Articles of Organization

After you have your Nevada LLC named, you must file articles of organization with the Nevada Secretary of State, along with a $75 filing fee. The articles must be signed by at least two of the persons who are organizing the LLC, and they must submit an original and a copy to the Corporations Division of the Secretary of State's office. Unlike most states, the organizers do not have to be Nevada residents (or even US citizens) to form an LLC.

The initial agent must also sign the articles, indicating acceptance of the appointment as agent.

The articles of organization forming your Nevada LLC must include the following information:

• The LLC's name.
• The name and street address of the LLC's resident agent, as well as mailing address if it's different
• The name and address (business or residence) of the organizers who sign the articles
• If the LLC will be manager-managed, the name and address of each initial manager
• If the LLC will be member-managed, the name and address of each initial member

The articles can also include other items that the members desire to include (as long as they don't conflict with state law), even if they are also included in the operating agreement

Your LLC is officially "organized" once the signed original and one exact or conformed copy of the articles of organization are received by the Corporations Division of the Nevada Secretary of State's office, along with the filing fee. That office will issue your new LLC a certificate of organization, along with a conformed copy. The original will be filed in the Secretary of State's office.

Since the state requires that a certified copy be kept at the resident agent's office, most organizers pay the extra $30 for a certified copy at the time of filing, for a total of $105.

Nevada LLCs must also file an initial report, the "List of Managers or Managing Members and Registered Agent," by the last day of the month after the month when the LLC was formed. The filing fee for this list is $125.00.

Registered Agent and Office

All Nevada LLCs are required to have a registered in-state agent. This agent is the person or office designated to receive official state correspondence, including notice if the LLC is served with a lawsuit.

The registered office may be (but is not required to be) the LLC's place of business, but it must have a street address (instead of just a post office box).

Operating Agreement

Almost as critical for the organization as the certificate of formation is the operating agreement. There isn't an official state requirement to have an operating agreement, but it's a vital internal document that lays out how your LLC will be run on both the daily and strategic levels. Unless the articles of organization or the operating agreement itself state otherwise, unanimous consent of the LLC's member is required to amend the operating agreement.

The operating agreement should list the LLC's members, specify how much each member has invested, explain how profits will be divided, and state how much proportional "weight" each member has when issues are voted upon. Unless the articles of organization or the operating agreement say otherwise, voting power in a member-managed LLC is vested in each member according to his or her current capital account balance with the LLC.

The operating agreement may also set forth meeting requirements such as the amount of required notice, what constitutes a quorum, voting rules, and so on, but it doesn't have to. Normally, however, the operating agreement does list requirements for the LLC that are already listed in state law and regulations. It can also include such items as restrictions or constraints on the power of the members to adopt, amend, or repeal the operating agreement. If there is more than one member, the operating agreement must initially be approved unanimously in writing by the members.

Membership in the LLC

An LLC is required to have at least one member. Members may become a member of or acquire an interest in the LLC when it is first started (using the methodology provided in the operating agreement), or when the new member's admission is recorded in the LLC's records.

To join the LLC, the prospective member usually needs to make some kind of contribution-for example, pay cash or transfer property to the LLC-or take a binding obligation to do so. However, a member may usually be admitted to the LLC without acquiring a membership interest if the rules in the articles of organization and operating agreement permit it, or if the members vote to do so and the admission is documented in the LLC's records.

A member can only resign from the LLC in a way consistent with the articles of organization and/or the operating agreement. One or both of these documents will also usually state the minimum amount of time a member can maintain membership before being allowed to resign.

LLCs can pursue remedies for damages suffered by the organization that result from a member's resignation. A member who resigns or withdraws ceases to be a member, has no voting rights, and has no right to continue to participate in the management of the company, even if a payment due him from the company is deferred.

When a member resigns, he or she is entitled to receive the fair value of the membership interest within a reasonable time after the resignation (unless, of course, the articles of organization or operating agreement specify otherwise).

If the resignation or withdrawal of a member violates the provisions in the operating agreement, then the amount payable to the former member is the fair market value of his interest reduced by the amount of damages sustained by the LLC or its other members as a result of the violation. In this case, the LLC may also defer the payment for as long as needed to prevent unreasonable hardship to the organization

Ongoing Requirements

Compared to other states, Nevada has minimal reporting and disclosure requirements. Each LLC must keep the following records available at its office for review or inspection:

• Names and addresses of all members in alphabetical order
• Names and addresses of managers (if the LLC is member-managed) in alphabetical order
• Certified copy of the articles of organization and any amendments
• Executed copies of any powers of attorney related to any certificate or amendment
• Operating agreement with any amendments

Also, it's a very good idea to keep on file and available the minutes of the meeting of the board and any committees of the owners or members.

