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

Location is one of the most vital factors you must consider when incorporating a business. Your primary location 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 plenty of important factors you need to keep in mind when choosing your primary location. This includes tax systems, registration fees, and more.

And because of this, it can be 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 Nevada and Washington.

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

If you need help deciding between starting a business in Nevada or Washington, here are some of the major differences you need to know.

High Capital Income Taxes

Washington's Tax Climate Ranking significantly went down this year after it lost its status as a state with no income tax. The state adopted a capital gains income tax which affects high earners and was not adjusted with inflation in mind. Washington also has aggressive gross receipts that don't offer full deductions for factors like the cost of goods sold and employee compensation.

This kind of environment is not ideal for companies with low capital. If you want your startup to thrive during its first year, you need an environment that will allow you to do so.

No Charging Order Protections

Unlike Nevada, Washington does not have charging order protections. Charging orders allow collectors to lien your company's assets and earnings to pay off your partner's debts. If your state does not have to charge order protections for LLCs and corporations, your earnings and shares in your business could be at risk.

The only way you can prevent your interests from being taken away by a creditor is for your state to have charging order protections.

Does Not Recognize Series LLCs

Washington is one of the many states that still don't recognize series LLCs. A series LLC is a special business structure that allows multiple LLCS to operate under one firm. Real estate investors with several properties typically adopt this entity to ensure that all of their properties have ample protection.

If having a series LLC matters to your business, consider doing business in Nevada instead. Nevada is one of the few states that recognize series LLCs. The state allows businesses to have several LLCs in operation.

No Business Court

It's normal for business partners to argue now and then. And when things escalate, they go straight to a business court for help.

Commercial or business courts are specialized courts dealing with business disputes. They're the ones that deal with disagreements turned into disputes between partners. The primary goal of a business court is to resolve complex business cases like unfair competition and more.

While Washington does have a small claims court, it doesn't have one that deals with corporate lawsuits. Luckily, Nevada is one of the many states with a business court.