Nevada has no state income tax - but it has specific payroll tax obligations that surprise many new business owners. The Modified Business Tax, DETR unemployment insurance, daily overtime rules, and new hire reporting requirements are Nevada-specific and change annually.
Nevada's Modified Business Tax applies to employers whose total quarterly gross wages exceed $50,000. The rate is 1.378% on wages above that threshold, filed and paid quarterly to the Nevada Department of Taxation. The MBT is a payroll-based tax - not an income tax. If your quarterly gross wages (including all compensation: salary, bonuses, commissions) exceed $50,000, you owe 1.378% on the amount over the threshold. It is filed quarterly using Nevada's tax portal. Financial institutions pay a higher rate of 2.0%. New employers are often caught off guard by their first MBT bill; proper payroll tracking is essential to avoid penalties. Note: the MBT applies to the employer only - it is not withheld from employee wages.
Source: Nevada Department of Taxation - tax.nv.gov
New Nevada employers pay a 2.95% SUI (State Unemployment Insurance) rate on the first $40,600 of each employee's wages per year. Register with the Nevada DETR before running your first payroll. The Nevada Department of Employment, Training and Rehabilitation (DETR) administers unemployment insurance. New employers use the 2.95% new-employer rate until they have enough employment history - typically 3 years - for an experience-rated rate. The taxable wage base is $40,600 per employee per year. Registration with DETR is required before running your first payroll, not after. Quarterly DETR filings are due April 30, July 31, October 31, and January 31. Late registration or filing triggers penalties.
Source: Nevada DETR - ui.nv.gov
Nevada requires overtime pay after 8 hours in a single workday - not just after 40 hours in a week. Federal law only requires weekly overtime. Nevada employers must track daily hours carefully. Under Nevada law (NRS 608.018), employers must pay 1.5 times the regular rate for: (1) hours worked over 8 in a single workday, or (2) hours worked over 40 in a workweek - whichever results in more overtime pay for the employee. This differs from federal FLSA, which only requires weekly overtime. Employees earning less than 1.5 times the minimum wage per hour are covered; higher earners may not trigger daily overtime depending on their written agreement. Proper timekeeping software is essential.
Source: Nevada NRS 608.018 - nevada legislature
Nevada requires employers to report all new hires to the Nevada New Hire Reporting Program within 20 days of the hire date. Report online at newhires.nv.gov. Required for all employees including part-time and rehires. Required information: employee name, address, SSN, date of hire; employer name, address, EIN. This information is used to enforce child support orders and detect unemployment fraud. Federal contractors must also report within 20 days. Missing the deadline can result in penalties of $25 per unreported hire (up to $500 for intentional noncompliance). The report is submitted online through the Nevada New Hire Reporting website. Most payroll software handles this automatically when configured correctly.
Source: Nevada New Hire Reporting Program - newhires.nv.gov
Nevada has no state income tax. Small businesses still owe federal income tax, federal payroll taxes via Form 941, Nevada MBT if quarterly wages exceed $50,000, DETR unemployment insurance, and local business license fees. The complete Nevada small business tax picture: (1) No Nevada personal or corporate income tax - but federal taxes still apply; (2) Nevada MBT: 1.378% on quarterly wages above $50,000; (3) Nevada DETR SUI: 2.95% new-employer rate on first $40,600 per employee per year; (4) Federal Form 941: Social Security (6.2%), Medicare (1.45%), federal income tax withholding, filed quarterly; (5) Nevada Commerce Tax: only if annual gross receipts exceed $4 million; (6) Sales tax: 8.375% in Clark County on tangible goods - most service businesses exempt; (7) City and county business license fees vary by jurisdiction. Summary: no income tax, but payroll obligations are real and specific.
Source: Nevada Department of Taxation - tax.nv.gov
Most bookkeeping problems start at the beginning - a missing bank account, a wrong accounting method, or a QuickBooks default chart of accounts that doesn't match the actual business. Getting the foundation right costs less than fixing it later.
