Free guide to Nevada LLC formation by LLC attorney, including strategic guidance for drafting a Nevada operating agreement to properly structure the LLC.
Published May 09, 2023 Last updated May 16, 2023
Table of Contents
LLCs, or limited liability companies, are the most popular business structure in Nevada. Nevada LLCs offer more liability protection than corporations with a flexible tax structure.
When forming or updating a Nevada LLC, it is crucial to consider state-law considerations. Because the laws of each state are different, the LLC’s formation documents—especially the Nevada operating agreement—must be prepared to meet Nevada’s specific requirements. This article discusses how to form Nevada LLCs that meet the requirements of Nevada law.
A Nevada LLC begins its existence when it files its articles of organization with the Nevada Secretary of State. The articles of organization are a simple, short form that includes the minimum amount of information needed to notify the Nevada Secretary of State of the LLC’s existence. It does very little to structure the LLC to accomplish the owners’ objectives.
It is dangerous—and possibly malpractice—to rely solely on the articles of organization to properly form a Nevada LLC. Because we believe that every Nevada LLC must have a Nevada operating agreement to be properly formed, we do not offer standalone services to prepare and file a articles of organization only. Each Nevada LLC we form comes with a Nevada-specific operating agreement that is attorney-designed to structure your business in a way that meets your goals.
A Nevada operating agreement is a legal document that serves as a blueprint for LLC operations, including control of the LLC, distribution of profits, and the rights and duties of LLC members and managers. 1
A Nevada operating agreement is the most important LLC formation document. It provides the framework for how the LLC will be governed. Without a valid operating agreement, LLC owners are left to the default provisions of the Nevada LLC act to govern the most crucial LLC planning opportunities. A well-drafted operating agreement should:
Attorney Practice Note: See our LLC Operating Agreement Checklist for a full list of issues to address in the Nevada operating agreement as part of the LLC formation process.
Each LLC that we form comes with a Nevada-specific operating agreement to help ensure that the LLC is custom-designed to protect the owners from liability, provide for profit distribution, structure control of the LLC, maximize creditor protection, reflect the LLC tax classification, and properly structure the LLC to accomplish the owner’s legal goals.
In Nevada, Title 7, Nevada Revised Statutes governs business entities in general. 2 Nevada LLCs are governed by Chapter 86 of the Nevada Revised Statutes, NRS 86.011 et seq. 3
As stated above, the operating agreement is the most important LLC formation document for structuring a Nevada LLC. The Nevada LLC act assumes that the LLC will have a valid operating agreement to govern its business operations.
Most provisions of the Nevada LLC act are simply default provisions that serve as a fallback for LLCs that fail to plan properly. These default provisions are the Nevada legislature’s best guess about what the owners might want. These guesses rarely align with the owners’ specific goals in setting up the LLC.
The Nevada Limited Liability Company Act requires a Nevada LLC operating agreement to “be interpreted and construed to give the maximum effect to the principle of freedom of contract and enforceability.” 4 This language is similar to language used in other state LLC acts and, of itself, is not remarkable. But unlike most other states, the Nevada LLC act takes this language seriously. Where other state LLC acts include provisions that contradict freedom of contract, Nevada law contains relatively few restrictions on the ability of a Nevada operating agreement to govern Nevada LLCs.
A Nevada LLC operating agreement may—but is not required to—provide for any of the following:
The operating agreement for a Nevada LLC may expand, restrict, or eliminate any duties that a member, manager, or other person owes to the LLC or another member or manager other than the implied contractual obligation of good faith and fair dealing. 6
The cost to form a new Nevada LLC depends on three factors:
Use our free, no-obligation tool below to get a cost estimate and a detailed breakdown of the services provided.
A Nevada LLC is officially formed when the LLC’s articles of organization is filed with the Nevada Secretary of State. 7 An Nevada limited liability company can be formed by one or more organizers. The name and address of each organizer is required. Each organizer must sign the articles of organization.
Nevada law allows the articles of organization to be signed electronically (e-signed). Instead of mailing or hand-delivering a hard copy, the organizer may submit the articles of organization electronically for e-filing. There is no publication requirement.
Nevada law requires the LLC to file an Annual List and State Business License Application year by the end of the LLC’s anniversary month. The fee for the Annual List and State Business License Application is $350.00.
