City of Reno Proposed Amendment to Business License Ordinance

  • January 18, 2017

The City of Reno is proposing an amendment to its business license ordinance.

If approved, the proposed change would be that business license fees would be assessed based on the business’s gross receipts for goods sold/services performed within the City of Reno only (verses all sales anywhere).

In addition, two new business categories have been created: (1) manufacturing facility, and (2) warehousing/distribution center. Businesses in those categories would also be charged a fee of 10 cents per square foot of “total business footprint.”

A public workshop is being held Thursday, January 19, 2017 at 3:30 p.m. in the Council Chambers at Reno City Hall. At the workshop, City staff will review the proposed ordinance and collect comments. Please attend the workshop to learn more and to voice your opinion about the ordinance.

Additionally, you may submit written comments, data or arguments in writing about the ordinance until January 25, 2017 at 5:00 p.m.

Comments should be submitted to:
Reno City Hall
Business License Division-2nd Floor
1 East First Street, Reno, Nevada, 89501
Mail to: P.O. Box 1900, Reno, NV 89505
Email to: BusinessLic@reno.gov

Learn more in this recent Northern Nevada Business Weekly article.

New Foreign Owned Single Member LLC Reporting Requirements

  • December 21, 2016

The IRS and Treasury department issued a new ruling on December 12, 2016, which is intended to create more financial transparency and reduce criminal activity (remember the “Panama Papers”?).  The new regulations will create a mechanism whereby U.S. tax information will come to the attention of a foreign investor’s home country. This directly impacts reporting requirements for foreign owned single member LLCs.

New Foreign Owned Single Member LLC Reporting RequirementsFor tax years beginning after January 1, 2017, domestic disregarded entities (e.g. single member LLCs) will be required to report and maintain records pursuant to Internal Revenue Code 6038A which previously only applied to 25% foreign owned domestic corporations.

Single member foreign owned entities will now be required to obtain a U.S. employer identification number (EIN) and to designate a “responsible party” (who is, in essence, the person that enables the “individual, directly or indirectly, to control, manage, or direct the entity and the disposition of its funds and assets”). The ruling also requires the filing of IRS Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business, which reports certain transactions with related parties, including amounts paid or received in connection with the formation, dissolution, acquisition and disposition of the entity, including contributions to and distributions from the entity.

The final ruling can be found in its entirety here.

7 Tips to Ready Your Business for 2017

  • November 23, 2016

Hard to believe that another new year is just around the corner.  Whether you are thinking about end of year organization or New
7 tips to ready your business for 2017Year’s business resolutions, here are  seven tips for readying your business for 2017:

  • Charitable Giving: Business or personal, charitable giving is not only a tax deductible event it is always better to give than to receive. There are many local non-profits that could especially use your help this time of year. Consider funding a Thanksgiving meal for a family, donating a warm coat or even volunteering some hours.
  • Estate Planning: When is the last time you updated your estate plan? Do you need to accomplish any year end gifting? It is advisable to review you estate plan at least every 5 years and depending on your circumstances more often.
  • Tax Planning: This is the time to call your CPA and discuss any over or under payments for 2016, year-end purchases and retirement account contributions.
  • Business Registrations: Have you renewed all required registrations, licenses and filed all required tax returns?  Business registration renewals of all types should be calendared. If Incline Law Group, LLP serves as your registered agent, we will track your annual business registration and state business license renewal for you.
  • Insurance: As long as the Affordable Care Act (“Obamacare”) remains in place, there is an open enrollment period which runs November 1, 2016 through February 1, 2017. Your employee health insurance plan is now likely to have a year-end renewal date regardless of when you used to renew. Now is the time to renew or shop for new policies.
  • Leases: Commercial leases often run for longer periods of time and new leases or renewals can often take some time to complete. If your lease is expiring in 2017, now is the time to start planning for that.
  • Employment Policies: January 1 is a great time to put new policies in place for employees in place, especially ones that address newer issues like medical marijuana in the work place and privacy issues. You do want to be sure that your employment practices and policies are compliant with state and federal employment law.  Please be sure to consult with your attorney before putting new employment policies in place.
This article was originally published in the Sierra Sun/Tahoe Bonanza in Incline Law Group’s monthly opinion column, Legal Clarity.

Welcome to Nevada Commerce Tax!

  • July 14, 2016

Did you get that letter from the Nevada Department of Taxation? The one that says, “Welcome To Nevada Commerce Tax”.Dept of Taxation Letter1

If you have a business entity or state business license registered in the State of Nevada, you probably just received a “Welcome to Nevada Commerce Tax” letter.  Generally, “Welcome To” and “Tax” are not words we like to see together.

