Comparing Nevada and Texas LLC: Which State is Right for You?

Location is one of the most vital factors you must consider when incorporating a business. Where you’re situated determines how high your company's chances of surviving are. It also affects how much it would cost you to run your startup.

There are advantages and disadvantages to incorporating your business in each state. The more benefits you have, the more resources you can put into expanding your startup. If you want your company to flourish, you need to find an environment that could help you do that.

Admittedly, it's challenging to determine which state is the best for your startup. So, to help you out, we've compared the benefits of doing business in the state of Texas and Nevada.

Learn what makes the Silver state the most pro-business location in the country through this guide.

If you're torn between incorporating your business in the State of Texas or Nevada, here are some of the major differences you need to keep in mind.

Business Tax Climate Ranking

Each state's Business Tax Climate ranking determines how efficient its tax systems are. According to the Tax Foundation's 2023 report, Texas has a much lower ranking than Nevada.

One of the reasons Nevada is ranked in 7th place is its lack of major tax types. Unlike Texas, which ranked in 13th place, the state doesn't impose corporate or sale taxes.

For this reason, if you want to avoid paying expensive taxes, consider incorporating in Nevada.

Personal Income Tax

Texas doesn't necessarily have an individual income tax rate. But, if you register your business as an S corporation or an LLC, the state will tax your earnings through your company's gross receipt taxes.

Corporate Taxes

It's also worth noting that Texas imposes two corporate taxes; sales and franchise.

Every company registered in the state must pay corporate taxes unless incorporated as a sole proprietorship or a general partnership. However, they can lose this exemption if they have another business entity as a partner.

Suppose your business is structured as a general partnership, but one of your partners is a corporation or an LLC. In this case, you'll have to pay corporate taxes.

High Filing Fees

Businesses that want to create an LLC in Texas must pay $300 worth of filing fees. Meanwhile, filing fees for LLCs in Nevada start at $150 to $200.

The state has no registration costs for sole proprietorships or general partnerships. But the downside of these two entities is that they don't have liability and personal asset protection.

Suppose someone sued your sole proprietorship for a loan you couldn't pay. In that case, you can protect yourself or your assets from the liability of paying back what you owe.

If you want to ensure liability and asset protection for yourself, create an LLC in Nevada for less than Texas' filing fees.

No Business Court

Texas is one of the many states that don't have a specialized court like a business or commercial court. Without them, solving disputes with your shareholders become even more challenging than it already is.