My experience of using Time Machine with a NAS:
When using a network location as the destination, once connected to the NAS, TM will create a sparse image on the destination and mount this image as a local drive on the Mac. You don't have to create the sparse image yourself. TM does it and maintains it.
On the NAS the USB drive has to be accessible to the NAS user account you will use to access it from the Mac. Normally the NAS will assign the same
usbshareN name for the USB drive's shared folder. You should add this to the Bonjour settings of Time Machines Folders, and enable broadcasting on SMB and/or AFP.
Provided there isn't a previous corrupted TM sparse image on the USB shared folder for this Mac then the new one should be created.
Finally, our two old Mac Minis (one always on [mine], the other gets turned off) are very reliable for not corrupting the sparse image. My MacBook Air is more prone to corruption, usually coincides with my DS215j TM NAS getting rebooted. I will probably stop using TM when ABB for Mac beta is stable, and move the backup destination to one of the my NAS+.