How Your LLC Will Be Taxed
In this guide, we’ll cover all the main business taxes required in Nevada, including sales, self-employment, payroll and federal taxes. The profits of an LLC aren’t taxed at the business level like
C Corporations. Instead, taxes are as follows:
State Taxes for LLC
There are two state taxes you must pay to the Nevada Department of Taxation: sales and commerce.
Nevada Sales Tax
If you sell physical products or certain types of services, you may need to collect sales tax and then pay it to the Department of Taxation. Sales tax is collected at the point of purchase and varies depending on the region, county or city where your business is located.
Most states don’t levy sales tax on goods that are considered necessities, such as food, medications, clothing or gas. Use our sales tax calculator to get an idea of what you'll need to pay, but always check with your accountant and the Department of Taxation to confirm whether your business is required to collect Nevada sales tax, and to ensure you're paying the correct amount.
Nevada Commerce Tax
Some states levy a tax on certain businesses for the privilege of doing business in the state. In many cases, it's called a franchise tax, though some states call it a transaction privilege tax or simply a privilege tax. In Nevada, it's known as a commerce tax.
If your business generates more than $4,000,000 in gross revenue in a tax year, you'll be required to file a Nevada Commerce Tax return. If your revenue reaches that mark, talk to your accountant
or professional tax preparer to ensure you correctly file your Nevada Commerce Tax return.
Federal Taxes for LLCs
As the owner of an LLC, you must pay self-employment tax and federal income tax, both of which are levied as “pass-through taxation."
Federal taxes can be complicated, so speak to your accountant or professional tax preparer to ensure that your Nevada LLC is paying the correct amount.
Federal Self-Employment Tax
All members or managers who take profits out of the LLC must pay self-employment tax. This tax is administered by the Federal Insurance Contributions Act (FICA), which covers Social Security and Medicare and other benefits. It applies to all the earnings you withdraw from your business. The current self-employment tax rate is 15.3 percent.
You’ll be able to deduct some of your business expenses from your income when calculating how much self-employment tax you owe.
Pay Less Self-Employment Tax by Treating Your LLC as an S Corporation
The Internal Revenue Service allows an LLC to be treated as an S Corporation for tax purposes, provided your business meets certain requirements. This can help you reduce the amount of self-employment tax you pay by allowing you to declare some of your income as salary and other income as distributions or withdrawals.
You do this by filing Form 2553, also known as an S Corp Election form, with the IRS. Incfile can also file the form for you. Use our S Corp Tax Calculator to get an idea of how much money you could save with this election.
Consult with your accountant or tax advisor for more information on reducing your LLC self-employment tax through an S Corporation tax election.
Federal Income Tax
You must also pay regular federal income tax on any earnings you take out of your LLC. The amount of income tax you pay depends on your earnings, current income tax bracket, deductions and filing status.
You only pay federal income tax on profits you take out of the business, less certain deductions and allowances. This includes your tax-free amount, plus business expenses and other deductions for areas such as healthcare and some retirement plans.
Speak to your accountant for more information.
Employee and Employer Taxes
If you pay employees, there are some slightly different tax implications. Speak to your accountant to get clear guidance for your unique situation.
Employees May Need to File Tax Returns
Regardless of whether you withhold federal and Nevada state income tax, your employees may need to file their own tax returns.
Employee Insurance and Other Requirements
You may also need to pay insurance for any employees, such as employee compensation insurance or unemployment tax.
Other Taxes and Duties for Your LLC
Depending on your industry, you may be liable for certain other taxes and duties. For example, if you sell gasoline, you may need to pay a tax on any fuel you sell. Likewise, if you import or export goods, you may need to pay certain duties.
Speak to your accountant about any other taxes you may need to withhold or pay.
Most LLCs must pay estimated taxes throughout the year, depending on the amount of income and profit you expect to make. This will include both federal income tax and self-employment tax.
Most LLCs will pay estimated taxes on a quarterly basis. Learn more on the IRS website, and speak to your accountant for more information.