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Nevada Law & Business - Business Organization

Nevada Law & Business - Business Organization

Nevada Business & Law — Section 3: Business Organization

Use your NASCLA Contractor’s Guide — Nevada Edition. This section focuses on entity types, formation, authority, governance, tax basics, ownership changes, foreign qualification, and what you must report to the Board. Tab each panel and mark all timeline/definition boxes in your book.

1) Entity Types & Liability Compare forms
EntityFormationLiabilityTax treatment (general)Notes for Contractors
Sole Proprietor No separate entity; register DBAs as needed Unlimited personal liability Pass-through (Schedule C) Simple, but personal assets at risk; license is held by the individual business.
Partnership Agreement between partners General partners: unlimited liability Pass-through (Form 1065/K-1) Define authority/scope in writing; consider LLP/LP structures to limit risk.
Corporation Articles of Incorporation Limited to corporate assets C-Corp or S-Corp election Formal governance (board, officers); good for growth and risk separation.
LLC Articles of Organization Limited to company assets Default pass-through; can elect corp Flexible management; operating agreement defines authority and profit shares.
2) Formation, Registration & Good Standing Secretary of State + Board

Formation Steps

  • Choose entity name; appoint registered agent.
  • File Articles (Corp/LLC) or partnership documents with the state as applicable.
  • Adopt governing docs: bylaws (Corp) or operating agreement (LLC).
  • Apply for EIN; set up business banking (separate from personal).

Licensing & Good Standing

  • Obtain/maintain state contractor license with the Board (classification, QI, limit, bond, insurance).
  • Keep entity active with annual/biennial filings & fees.
  • City/county business licenses are separate and do not replace the state contractor license.
3) Authority & Governance Who can sign?

Corporations

  • Board of Directors sets policy; officers (president/CEO, secretary, treasurer) manage daily operations.
  • Resolutions authorize contracts, borrowing, bonding, and banking.
  • Minutes document decisions; keep a corporate record book.

LLCs

  • Manager-managed or member-managed; operating agreement governs authority.
  • Define who can bind the company (sign contracts, change orders, bonds).
  • Maintain consent records and key approvals.
4) Tax Basics & Accounting Interfaces High-level
  • Understand pass-through vs corporate taxation; payroll taxes apply to employees; independent contractor tests matter.
  • Coordinate with job costing: revenue recognition, retainage, and tracking change orders.
  • Keep calendars for tax filings, workers’ comp audits, and license renewals.
5) Ownership/Control Changes & Board Notices Deadlines
  • Report material ownership or control changes to the Board within required timelines.
  • QI disassociation triggers notice and replacement windows.
  • DBA/name changes must be updated; contracts/ads must use the licensed name/DBA on file.
6) Foreign Qualification & Joint Ventures Working across states/projects

Foreign Qualification

  • If formed in another state, you must qualify to do business in Nevada before contracting.
  • Maintain registered agent and good standing in both states.

Joint Ventures (JV)

  • JV agreement defines scope, capital, management, and bonding/insurance responsibilities.
  • Ensure the JV or each venturer holds proper licensing/classifications for the work performed.
7) Name Style, DBAs & Advertising Consistency
  • Use the exact licensed name or approved DBA on contracts, invoices, websites, and ads.
  • Include the Nevada license number on required advertising; maintain consistent branding.
  • Misrepresentation or using unapproved names can result in discipline.
8) Internal Controls & Documentation Protect the entity
  • Segregate duties (approvals vs. payments); maintain vendor/sub onboarding with W-9, licenses, COIs, WCs.
  • Use signing authority matrices; keep specimen signatures on file.
  • Keep minutes/consents, resolutions, and license/insurance/bond logs organized.

Practice Exam — 60 Questions Answers & brief explanations under each

1. Which entity exposes the owner to unlimited personal liability?

  1. LLC
  2. Corporation
  3. Sole proprietorship
  4. LLP
Answer

C — Sole proprietors have unlimited personal liability.

2. Which document typically authorizes a corporation to enter a major contract?

  1. W-9
  2. Board resolution
  3. Annual report
  4. COI
Answer

B — Resolutions grant authority.

3. The operating agreement primarily governs:

  1. LLCs
  2. Corporations
  3. Partnerships only
  4. Sole props
Answer

A — LLC internal rules.

4. Using a different business name on contracts than the licensed name can lead to:

  1. No issue
  2. Discipline for misrepresentation
  3. Tax credits
  4. Bond waiver
Answer

B — Must match Board records.

5. A partnership’s default tax treatment is:

  1. C-corp
  2. Pass-through
  3. Exempt
  4. LLC only
Answer

B — Form 1065 → K-1s.

6. The registered agent’s role includes:

  1. Signing payroll checks
  2. Receiving legal/service of process
  3. Setting GL limits
  4. Doing safety audits
Answer

B — Legal notices go to the agent.

7. Who can bind a manager-managed LLC if not otherwise limited?

  1. Any member
  2. The manager per the operating agreement
  3. Suppliers
  4. The bank
Answer

B — Authority defined by agreement.