Nevada law allows LLCs to be organized as series LLCs. 8
An owner of a Nevada LLC is called a member. 9
A Nevada LLC may be governed by the members (member-managed), or LLC managers may be appointed to govern the day-to-day affairs of the LLC. 10
Attorney Practice Note: While the member-managed structure may first seem more intuitive for small LLCs, structuring an LLC as a manager-managed LLC can provide enhanced creditor protection compared to member-managed LLCs.
Nevada LLC members and managers may act by formal meeting and vote, but that is relatively uncommon. In most cases, members and managers will sign an action without a meeting agreeing to actions on behalf of the LLC.
Each Nevada LLC we form comes with an organizational action without a meeting to document the initial formation and help protect against veil piercing claims.
A Nevada registered agent is a Nevada resident or business organization that is designated to receive legal notices from the Nevada Secretary of State on behalf of the LLC. Each Nevada LLC must appoint a registered agent to receive service of process on the LLC. The registered agent must sign a Certificate of Acceptance of Appointment accepting the appointment before the organizer files the articles of organization.
In Nevada, a member’s economic interest in an LLC is called a membership interest. The Nevada LLC act recognizes both economic interest and non-economic interests in an LLC. It refers to an economic interest as member’s interest. 11 It does not specifically define a non-economic interest.
Fiduciary duties are an important—but often overlooked—aspect of LLC law. A fiduciary duty is a responsibility to act on behalf of another person and, where necessary, to put the other person’s interest ahead of one’s own.
It is not uncommon for LLC members and managers to be involved in different activities, some of which could be viewed as adverse to the interest of the LLC or other members or managers. Failure to consider fiduciary duties in the operating agreement can create unexpected liability for breach of fiduciary duty claims.
The Nevada LLC act does not clearly define the scope of fiduciary duties that apply to LLC members and managers, but courts may find a fiduciary duty in certain circumstances. In this situation, it is particularly important for the operating agreement to specify whether fiduciary duties should be included and, if so, to define the scope of a member’s and manager’s fiduciary duties.
Nevada law does not allow a Nevada operating agreement to indemnify members or managers for. actions that are not taken in good faith and in a manner in which the member or manager reasonably believed to be in or not opposed to the best interests of the company. 12
Attorney Practice Note: Relying on default state-law fiduciary duties is risky. To avoid ambiguity, fiduciary duties should be specified in the LLC’s operating agreement.
A Nevada LLC may effectively move to another state by changing the law that applies to the LLC—a process known in Nevada as conversion. 13
The Nevada conversion process is discussed in detail in our article on Nevada LLC conversion.
LLC law is based in large part in partnership law, which (unlike corporate law) treated partners as having an obligation to continue to participate in the venture. A member that wants to divest himself of his interest in the LLC and cease to be a member may sometimes do so by withdrawal.
The default provisions of the Nevada LLC act do not prohibit a member’s withdrawal from the LLC. While the operating agreement may prohibit a member from withdrawing from the company, a member may still wrongfully withdraw from the LLC. If the resignation or withdrawal of a member violates the operating agreement, the amount payable to the member who has resigned or withdrawn is the fair market value of his or her interest reduced by the amount of all damages sustained by the company or its other members as a result of the violation. The company may defer the payment for so long as necessary to prevent unreasonable hardship to the company. The articles of organization or the operating agreement may change these default rules. 14
The default provisions of the Nevada LLC act require the LLC to redeem a withdrawing member’s membership interest in the LLC , but the operating agreement may waive the redemption right.
The default provisions of the Nevada LLC act do not deal with the LLC’s ability to involuntarily dissociate (expel) a member from the LLC in certain circumstances. The operating agreement may prohibit or allow expulsion.
LLCs benefit from a feature known as charging order protection. Charging order protection limits the ability of a member’s creditors from seizing LLC assets (outside liability protection). Under the Nevada LLC act:
On application to a court of competent jurisdiction by any judgment creditor of a member, the court may charge the member’s interest with payment of the unsatisfied amount of the judgment with interest. To the extent so charged, the judgment creditor has only the rights of an assignee of the member’s interest. 15
A charging order is the exclusive remedy for creditors of a member. 16
A Nevada LLC is dissolved by filing articles of dissolution. The Nevada LLC act does not require notice to creditors on liquidation. Nevada rules for involuntary windup 17 and grounds for judicial dissolution 18 should also be considered.
Click the link below to find out how to set up a Nevada LLC the right way.
Free Nevada LLC Formation Analysis