Five steps to set up bookkeeping for a new business: open a dedicated business bank account, choose an accounting method (cash or accrual), select accounting software, set up a chart of accounts for your industry, and reconcile monthly from day one. Step 1 - Business bank account: Never mix personal and business finances. Open a separate business checking account before your first business transaction. This protects your LLC's liability protection and makes bookkeeping infinitely simpler. Step 2 - Accounting method: Most small service businesses start on cash basis (record income when received, expenses when paid). Switch to accrual if you carry inventory or exceed $29 million in revenue. Step 3 - Accounting software: QuickBooks Online is the standard for most small businesses. Set up through a ProAdvisor to get the chart of accounts right from the start. Step 4 - Chart of accounts: The default QuickBooks template is almost always wrong for your industry. A correct chart of accounts is the foundation of useful financial reports. Step 5 - Monthly reconciliation: Reconcile bank accounts monthly from month one. A year of unreconciled transactions is exponentially harder to fix than one month.
Nevada requires businesses to retain financial records for at least 4 years for bookkeeping and tax purposes. Keep employee records for 4 years, payroll tax records for 4 years, and corporate formation documents indefinitely. Financial records (bank statements, invoices, receipts): 4 years minimum. Payroll tax records (W-2s, 941s, payroll registers): 4 years minimum; IRS recommends 7 years. Employee files (I-9, W-4, time records): 4 years after separation. Corporate documents (articles of incorporation, meeting minutes, contracts): indefinitely. Sales tax records (if applicable): 4 years. Note: if you are audited or involved in litigation, retention requirements extend beyond these minimums. Cloud storage in QuickBooks Online or similar systems satisfies retention requirements for most transaction records.
Hire a bookkeeper when bookkeeping takes more than 5 hours per month, when you have employees and payroll obligations, when you have fallen behind on reconciliations, or when your CPA says your books aren't workable. Five triggers that signal it's time: (1) First employee - payroll adds DETR registration, 941 filings, W-2s, and state compliance that requires specialist knowledge; (2) Falling behind - if you're more than 2 months behind on reconciliations, the catch-up cost is less than the compounding error cost; (3) Tax-season panic - if you're scrambling every March to provide records to your CPA, monthly bookkeeping eliminates that entirely; (4) Business growth - when revenue exceeds $200K, the cost of a bookkeeping error grows with it; (5) CPA feedback - if your accountant is asking questions you can't answer from your books, the books need professional maintenance.
Cash accounting records income when you receive payment and expenses when you pay them. Accrual accounting records income when it is earned and expenses when they are incurred, regardless of when cash changes hands. Cash basis is simpler and works well for most service businesses, freelancers, and small retailers. Accrual basis is required for businesses with inventory and those averaging over $29 million in annual gross receipts (IRS requirement). For construction contractors, accrual accounting is often the better choice because it matches revenue to the period work was performed - critical for accurate job costing and progress billing. The accounting method affects how your P&L looks and when you owe taxes. Switching methods requires IRS approval using Form 3115. Most new businesses start on cash basis and switch to accrual as they grow or add complexity.
A profit and loss statement shows revenue at the top, subtracts cost of goods sold to get gross profit, then subtracts operating expenses to get net profit. Net profit is what the business actually kept after all expenses. P&L structure: Revenue (total sales) minus Cost of Goods Sold (direct costs to produce what you sold) equals Gross Profit. Gross Profit minus Operating Expenses (rent, payroll, insurance, utilities, marketing) equals Operating Income. Operating Income adjusted for interest and taxes equals Net Profit. Common confusions: Revenue is not profit - a business with $500K in revenue and $520K in expenses is losing money. Profit is not cash - a profitable business can still run out of cash if clients pay slowly, which is the Accounts Receivable timing problem. A correctly structured P&L - with the right chart of accounts - reveals where money is actually going.
Construction accounting is a distinct discipline from general business bookkeeping. Job costing, AIA billing, certified payroll under NRS 338, and prevailing wage compliance are construction-specific requirements that general bookkeepers are not trained to handle.