8. Good standing usually requires:

  1. Monthly tax audits
  2. Timely state filings/fees
  3. City inspection
  4. Board hearing
Answer

B — Maintain entity status.

9. A JV should ensure licensing is held by:

  1. The designer
  2. The JV or the venturer(s) performing the work
  3. The bank
  4. The owner
Answer

B — Proper licensure for scopes.

10. Corporate minutes/consents are used to:

  1. Decorate the office
  2. Document decisions and approvals
  3. Replace contracts
  4. Set bid day
Answer

B — Keep governance records.

11. An S-corp is:

  1. A state charter
  2. A federal tax election
  3. A safety program
  4. A bond form
Answer

B — IRS election for qualifying corps/LLCs.

12. To do business in Nevada, a foreign LLC must:

  1. Change owners
  2. Qualify/register in Nevada
  3. Move headquarters
  4. Close in the home state
Answer

B — Foreign qualification before contracting.

13. Who sets contracting policy in a corporation?

  1. Board of Directors
  2. Vendor
  3. Auditor
  4. Insurance broker
Answer

A — Board oversight; officers execute.

14. Which name must appear on ads and contracts?

  1. Favorite brand
  2. Exact licensed name/approved DBA with required license number
  3. Super’s nickname
  4. Bank name
Answer

B — Consistent with Board files.

15. A manager-managed LLC most likely requires contract approval from:

  1. Any employee
  2. The designated manager
  3. The receptionist
  4. The accountant
Answer

B — As set in the operating agreement.

16. A material change in control generally requires:

  1. No action
  2. Board notification and possible re-evaluation
  3. Only city approval
  4. CPA letter
Answer

B — Notify the Contractors Board.

17. An “authority matrix” helps define:

  1. Safety fines
  2. Who can sign and how much
  3. Vehicle titles
  4. Lien rights
Answer

B — Controls & approvals.

18. Which is not a governing document?

  1. Bylaws
  2. Operating agreement
  3. Board minutes
  4. Certificate of insurance
Answer

D — COI is insurance evidence, not governance.

19. A “member-managed” LLC suggests authority is held by:

  1. Board of directors
  2. Managers
  3. Members
  4. Vendors
Answer

C — Members manage unless otherwise stated.

20. Using an unapproved DBA can result in:

  1. Tax refund
  2. Discipline for misrepresentation
  3. Bond increase
  4. No effect
Answer

B — Names must match license records.

21. Which is a reason to keep a corporate record book?

  1. Halloween party planning
  2. Evidence of authority and compliance
  3. Vehicle specs
  4. Permit fees
Answer

B — Store bylaws, minutes, resolutions.

22. Independent contractor misclassification can lead to:

  1. Lower taxes only
  2. Tax, WC, and wage liabilities
  3. No consequence
  4. Bond cancellation
Answer

B — Major compliance risk.

23. A signature block on contracts should match:

  1. Owner’s nickname
  2. Licensed entity name/DBA and authorized signer’s title
  3. Sub name
  4. CPA name
Answer

B — Clarity of capacity and authority.

24. Which body typically appoints officers?

  1. Vendors
  2. Board of Directors
  3. Inspectors
  4. Auditors
Answer

B — Corporate governance.

25. A foreign corporation contracting in Nevada without qualification risks:

  1. Lower premiums
  2. Penalties and inability to maintain actions until qualified
  3. Automatic license upgrade
  4. No impact
Answer

B — Qualify before contracting.

26. The purpose of bylaws is to:

  1. Set tax rates
  2. Establish internal corporate rules
  3. Replace contracts
  4. Define OSHA standards
Answer

B — Internal governance.

27. A manager-managed LLC without a designated signatory should:

  1. Let any member sign
  2. Adopt a resolution/consent naming signers
  3. Ask the city
  4. Ignore
Answer

B — Document authority.

28. Which is typically a pass-through entity?

  1. C-corp
  2. LLC (default)
  3. Public agency
  4. REIT
Answer

B — LLC default is pass-through.

29. A corporate officer most likely to sign checks is:

  1. Secretary
  2. Treasurer/CFO per policy
  3. Director only
  4. Registered agent
Answer

B — Treasurer handles finance.

30. A JV’s bonding is typically arranged by:

  1. Designer
  2. JV per agreement; may rely on venturers’ capacity
  3. Owner’s bank
  4. Subcontractors
Answer

B — Defined in the JV agreement.

31. A “member resolution” is most common in:

  1. LLC
  2. City council
  3. Partnership
  4. S-corp only
Answer

A — Members/managers adopt consents.

32. Which document proves authority for a specific contract?

  1. Employee handbook
  2. Resolution/consent naming the signer and limits
  3. COI
  4. W-4
Answer

B — Authority instrument.

33. For public works prequalification, owners often review:

  1. Marketing colors
  2. Financial strength, experience, safety record
  3. Favorite team
  4. Holiday schedule
Answer

B — Capacity and record.

34. A partnership agreement should address:

  1. None of these
  2. Profit/loss shares, authority, dispute resolution
  3. Vehicle color
  4. Logo font
Answer

B — Core governance terms.

