Why Startups Are Moving to Nevada

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Tesla’s decision to relocate to Reno, Nevada, back in 2014 sparked a national debate, which led to companies relocating to the desert state from their home state. But why? What did Elon Musk discover about Nevada that made him think such a big, expensive move was worth it? What did other companies like Apple and Microsoft learn that inspired them to make the same move?

This post will examine why startup businesses are transferring to Nevada and what you need to know before making the move.

Why Moving a Company to Nevada Is Worth It

Moving Tesla from California to Nevada was not an impulse move for Musk. In reality, it’s more calculated than most people think. Here are some reasons businesses are moving to Nevada:

Unrivaled Tax Breaks

Nevada is a unique state, earning significant tax revenue from its casinos. But instead of pocketing this extra money, Nevada passes these tax savings to individuals and businesses.

As a result, the state removed major tax types, including the following:

  • State Tax
  • Corporate Income Tax
  • Personal Income Tax

These tax breaks could mean a lot to entrepreneurs needing help raising funds. They can use the money they save and reinvest it in their company.

Enhanced Privacy

In many states, annual business filings require the inclusion of significant financial information about both the business and its principals. Nevada, however, takes privacy very seriously and requires only minimal filing requirements. They don’t require companies to have a formal information-sharing agreement with the IRS.

The fact that Nevada collects such limited information at the time of filing means there’s little to share about you or your Nevada business, including anyone trying to claim against you.

Unprecedented Lawsuit and Asset Protection

Unlike other states, Nevada doesn’t believe that the individuals controlling businesses should be in danger of losing their personal assets because of business matters. Nevada also doesn’t believe that businesses should be responsible for the personal liabilities of their controllers.

Because of this strong “pro-business” stance, Nevada’s courts have taken firm measures to prevent lawsuits against a Nevada business from personally affecting its representatives.

No Residency Required

You can use and maintain a Nevada business even if you’re not a resident of Nevada. Matter of fact, you can establish one without ever visiting Nevada.

Form your business by mail, fax, or phone, and you, as the business owner, never have to visit the state or conduct annual meetings. However, if you want the tax benefits from forming your business in Nevada, you’ll need to set up business operations in Nevada. 

This is where having a Registered Agent comes in handy.

No Minimum Capital Required

Many states require an LLC or corporation to have at least $1,000 in capital. But you can organize a Nevada startup with little capital if desired.

How to Move a Business to Nevada

Step 1: Research Nevada’s Business Environment

Understand the state’s tax structure, regulatory environment, and industry-specific requirements. The Nevada Secretary of State’s website is a valuable resource for obtaining information on business licenses, regulations, and compliance.

Step 2: Choose a Business Structure

Nevada offers various options, including sole proprietorship, partnership, limited liability company (LLC), and corporation. Each structure has advantages and disadvantages, so choose the one that aligns with your business goals and preferences.

Step 3: Register Your Business with the Nevada Secretary of State

Once you’ve chosen a business structure, register your business with the Nevada Secretary of State. This involves filing the necessary paperwork and paying the required fees. The online filing system makes the process efficient and user-friendly.

Start your Nevada LLC in 24 hours
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You don’t need to live in Nevada to enjoy the best asset protection
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Step 4: Establish a Physical Presence

Your business must have a physical presence in the state in compliance with Nevada’s regulations. This can be a physical office, a retail space, or a warehouse. Ensure that your business address is legitimate and complies with local zoning laws. 

Step 5: Transfer Necessary Licenses and Permits

Work closely with the appropriate authorities to transfer licenses and permits from your current location to Nevada. This process may vary depending on your industry, so be sure to check with the relevant regulatory bodies to avoid disruptions to your operations.

Step 6: Understand Nevada’s Tax Structure

One of the primary reasons businesses move to Nevada is its favorable tax environment. Nevada has no corporate, personal, or franchise income tax. However, there is a Modified Business Tax (MBT) on gross wages over a certain threshold.

Step 7: Open a Business Bank Account in Nevada

Having a local business bank account is necessary for managing your finances efficiently. Choose a reputable bank with a strong presence in Nevada to streamline your banking processes and facilitate transactions with local clients and suppliers.

Things to Keep in Mind When Moving to Nevada

Before you think about transferring your company to the desert state, there are a few things you need to consider. For instance, your options on how to move your LLC to Nevada.

You can either dissolve your current LLC and create a new one in Nevada or register as a foreign LLC. Certain states allow the domestication of LLCs, one of the easiest ways to transfer to Nevada. But you can choose between the two options we’ve mentioned if they don’t.

Suppose you want to demolish your current LLC and create a new one in Nevada. In that case, you’ll have to pay certain taxes for the transfer and create a new employer identification number.

However, if you decide to register as a foreign LLC in Nevada, you must file an Application for Registration of a Foreign Limited Liability Company with the Secretary of the State.

Typically, the filing fee for foreign LLCs is around $425. This includes the documents you typically need to start an LLC, like a business license and your initial list of managers.

Foreign LLCs are perfect if you want to operate in your home state. But it’s worth noting that doing so means you’ll have to file two annual reports in your home and Nevada.

The Bottomline

Nevada is the ideal location for big companies like Tesla, Microsoft, and Apple. These advantages in Nevada can also give your business the support and edge it needs to thrive.

If you’re ready to turn your dream business into a reality, look no further than NCH. Our comprehensive asset protection strategies are second to none. 

From business entity formation to accounting and taxes, building business credit, and estate planning, they are proven to help businesses successfully launch and grow.

Visit our website or call us at 1-800-508-1729 to schedule your consultation!

NCH DISCLAIMER: The above material has been prepared for informational purposes only, containing opinions of the provider, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Please consider consulting tax, legal, and accounting advisors before engaging in any transaction.

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Tags: apple, Business, Business Owner, elon musk, microsoft, Nevada, Nevada business, Registered Agent, small business, small business owner, tesla

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