Job costing tracks the actual labor, materials, subcontractor, and overhead costs for each individual project - so a contractor can see whether each job was profitable, not just whether the company overall made money. Job costing answers the question: did we make money on this specific job? - a question that a standard P&L cannot answer. Without job costing, a contractor might show overall profitability while losing money on half their jobs. Job costing tracks costs by: job number, cost code (labor, materials, subcontractors, equipment, overhead), and phase (foundation, framing, finish, etc.). In QuickBooks Online Plus and Advanced, job costing is done through Projects and Classes. For more complex tracking, AccountingSuite offers native construction job costing without workarounds. Hharpp configures job costing in both platforms.
AIA billing is a standardized invoicing format used on commercial construction projects. The G702 Application for Payment and G703 Continuation Sheet are the two core AIA forms that general contractors and subcontractors use for progress billing. AIA billing divides a contract into line items (the Schedule of Values on the G703) and tracks how much of each line item has been completed as work progresses. The G702 is the cover page showing the total contract, total completed work, retainage withheld, and amount due. Retainage (typically 5 to 10 percent) is held until project completion. AIA billing requires careful tracking in the accounting system - QuickBooks Online supports progress invoicing natively, but configuring it correctly for AIA format requires someone who understands both the billing format and the accounting.
Nevada NRS 338 requires contractors on public works projects to pay prevailing wages and submit weekly certified payroll reports documenting each worker's classification, hours, and wage rate. These reports are submitted to the public body overseeing the project. NRS 338.020 through 338.090 governs Nevada public works payroll. Key requirements: (1) All workers on public works projects over $250,000 must be paid Nevada prevailing wages - set by trade and county by the Nevada Labor Commissioner; (2) Weekly certified payroll reports (using federal WH-347 or equivalent) must be submitted to the awarding body; (3) Contractors must retain payroll records for 3 years; (4) Violations can result in contract termination and debarment from future public works. Certified payroll is separate from regular payroll processing - it requires specific documentation that most standard payroll software doesn't handle automatically. Hharpp handles certified payroll under NRS 338 for Nevada contractors.
Source: Nevada Labor Commissioner - labor.nv.gov
Retainage is a percentage of each progress billing - typically 5 to 10 percent - that the project owner withholds until the job is substantially complete. Contractors track it as a separate receivable account in QuickBooks. Retainage creates a timing difference between billing and cash collection that affects cash flow significantly on large projects. For example: a contractor bills $100,000 per month with 10% retainage. Each month, $10,000 goes into retainage receivable instead of regular accounts receivable. Over a 12-month project, $120,000 accumulates - not collected until project completion and acceptance. In QuickBooks Online, retainage is tracked using a separate retainage receivable account and special billing items. Incorrectly set up, retainage disappears into regular A/R and distorts the true cash picture. Hharpp configures retainage tracking in QuickBooks for construction clients.
Construction accounting requires job costing, progress billing, certified payroll, retainage tracking, and a contractor-specific chart of accounts - none of which are part of standard bookkeeping training or a default QuickBooks setup. Five ways construction accounting differs from general bookkeeping: (1) Revenue recognition - construction uses percentage-of-completion, not point-of-sale; (2) Cost tracking - every expense must be allocated to a specific job and cost code, not just a general expense account; (3) Billing format - AIA G702/G703 progress billing is a construction standard that most bookkeepers have never seen; (4) Certified payroll - weekly reports to public agencies with prevailing wage verification; (5) Retainage - cash collected months after billing, requiring separate receivable tracking. A general bookkeeper working from a default QuickBooks template will produce financials that look acceptable but reveal none of the job-level data contractors need to manage profitability.
Payroll is the highest-penalty compliance area for small businesses. The IRS failure-to-deposit penalty starts at 2% and reaches 15% depending on how late the deposit is - and Nevada adds its own MBT and DETR obligations on top of federal requirements.
