Forming an LLC in Delaware vs Nevada: All You Need to Know

forming an llc in delaware vs nevada all you need to know

Where you decide to set up your business is a key decision to make early on. There are a number of factors that you will want to consider in making that choice. For one, are you willing to move? If close proximity to you and your family is important, you may wish to stay local. What is the consumer base like? In simple terms, you have to go where your customers are. Lastly, how business-friendly is your state when it comes to forming an LLC? Limited liability companies offer many benefits to business owners, and they are available in all 50 states. The rules and requirements, however, are not universal, and each state will have their own guidelines to follow.

For example, forming an LLC in Delaware vs Nevada will present different advantages and disadvantages for aspiring entrepreneurs. By understanding the nuances of the LLC registration process in each state, you can make a more informed decision on which location is correct for your business.

forming an llc in delaware vs nevada all you need to know


Why Establish a Limited Liability Company?

If you are considering using a limited liability to structure your business, you can hardly be blamed. LLCs are incredibly common and popular among business owners because of the legal and tax benefits they can provide you with. The main draw for creating an LLC is the concept of “limited liability.” In the unlikely event that your business takes on too much debt and goes bankrupt, or if your organization faces a costly lawsuit, you cannot personally be found liable. In other words, you can shield your individual assets, such as your home or retirement accounts, from potential legal judgements. 

Another key aspect to setting up an LLC are the tax implications that come along with it. The Internal Revenue Service (IRS) treats limited liability companies as “pass-through” entities. When your business generates a profit, that money is not taxed off top, it instead passes through to the individual members of the LLC who in turn pay personal income taxes. As you can likely guess, this is a considerable benefit to financially savvy business owners.

You may find it helpful to speak with a business or tax attorney when choosing the structure that is right for you. They may well conclude that an LLC is still the correct fit, but there may be particulars about your business that warrant a closer examination.

Forming an LLC in Nevada

In order to set up a limited liability company in Nevada, there are a few steps that you will need to complete. First, you will want to choose a name for your business that is wholly distinguishable from other LLCs registered with the Secretary of State. Your name will also have to include the words “Limited Liability Company,” or some acceptable abbreviation. 

Next, you will need to appoint a registered agent. This individual will maintain the responsibility of receiving service of process on behalf of your business. In other words, if your business is served with legal documents, one party will be charged with collecting them. Lastly, you will need to submit your Articles of Organization to the Nevada Secretary of State’s office.

Your Articles of Organization form will include some pertinent information about your LLC as well as its members. One state-specific consideration to be aware of with regards to Nevada is that its filing fee is rather high. Nevada will also require that you provide an annual list of LLC members to the state.

Choosing Delaware for Your LLC

Though it may seem like a small, unassuming state nestled on the east coast, Delaware is a major hub of commerce in the United States. This is largely due to the fact that it is very friendly to limited liability companies and corporations.

Setting up an LLC in Delaware largely follows the same protocol as Nevada. You will need to choose a unique moniker for your business, select a registered agent, and submit Articles of Organization to the appropriate state agency. One area where Delaware differs from Nevada is that its filing fee is hundreds of dollars cheaper. The annual reporting requirements are also much less stringent. Because of these factors, when choosing between these two states for LLC formation, many business owners will opt for Delaware over Nevada.

Form Your LLC Online Today with Our Help

Whether you have chosen Nevada or Delaware for the location of your limited liability company, you can anticipate dealing with some paperwork. You will need to source the correct registration forms, fill them out thoroughly in ink, and mail them back to the correct state agency’s office.

At the Corporation Center, we can help you streamline this process. We use easy-to-complete web forms and an SSL-encrypted web portal to process LLC registration documents for all 50 states. To learn more, contact us by phone or email today.