The commerce tax, previously discussed here, imposes annual commerce tax on business gross revenues generated in Nevada over $4,000,000 during the previous fiscal year.  The amount of the tax is based on your registered industry code. Each business category is assigned its own gross receipts tax rate with rates ranging from 0.051 percent to 0.331 percent. Businesses which do not fit into any other category are taxed at the 0.128 percent rate for Unclassified businesses.

Business Category Tax Rate Business Category Tax Rate
Rail Transportation 0.33% Management of Companies 0.14%
Educational Services 0.28% Utilities/Telecommunications 0.14%
Waste Management Services 0.26% Other Transportation 0.13%
Publishing, Software, Data Processing 0.25% Warehousing and Storage 0.13%
Real Estate 0.25% Unclassified 0.13%
Arts, Entertainment, and Recreation 0.24% Retail Trade 0.11%
Truck Transportation 0.20% Financial Activities 0.11%
Accommodation 0.20% Wholesale Trade 0.10%
Food Services (includes restaurants) 0.19% Manufacturing 0.09%
Health Services 0.19% Construction 0.08%
Professional Services 0.18% Agriculture 0.06%
Administrative and Support Services 0.15% Air Transportation 0.06%
Other Services 0.14% Mining 0.05%

Regardless of the amount of gross revenue, each business is required to file a return. August 15, 2016 is the due date for the first return and any payment which may be due.

Since the commerce tax legislation was enacted, Incline Law Group LLP has been counseling clients on its potential impact on their businesses. Of particular concern to many of our real estate clients is the impact of the tax on the sale or leasing revenues of real estate holdings. There are a number of ways that such holdings can be held and structured to minimize the impact of commerce tax on these ventures.  Likewise, careful planning can minimize the impact of these taxes on non-real estate related ventures or businesses which own a mix of real estate and provide other goods or services.

Businesses that may be subject to the new commerce tax are highly advised to consult with their legal and tax advisors prior to filing their first return in August. We would also highlight that the return is based on a fiscal, rather than calendar, year which may prove inconvenient for businesses operating on a calendar year tax election.

If you have questions about the commerce tax you may find information at www.nevadatax.nv.gov or feel free to call our office.

Why Operating Agreements are Critical

Why Operating Agreements are Critical

  • March 31, 2016

While Operating Agreements may not be required in many states, most, if not all, authorize the use of Operating Agreements for limited liability companies (LLCs).

Why are Operating Agreements so critical? Because they help to define the rights, obligations and relationships between all those involved in the LLC. As I often tell clients – every partnership is a great one…until it’s not. And when it stops being great, or the parties want to go in different directions, having an agreement that can guide a resolution or decision making authority is key.

Members, managers and the company can generally agree to operate the LLC in any manner they want so long as it is in compliance with applicable law. While Operating Agreements can cover a myriad of issues there are generally five areas that most members and managers will turn to for guidance, and therefore are areas that are worthy of careful consideration when entering into an Operating Agreement.

1. Manager Authority: This section will set forth what decisions the manager of the LLC can make without member input. This might be all day to day decisions, but not major decisions or some variation of that.

2. Member Decisions: The extent to which the members have a vote on certain LLC business can be minimal or broad. Often members will want to retain the right to vote on new managers, the ability of the LLC to borrower money, dissolution of the LLC or amendments to the Operating Agreement.

3. Duties: Most states provide a statutory framework for certain duties that managers may owe to the company and/or members. These usually include certain fiduciary duties and duties of care. These duties can often be expanded or narrowed by agreement of the parties in an Operating Agreement.

4. Allocations and Distributions: Operating Agreements can specify how the company will allocate and distribute profits and losses to the members. Members have the flexibility to create preferred returns, allocations of profit and loss that are different that ownership interests and many other structures for the allocation and distribution of profits.

5. Transfer of Membership Interests: How, when and if members can sell their interest or otherwise withdraw from the LLC is very important. The Operating Agreement can provide for very restrictive transfer and withdrawal rights or very liberal transfer rights. It is important that members understand any limitations on their ability to sell their interest or otherwise withdraw from the LLC.

Operating Agreements can cover many issues. The five noted above are some of the key issues that we find are often important to clients. The flexibility of the LLC structure and Operating Agreement provisions are what make LLCs a very attractive entity structure for many people. Incline Law Group, LLP can assist you with preparing an Operating Agreement as well as the formation of an LLC in Nevada or California.

