The short answer is yes…if your business is located in Nevada (or Delaware).
Otherwise, your best bet is to form your business entity in the state where your business operates and you live.
There are many myths about forming Nevada LLCs and corporations. One such myth is that you can avoid paying income tax by incorporating in Nevada. Repeat after me: “there is no (legal) way to avoid income tax except by earning no income”.
Another myth is that you can hide your assets from your creditors (including ex-spouses and bankruptcy trustees) by forming a Nevada corporation and handing bearer shares in the corporation to an accomplice.
Needless to say, these techniques don’t work. Bad things happen when you try to cheat the IRS or a bankruptcy judge.
In many cases, it’s unnecessary. Most people, if they used the tax rules to their fullest, would save more money than they do already. It is not necessary to cheat to lower your tax bill.
Costs of Nevada and Delaware LLCs
Ok, so say you don’t want to cheat the taxman or creditors…are Nevada or Delaware LLCs nonetheless cheaper to form and operate compared to other states?
The states with the highest formation fees do not necessarily charge the highest annual fees.
Therefore, to best compare the cost of forming an LLC, this site uses a “total cost of ownership” approach which adds up the entire cost of having an LLC in a specific state for 5 years.
Delaware and Nevada are both aware of their popularity as destinations for the formation of corporate entities–and they charge fees accordingly.
Delaware charges a $300 annual reporting fee while Nevada charges $150.
In contrast, there are 28 states that charge less than $100 annual reporting fees, and 8 states that charge no annual LLC reporting fee.