Nevada tax law can be complicated, especially if you aren’t especially familiar with the process of filing federal income taxes. Specifically, you may be wondering, “What is a disregarded entity for tax purposes in Nevada?” An experienced tax lawyer can provide information tailored to your situation based on Nevada’s tax-specific advantages.
What Is a Disregarded Entity for Tax Purposes in Nevada?
A disregarded entity is basically a term for a business that is “ignored” when it comes to filing federal income taxes. It’s as if the business doesn’t exist as a separate entity from its owner. The most common example is typically a single-member LLC, which is a limited liability company with just one owner.
With a disregarded entity in Nevada, you have protection from legal claims just like other “real” companies, but you can file taxes just like other simple sole proprietorships. This usually means you won’t file an extra business tax return, and you won’t have the headache of filing a state income tax.
How Does a Disregarded Entity Work in the Real World?
If you set up an LLC in Nevada to protect your personal assets from legal claims or business debts, then the LLC acts as a legal “shield.” However, for the purposes of federal income taxes, the IRS acts as if the LLC isn’t there, and all of a business’s income, profits, expenses, and/or losses go right into your personal tax return. You typically file just one set of taxes rather than two, and you won’t file a separate tax return for your business.
You may already know that Nevada does not have a state corporate income tax, and it also does not have a personal income tax. As a result, you won’t owe the Silver State any income tax on your profits regardless.
However, the disregarded status is only for income tax purposes, so it’s worth speaking with a trusted advisor if you want to discuss what may happen with your payroll taxes if you have any employees, list filing, Nevada’s fees for an annual business license, or excise taxes.
Across this country, there are about 34.7 million small businesses. If you are exploring your options for starting a small business or if you need to change the status of your business from an LLC to something else, like an S-corp or a regular corporation, you can meet with a knowledgeable legal professional for help filing out the appropriate IRS form.
Hire a Tax Lawyer at Lobb & Plewe – Nevada’s Premiere Tax & Estate Planning Attorneys
At Lobb & Plewe, our firm understands how to maximize wealth protection. We know Nevada is unique, and our team offers unique solutions and tax strategies that work for your business and personal finance goals. When you need to hire a tax lawyer, we offer Nevada asset protection done right.
Since 1993, we have helped Nevadans with their business needs, and we understand the unique aspects of tax law and disregarded entities in our state. We provide high-caliber legal services to our trusted clients. Reach out to hear how our background can benefit your specific needs. Contact us to set up an initial consultation right away.