The Zipper (Why You Should Hire a Lawyer)

  • February 24, 2016

This morning as I was getting ready for work, I found myself contorted into a pretzel trying to zip up a maddening zipper on the back of my dress. Why on earth would anyone put a zipper on the back of a dress? Pure conjecture, but I was guessing

Are you tired of struggling?

Are you tired of struggling?

that this asinine design is left over from the days when women had ladies in waiting, always at the ready to help them button or tie up a piece of clothing.

(Sure enough – a quick search on the internet confirmed my suspicion: “In earlier centuries, buttons found on the back of a dress as opposed to the front were originally intended to give the appearance of wealth in a woman, as wearing such a garment implied the woman could afford servants to help her dress.”)

This got me to thinking about what I am sure is every clients’ frustration with going to a lawyer.  Why should it be necessary to hire a really expensive lawyer to handle something that they should be able to zip up themselves?

Well, much like the zipper on my dress, the legal system has evolved out of complex structures, relationships and systems. Just because our lawyers don’t wear those silly wigswhite wigs anymore doesn’t mean that the legacy of hundreds of years of operating within a complex legal systems has made it any more user friendly. Lawyers are educated and trained to navigate that complex system. Much the same way that doctors are educated and trained to navigate the complex systems of the human body.

There are some things that I encourage my clients to handle on their own (and spend the money they would spend on me buying a dress that zips up the side). These are things like trying to work out a dispute before it escalates, or discussing and outlining the terms of the deal they would like to see come to fruition. And then there are some things that I advise that my clients do ask for help on.

As an attorney I think it is important, and my duty, to be honest with my clients about what I think they can handle on their own and where I think they may need assistance navigating a complex legal structure. I love having that conversation with my clients. It gives me an opportunity to hear what their goals are and how they want to get there. Feeling empowered to make things happen in your business and personal life is energizing, but if someone is struggling with the darn back zipper, I gladly offer a helping hand.

 

New Nevada Business Fees and Taxes – Effective July 1, 2015

  • June 17, 2015

Nevada Business Fees & Taxes

With the passage of SB 483 several new business fees and taxes will go into effect July 1, 2015. Below is a summary of the key provisions that may impact your Nevada business:

 Business License and Filing Fees

  • Annual list and initial list fees will increase by $25 for all entity types
  • State Business License Fees will increase from $200 to $500 for Corporations formed under NRS Chapters 78, 78A, 78B, 80 and 89.
  • Any annual or initial list or Business License application for August or earlier, received prior to July 1, 2015 will be assessed the pre-July fees.
  • Fees for reinstatements and revivals received after July 1, 2015 will be calculated based on the new fees, even if for prior years.

Payroll Taxes

The Modified Business Tax (MBT) is currently imposed on businesses other than financial institutions in the amount of 1.17 percent of wages paid above an exemption level of $85,000 per quarter. The MBT will increase from 1.17 percent to 1.475 percent for most businesses. Mining companies will join financial institutions in paying the higher 2 percent tax rate. The MBT base is broadened by reducing the exemption to $50,000 per quarter.

Commerce Tax

The new Commerce Tax is a modified gross receipts tax levied on businesses’ Nevada gross revenue in excess of $4 million per year, less certain subtractions including distributions from pass-through entities, stock proceeds, bad debts expensed on federal taxes, and net income from a passive entity to the extent that income was generated by another business entity. The new Commerce Tax divides Nevada’s economy into 26 business categories, each consisting of one or more industry classifications as delineated under the North American Industry Classification System (NAICS). Each business category is assigned its own gross receipts tax rate with rates ranging from 0.051 percent to 0.331 percent. Businesses which do not fit into any other category are taxed at the 0.128 percent rate for Unclassified businesses.

Business Category Tax Rate Business Category Tax Rate
Rail Transportation 0.33% Management of Companies 0.14%
Educational Services 0.28% Utilities/Telecommunications 0.14%
Waste Management Services 0.26% Other Transportation 0.13%
Publishing, Software, Data Processing 0.25% Warehousing and Storage 0.13%
Real Estate 0.25% Unclassified 0.13%
Arts, Entertainment, and Recreation 0.24% Retail Trade 0.11%
Truck Transportation 0.20% Financial Activities 0.11%
Accommodation 0.20% Wholesale Trade 0.10%
Food Services (includes restaurants) 0.19% Manufacturing 0.09%
Health Services 0.19% Construction 0.08%
Professional Services 0.18% Agriculture 0.06%
Administrative and Support Services 0.15% Air Transportation 0.06%
Other Services 0.14% Mining 0.05%

Sales Tax

The state’s 6.85 percent sales tax is composed of four taxes: the 2 percent state rate, a 2.6 percent Local School Support Tax, a 0.5 percent Basic City-County Relief Tax, and a 1.75 percent Supplemental City-County Relief Tax. The Local School Support Tax’s current rate is a temporary increase adopted in 2009, scheduled to sunset to 2.25 percent at the end of the current fiscal year. The newly adopted tax plan makes the current rate permanent.

