Are Nevada LLCs a Scam

Updated June 6, 2022

Nevada LLC

The question professionals often get is whether LLCs set up in Nevada are scams. Is there something mysterious about them? in and of themselves are not a scam.  Nevada is simply a state with laws that protect the members of the LLCs. You can absolutely use Nevada to create your LLC., just as you could use any state. 

Every state is like a menu when it comes to filing entities such as LLCs.  You can look at the statutes and decide whether or not you want to establish your entity in that jurisdiction or not. There are, of course, legal requirements about whether you are eligible to establish your location or principal place of business in a particular jurisdiction and take advantage of its statutes.  For example, simply providing a postal box will not meet the requirement that you are actually domiciled in the state.  You generally must have a physical address where records are kept and records are maintained for the business in order to meet the required business nexus.

Once this is established, you can then register other locations in other states – your state for instance.   if you use a Nevada LLC but have physical locations in other states or multiple properties in other states you would need to register that Nevada LLC in the other states in order to do business in that location.   This is called foreign filing.

LLC Benefits

You still reap the benefits of the principal place of business where you establish that business, in this case, Nevada.  Nevada law would cover the internal workings of the company while the foreign jurisdiction would cover the business interaction within that jurisdiction.

It may or may not make sense to do this. For example, if you have a lot of intangible assets such as intellectual property, or you are receiving licensing fees or royalties or in the case that you do not have a principal place of business because you are doing business all over the world or all over the country, perhaps via an internet business, then Nevada may make sense and you.  Then would need to determine if you would still need to register the business in your home state, as well.

In short, Nevada LLCs are not a scam. There are very strong advantages to using a state like Nevada that has extremely pro-owner laws and statutes.  For example, it is common practice to to hold other business interests because Nevada makes it next to impossible for creditors to ever reach those assets.  However, there are also some disadvantages if you enter into this without a full understanding of what you are engaging in. For these reasons, it may be wise to seek the help of a professional to assist you in sorting out the logistics of establishing your LLC in Nevada or another jurisdiction.

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