Six steps to run payroll for the first time in Nevada: get a federal EIN, register with Nevada DETR, collect employee W-4 and I-9 forms, report the new hire within 20 days, set up payroll software, and run the first payroll with correct federal and Nevada tax settings. Step 1 - EIN: Apply free at IRS.gov. Required before opening a business bank account, registering with DETR, or running payroll. Step 2 - DETR registration: Register at ui.nv.gov before running first payroll. This sets up your SUI account. Step 3 - Employee paperwork: W-4 (federal withholding elections), I-9 (employment eligibility). Nevada has no state income tax withholding - no state W-4 is required. Step 4 - New hire report: File within 20 days at newhires.nv.gov. Step 5 - Payroll software: QuickBooks Payroll, Gusto, or ADP. Configure federal and Nevada tax settings correctly before running first payroll. Step 6 - First payroll: Verify gross pay, deductions, and net pay before issuing. Set up your payroll deposit schedule (monthly or semiweekly based on IRS lookback period).
Form 941 is the IRS quarterly payroll tax return filed by employers. It reports total wages paid, federal income tax withheld, and Social Security and Medicare taxes. Due dates are April 30, July 31, October 31, and January 31. Every employer who pays wages must file Form 941 quarterly, even if no taxes were withheld (use Form 944 if annual employment tax liability is $1,000 or less). The form reports: total wages and tips, federal income tax withheld, employee and employer Social Security and Medicare contributions, payroll tax credits (if any), and total deposits made during the quarter. Separate from filing, payroll tax deposits are due on a monthly or semiweekly schedule depending on your lookback period. Late deposits trigger the failure-to-deposit penalty ranging from 2% to 15% of underpayment.
Source: IRS.gov - Form 941 information
A W-2 employee has taxes withheld by the employer and receives benefits as directed by law. A 1099 independent contractor is self-employed, pays their own taxes, and receives no employer-withheld taxes. Misclassifying an employee as a contractor carries significant IRS penalties. The IRS uses a 3-factor test: behavioral control (does the employer control how work is done?), financial control (does the employer control how the worker is paid, reimburse expenses, provide tools?), and relationship type (is there a written contract, benefits, permanency?). Generally: W-2 if you control the work method and schedule; 1099 if the worker controls their own process, works for multiple clients, and provides their own tools. Nevada follows federal classification rules with additional state scrutiny. Misclassification penalties: back payroll taxes, interest, penalties of 1.5 to 3% of wages, and potential DETR liability. When in doubt, W-2 is the safer classification.
Payroll year-end checklist: verify employee information, reconcile payroll totals against quarterly 941 filings, issue W-2s by January 31, file W-3 with SSA, issue 1099s to contractors by January 31, and confirm all quarterly filings are current. Step-by-step year-end payroll close: (1) Verify SSNs and addresses for all employees - incorrect W-2 information generates IRS notices; (2) Reconcile YTD payroll totals in your payroll software against all 4 quarterly 941 filings; (3) Issue W-2s to all employees by January 31 and file Copy A with SSA electronically; (4) Issue 1099-NEC to all independent contractors paid $600 or more during the year by January 31 and file with IRS; (5) Confirm final Q4 941 is filed by January 31; (6) Close the payroll year in your software to prevent prior-year edits. Year-end payroll errors are the most common reason CPAs request corrections in February.
The IRS failure-to-deposit penalty ranges from 2% for deposits 1 to 5 days late to 15% for amounts unpaid after 10 days following the first IRS notice. The penalty applies to the full undeposited tax amount. DETR has separate late filing penalties. IRS failure-to-deposit penalty schedule: 2% for 1 to 5 days late; 5% for 6 to 15 days late; 10% for more than 15 days late; 15% if not paid within 10 days of first IRS notice. These are compounding - the penalty applies to the full undeposited amount. Additionally, the Trust Fund Recovery Penalty holds business owners and officers personally liable for the employee portion of payroll taxes (Social Security, Medicare, income tax withheld). This means the IRS can pursue you personally even if the business is closed or bankrupt. If you have missed payroll tax deposits, acting immediately - not waiting - minimizes the penalty.
