Many Nevada residents are likely aware that people who run businesses are often encouraged to “incorporate.” There are different ways to run businesses, and creating a corporate entity is one way to take advantage of certain business structures. Most people probably link this activity to businesses that have the abbreviation “inc.” after their names, standing for “incorporated.” However, there are other types of business structures, including one that has become widely used over the past several decades in Nevada and around the country: a “Limited Liability Company‘” or “LLC.”

LLCs have seen rising popularity for several reasons. First, just like other forms of corporate structures, these companies provide asset protection for the personal property of their owners. That is, if a creditor goes after the LLC for an unpaid debt or other liability, that creditor can normally only reach those assets controlled by the company, rather than those owned personally by the officers of the corporation. Contrast this with a sole proprietorship, where if the business owes a debt the owner’s house, car and other assets could be in jeopardy.

But, asset protection is a characteristic of basically all corporate structures. So, why would a Nevada business owner choose an LLC over, say, a “C-Corporation”? One major reason is that LLCs allow for what is called “pass-through, or flow through, taxation.” This means that the ownership may only pay taxes on his or her personal return, if so desired, rather than paying both business and personal taxes. Another potential advantage in Nevada is that LLCs allow for privacy in ownership and asset identity. Because one can set up an LLC in the state without disclosing the officers or assets owned by the company, except for a designated representative to accept service of process, which is often the company’s lawyer, people can invest in the business more or less anonymously.

So, creating an LLC in Nevada can give a company the advantages of being a corporation, while still avoiding the “double taxation” that many corporations experience. Of course, there may be reasons not to use an LLC and choose a different business structure instead, and every situation will depend on its specific circumstances. Those with questions about setting up a corporate structure may wish to consider contacting an experienced business law attorney.