Should You Form a Nevada LLC?

The short answer is yes...if your business is located in Nevada. Otherwise, your best bet is to form your business entity in the state where your business operates. There many myths about forming Nevada LLCs and corporations. One such myth is that you can avoid paying federal income tax by incorporating in Nevada. That's completely untrue. There is no way to avoid federal income taxes other than not making money or leaving the country (and even then they can levy an expatriation tax). You can't even avoid state income taxes with a Nevada LLC. While Nevada has no state income tax, if the state that you're a resident in does, then when you draw a salary or profits from your Nevada LLC, you'll be liable to your home state for income tax. To avoid those high state taxes, you'll have to move. 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. And actually, 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. The bottom line is that you should form your LLC in the state where your business is located.