If you have missed payroll tax deposits, call (702) 342-8844 directly. These situations are prioritized for same-day response.
Good bookkeeping is not a compliance exercise - it is the information system that tells you whether your business is actually making money. Four questions that every small business owner should be able to answer from their books.
Every month a bookkeeper categorizes all transactions, reconciles bank and credit card accounts against statements, reviews accounts receivable and payable, and produces a profit and loss statement and balance sheet for the business owner and CPA. Monthly bookkeeping deliverables: (1) Transaction categorization - every income and expense transaction coded to the correct account in the chart of accounts; (2) Bank reconciliation - every bank and credit card account reconciled to its statement, discrepancies investigated; (3) Accounts receivable review - outstanding invoices identified, aging report produced; (4) Accounts payable review - upcoming bills tracked, cash flow visibility maintained; (5) Financial statements - P&L (income statement) and balance sheet produced monthly; (6) Payroll coordination - payroll recorded in the books and reconciled to payroll reports. Year-round responsibilities include quarterly payroll tax filings, annual 1099 preparation, and year-end close.
Five warning signs your QuickBooks file has errors: your balance sheet doesn't balance, Undeposited Funds keeps growing, your P&L doesn't match what you expect, you can't reconcile a bank account, or your CPA is asking questions you can't answer from your reports. Warning sign details: (1) Balance sheet out of balance - this almost always indicates a data entry error or incorrect opening balances; (2) Undeposited Funds growing - this account should be cleared regularly; a large growing balance means payments are stuck in transit and your A/R is overstated; (3) Negative cash balance - you don't have literally negative cash; this means transactions were entered incorrectly; (4) Reconciliation never completes - if the difference never reaches zero, there are unmatched transactions or incorrect entries; (5) Unexplained P&L swings - large month-to-month fluctuations that don't match actual business activity usually indicate miscategorization. None of these are emergencies, but all get more expensive to fix the longer they persist.
Revenue is total sales. Profit is what remains after expenses. Cash flow is the actual movement of money in and out of the bank. A business can be profitable and still run out of cash - this is the most common financial surprise for growing businesses. Revenue (top line): everything invoiced or sold, before any deductions. Gross profit: revenue minus cost of goods sold - what the business made before overhead. Net profit (bottom line): gross profit minus all operating expenses - what the business actually kept. Cash flow: the actual timing of money received and paid. The gap between profit and cash exists because: clients pay late (receivables); you pay suppliers early (payables); you have loan payments (principal is not an expense); you made capital purchases (equipment bought is not immediately expensed on the P&L). A business can show $50K in net profit while having a negative bank balance. This is why cash flow forecasting - separate from your P&L - is essential for business management.
AI bookkeeping tools automate transaction categorization but still require human oversight for accuracy, compliance decisions, and Nevada-specific requirements. Software can categorize transactions; it cannot ensure your MBT is calculated correctly or your certified payroll complies with NRS 338. What AI and software do well: bank feed imports that eliminate manual transaction entry; rules-based categorization for recurring transactions; receipt scanning; basic reporting. What still requires human judgment: reviewing categorizations for accuracy (AI miscategorizes transactions regularly, especially construction cost codes); compliance decisions (which expenses are deductible, how to handle owner draws, how to classify workers); Nevada-specific obligations (MBT calculation, DETR filings, certified payroll); year-end tax preparation inputs; catch-up bookkeeping on messy files. The honest answer for most small businesses: software handles the data entry; a CPB handles the judgment calls, compliance, and accuracy review. Cutting out the CPB to save money usually costs more in errors, penalties, and CPA cleanup.
Everything covered on this page condensed into a single printable checklist - Nevada-specific deadlines, record retention requirements, monthly bookkeeping tasks, and payroll compliance items. Built for Henderson and Boulder City small businesses by Heather Potvin, CPB. Free - no signup required.