sellers Completing a Tax Interview with Your New nevada LLC

When you form a nevada LLC, make sure you know how to complete the tax interview on the marketplace where you plan to sell, or your account will NOT be activated. We provide these steps when you register and have tips directly from Amazon, for example, so you don’t have to figure out later what TOS areas you violated or what is POA (appeal) to Amazon.

Our team is familiar with most platforms and sales tax compliance that makes NCP and our sister brand, Sales Tax System, the #1 resource for serious e-commerce sellers looking to build and protect their profits in the U.S.

Ready to form a nevada LLC?