35. When a new DBA is adopted, the contractor should:

  1. Do nothing
  2. Update Board records and use it consistently
  3. Use it only on social media
  4. Hide it
Answer

B — Keep names consistent.

36. Which role is least likely to bind a corporation by default?

  1. President/CEO
  2. Secretary/Treasurer per policy
  3. Random employee
  4. Authorized VP
Answer

C — Authority must be granted.

37. Separate bank accounts help preserve:

  1. Corporate veil and clean records
  2. Decor
  3. Brand style
  4. Vacation days
Answer

A — Avoid co-mingling.

38. A “consent in lieu of meeting” is used to:

  1. Replace the license
  2. Record approvals without a live meeting
  3. Pay taxes
  4. Get permits
Answer

B — Documented consent.

39. If the QI leaves, the entity must:

  1. Ignore
  2. Notify the Board and replace within allowed time
  3. Change city logo
  4. Open a new bank
Answer

B — QI replacement window.

40. Who usually maintains the corporate minute book?

  1. Project foreman
  2. Corporate secretary
  3. Inspector
  4. Vendor
Answer

B — Records custodian.

41. A “member-managed” LLC with three members means:

  1. Only one can sign
  2. All members may manage unless limited
  3. No one can sign
  4. The agent signs
Answer

B — Subject to the agreement.

42. Foreign qualification usually requires:

  1. DBA approval only
  2. Registered agent appointment and state filing
  3. Owner vacation
  4. Bank letter
Answer

B — File and appoint agent.

43. Failure to maintain good standing can result in:

  1. Automatic bond increase
  2. Inability to contract or maintain actions
  3. More holidays
  4. License becomes city-only
Answer

B — Keep filings current.

44. Which pairing is correct?

  1. Bylaws — LLC
  2. Operating agreement — LLC
  3. Minutes — Not used
  4. Registered agent — Employees only
Answer

B — Bylaws for corps; OA for LLCs.

45. A partnership default authority is best controlled by:

  1. Silence
  2. Written partnership agreement
  3. Vendor emails
  4. Owner texts
Answer

B — Document the rules.

46. Using the exact licensed name on contracts helps:

  1. Enforceability and compliance
  2. Color matching
  3. Vehicle mileage
  4. Social media
Answer

A — Avoids disputes.

47. A JV that will submit bids should:

  1. Skip paperwork
  2. Execute a JV agreement and address bonding/insurance/licensing
  3. Ask subs to sign checks
  4. Bill under a supplier
Answer

B — Define responsibilities upfront.

48. Corporate officers are chosen by:

  1. Coin flip
  2. Board of Directors per bylaws
  3. Vendors
  4. Inspector
Answer

B — Governance process.

49. Which is the best evidence of signing authority?

  1. Business card
  2. Resolution/consent and title
  3. Email signature
  4. Verbal claim
Answer

B — Formal grant of authority.

50. If an entity converts from LLC to corporation, it should:

  1. Notify the Board and update records
  2. Ignore
  3. Only update website
  4. Change vehicle wraps
Answer

A — Report entity changes.

51. A pass-through entity’s profits are generally taxed at:

  1. Entity level only
  2. Owner level
  3. Bank
  4. Board
Answer

B — Owners pay the tax.

52. The purpose of a registered agent is to:

  1. Run payroll
  2. Receive legal documents
  3. Perform safety audits
  4. Write specs
Answer

B — Service of process.

53. In a corporation, day-to-day operations are handled by:

  1. Board
  2. Officers
  3. Shareholders directly
  4. Owner’s family
Answer

B — Officers run operations.

54. If an LLC is member-managed, authority to sign is held by:

  1. Managers only
  2. Members (unless limited)
  3. Vendors
  4. CPA
Answer

B — Default to members.

55. An entity using unapproved advertising that omits the license number risks:

  1. Bonus points
  2. Citation/discipline
  3. Tax credit
  4. Bond waiver
Answer

B — Advertising rules apply.

56. A corporation wishing to change its name should first:

  1. Notify the Board and amend state filings
  2. Print business cards
  3. Tell vendors only
  4. Change uniforms
Answer

A — Keep filings consistent.

57. Which body owns the corporation?

  1. Officers
  2. Shareholders
  3. Vendors
  4. Bank
Answer

B — Shareholders own; board governs.

58. A partnership without a written agreement risks:

  1. Clarity
  2. Disputes over authority/profits
  3. No taxes
  4. Automatic corporate status
Answer

B — Put it in writing.

59. Commingling funds can:

  1. Pierce the corporate veil
  2. Improve branding
  3. Raise bond limits
  4. Lower OSHA fines
Answer

A — Keep funds separate.

60. If unsure who can sign a contract for your entity, the best step is to:

  1. Let the foreman sign
  2. Review bylaws/operating agreement and adopt a resolution/consent naming authorized signers
  3. Ask the supplier
  4. Proceed with a handshake
Answer

B — Verify and document authority.

Next: Section 4 — Contracts →