Cigarette Tax

Cigarette taxes, currently set at 80 cents per pack, will rise to $1.80 per pack under the new tax package.

Live Entertainment Tax

With limited exceptions, all live ticketed venues will now be subject to a 9 percent tax on admissions, with food and beverage exempt from the LET. Boxing matches will subject to a reduced 8 percent rate. NASCAR’s continued exemption from the LET is contingent upon holding two races per year in Nevada. Non-profit events distributing more than 7,500 tickets are no longer exempt.

Nevada Has No Corporate Taxes, Right?

  • April 15, 2015

Nevada has no corporate taxes, right?

It is true that Nevada does not impose corporate income taxes.  This, and the fact that Nevada also does not impose personal income tax, makes it a very business friendly state.  However, this does not mean that you can escape taxation simply by forming a corporation or limited liability company in Nevada.  First, regardless of where you incorporate, the Fed’s are always entitled to a piece of the action, whether that is recovered through corporate taxes or personal taxes.  Second, if you are doing business in another state, you may be required to register to do business in that state, which may mean paying annual registration fees as well as state corporate income taxes or other taxes imposed by that state.  Third, if you are not a resident of Nevada, you may be obligated to pay state personal income tax in whichever state you do reside.

So what constitutes “doing business” in another state?  Here is a lawyer answer for you – it depends.  Every state has a different statutory definition of what constitutes doing business in that state.  It is fairly safe to say that if you repeatedly conduct activities in a state, like shipping goods from a warehouse or having salespeople visiting customers on a regular basis, that is likely to be considered “doing business” in that state.  This may mean that you need to register your business to do business in that state.

While Nevada is one of the most business friendly states around, which is one of the many reasons we love our beautiful Silver State, forming an LLC or corporation here, if you are not actually conducting business in our fair state, is not necessarily going to help you avoid taxes in another state.  The solution of course is for you to bring your business to Nevada.  We would welcome you with open arms.  But short of that, you should consult with an attorney and/or CPA before electing the state in which you incorporate your business.

welcome-to-nevada-sign

End of Year Business (and Personal) Planning

  • December 2, 2014

Whether you are thinking about end of year organization or New Year’s business resolutions, here are a few thoughts for readying your business for the new year ahead:

NewYearAhead300

  • Tax Planning: Many businesses operate on a calendar year tax basis.  That means this is the time to call your CPA and discuss any over or under payments, year-end purchases and retirement account contributions.
  • Charitable Giving: Business or personal, charitable giving is not only a tax deductible event but it is also good for your heart.  There are many local non-profits that could especially use your help this time of year.
  • Trademark Renewals: Trademark registrations do have an expiration date.  Do you know when yours is due?  Do you have it calendared?  You should.
  • Business Registrations: All entities, whether a corporation, LLC or other have annual or bi-annual renewal filing requirements.  Similarly, state and local business licenses may be need to be renewed.  Business registration renewals of all types should be calendared.  If Incline Law Group, LLP serves as your registered agent, we will track your annual business registration and state business license renewal for you.
  • Leases: Commercial leases often run for longer periods of time and new leases or renewals can often take some time to complete. If your lease is expiring in 2016, now is the time to start planning for that.
  • Employment Policies: Does your company have a social media policy? When is the last time you updated your employee handbook?  January 1 is a great time to put new policies in place.  You do want to be sure that your employment practices and policies are compliant with state and federal employment law.  Please be sure to consult with your attorney before putting new employment policies in place.
  • Website Policies: “Terms of Use” and “Privacy Policies” can become outdated, quickly. It is a good idea to review your website policies on an annual basis.  You might also take a look at whether your website technologies are optimized for mobile phones and tablets.  It is the wave of the future, or so the kids say.
  • Insurance: Under the Affordable Care Act (“Obamacare”), there is an open enrollment period which runs November 15 through February 15.  Your employee health insurance plan is now likely to have a year-end renewal date regardless of when you used to renew.  Now is the time to check that out.