Business Formation Attorneys In Las Vegas, Nevada
A business entity is established so that the business has a legal existence separate from its owners. If a business entity is properly formed, the owners’ personal assets are generally not subject to the creditors of the business, including judgment creditors. Therefore, a business entity must be established and maintained as a separate legal entity, and certain formalities must be observed.
LKP forms business entities, including corporations, LLCs, series LLCs, and limited partnerships. We also prepare and review business contracts, buy-sell agreements, and business succession plans.
How Business Entities Are Formed in Nevada
Most business entities in Nevada require a filing with the Nevada Secretary of State. The process is similar for each business entity, although the type of documents to establish a business entity vary.
For example, a corporation must file Articles of Incorporation. As part of the process of filing, the business entity must name a registered agent. Normally, the business entity also applies for a business license.
While registration is proceeding, the corporation’s attorney prepares the corporation’s bylaws. Directors and officers are appointed. Shares of stock are authorized to be issued. Then shareholders buy stock and the corporation is capitalized. Afterward, shareholders and directors hold regular meeting where the proceedings are recorded in minutes.
Complying with these requirement is critical for the corporation to remain a business entity distinct from its shareholders. If corporate formalities are not observed, then the corporation’s shareholders can become liable for corporate actions and debts. A lawsuit seeking to hold shareholders responsible attempts to “pierce the corporate veil.”
Things to Consider When Choosing a Business Entity
Several types of business entities exist for a reason: Each of them has its good and bad points, and tax treatment varies. As an overview, consider the pros and cons of corporations, LLCs, partnerships and limited partnerships:
- Corporations have existed for centuries. For that reason, the law regarding corporations is highly developed. Investors love certainty, so if the business will seek outside money, the corporate format is the best choice of business entity. By default, corporations are taxed at the corporate level, plus the individual shareholders are taxed on dividends, so there can be double taxation.
- LLCs are usually run much less formally than corporations. Earnings and losses from an LLC pass through to the owners and are reported on their individual tax returns. There is no double taxation. The owners of the LLC manage it under an “operating agreement” that can contain customized provisions. Outside investors tend to avoid LLCs because there isn’t as much law concerning them as for corporations. LLCs are ideal for businesses with only a few owners.
- General partnerships should be avoided as business entities because there is no shield from individual liability. In fact, one partner can be held responsible for actions taken by another partner regarding the partnership even when the first partner did not know about them. Partnership profits and losses pass through to the owners, just as with an LLC.
- Limited partnerships consist of at least one general partner and at least one limited partner. The general partner runs the partnership and is individually liable if things go wrong. The limited partner is simply an investor who has no role in running the partnership. If the partnership fails, the limited partner will lose their investment, but they are not individually liable. Partnership profits and losses pass through to the general and limited partners and are reported on their individual tax returns.
Buying and Selling Businesses in Nevada
Business entities frequently enter into purchase and sale agreements. These agreements are of two types. In one type, the business entity is either buying or selling the assets of the business. In the other type, the business entity is itself being bought or sold.
If the business entity is buying another business, then the purchase and sale agreement must be for the transfer of the selling owners’ interests in the business to be acwuired, whether they are shareholders of a corporation, members of an LLC, or partners in a partnership.
Most Nevada Businesses Must Have a Nevada Registered Agent
Most Nevada business entities require a registered agent. The agent is registered with the state of Nevada to be the business’ official point of contact. The state sends routine notices to the registered agent. If a business is sued, the registered agent can be the one who receives the legal process. A registered agent forwards notices received to the business owners.
Contact a Business Formation Lawyer in Nevada
LKP has highly experienced attorneys in Las Vegas who form businesses throughout Nevada. If you or someone you know needs business formation services in Nevada, whether in Las Vegas, Henderson, Reno, or Carson City, contact us for a free consultation using our online contact form. Or call 702-333-1711 to speak to a business formation attorney experienced in forming corporations, LLCs, series LLCs, and limited partnerships.