Besides keeping the previously-listed records available for review, Nevada LLCs have to file an initial List of Managers or Managing Members and Registered Agent. An updated list must be filed every year not later than the anniversary month of the LLC's formation; the filing fee is $125.

Companies conducting business in Nevada must also file a business registration form with the state Department of Taxation to obtain a general business license. The filing fee is $100, and the license must be renewed annually. Other Nevada agencies, like the Employment Securities Division, and some local governments also accept the same application form for their filing requirements.

Dissolution

An LLC is dissolved when any one of the following events occurs:

• Event(s) specified in the articles of organization or operating agreement
• A unanimous member vote to dissolve (unless a certain percentage or proportion is stated in the articles of organization or operating agreement
• Event that makes it illegal for the LLC to continue
• The LLC's duration-as specified in the articles of organization or the operating agreement-expires
• A court order ordering dissolution

Taxes

Nevada has no franchise tax or personal or corporate income taxes. There is also no special state entity tax levied on LLCs..

However, by its nature, an LLC still offers some federal tax advantages over a corporate structure, including the availability of more deductions. The biggest advantage is that an LLC is not required to be a separate tax entity like a corporation. Instead, it can be a "pass-through entity" for tax purposes, so that the LLC owners report business losses or profits on their personal tax returns, in the same way that a partnership does.

Articles of Incorporation

The Nevada Business Corporation Act (Chapter 78 of the Nevada Revised Statutes) requires that the new Nevada corporation file articles of incorporation with the Nevada Secretary of State, including the following:

• At least one incorporator must sign and file the articles of incorporation.
• There must be at least one incorporator, either a natural person of legal age or a legal entity. However, the incorporator does not have to be a director, officer, or shareholder of the company.
• The name and address of each incorporator and initial director.
• The number of shares the corporation is authorized to issue, as well as the number of shares of each stock class and/or series
• The name and address of the initial registered agent, who must sign the articles, indicating acceptance.
• If the corporation is registered as an investment company or intends to conduct business in that area, the articles must list any provision limiting or eliminating annual shareholder meetings

State approval or certification may be required before a corporation may file its articles of incorporation if its corporate name indicates that it will conduct operations in the areas of banking, trusts, engineering, accounting, insurance, or residential owners' associations.

In Nevada, the filing fee is based on the number of shares authorized. It will be a minimum of $105 total, which includes $30 for certifying one copy of your articles of incorporation-Nevada law requires you to keep a certified copy of your filed articles at the corporation's registered agent's location. The fee also includes a minimum $75 authorized capital fee.

By the end of the month following the filing of the articles of incorporation, you must also submit an Initial List of Officers, Directors, and Resident Agent to the Nevada Secretary of State with a $125 fee.

Registered Agent and Office

Nevada corporations must have a registered in-state agent-a natural person who is a Nevada resident-who is designated to receive official correspondence from the state. The registered agent must have a business office that is the same as the registered office.

Many new corporations use one of the initial directors or officers as the registered agent and list the street address of the corporation for the registered office.

Bylaws

A corporation is required to keep its bylaws available at its main office, but it is not required to file them with the state. The incorporators or board of directors should adopt the corporation's bylaws at their first meeting, insuring that there is no conflict with the articles of incorporation or state law. They should also keep the bylaws updated as time goes on.

Bylaws set forth the corporation's basic operating principles from both the managerial and legal perspectives, and should include, as a minimum:

• The authority of directors, how many there are, and how long they serve
• Officers' duties and responsibilities and how long they serve
• How major decisions are reached, with or without meetings
• How, when, and where shareholders' and directors' meetings are held
• How the corporation's stock is issued
• Requirements for publishing annual financial information to shareholders

Directors and Officers

The board of directors is responsible for making the corporation's major decisions. The new Nevada corporation must have at least one director, who must be a natural person of at least 18 years of age. The articles of incorporation or bylaws may specify additional qualifications for directors. Unlike in many states, directors of Nevada corporations are not required to also be stockholders. In fact, they are not even required to be Nevada residents or even US citizens.

Officers must be either listed in the bylaws or elected by the board, and may appoint other officers in compliance with the bylaws. Corporate officers must be natural persons, and a corporation is required to have at least a president, secretary, and treasurer. An officer may hold more than one office in the corporation, unless otherwise prohibited by law or the corporation's articles of incorporation or bylaws.

Required Reports

Nevada corporations must update their list of directors, officers, and registered agent each year. The annual filing fee is $125.

Taxes

Nevada has no individual or corporate income tax. However, any business with one or more employees must obtain a state business license and pay an annual business tax.

A "Subchapter S" corporation is one that chooses to be treated as a pass-through entity (such as a sole proprietorship or partnership) for tax purposes. A subchapter-S election thus has federal, but no state, implications for Nevada corporations.