Why form a Wyoming LLC?
Wyoming has done three things incredibly well with Wyoming LLCs.
1. They have done a great job at improving their LLC statutes to make them the strongest in the country.
2. Unlike other states such as Nevada and Delaware, in keeping the initial and annual fees low.
3. First state to adopt LLC statutes. One little known fact is that the Wyoming LLC has the longest LLC case law history in the country. This is because they drafted the first LLC statutes in the nation in 1977. That’s about 18 years before most states.
So we’ll first quickly cover the 10 top benefits and advantages of setting up a Wyoming LLC. Then we’ll dive into the details of each benefit. Finally, we will tell some of the cons or disadvantages of forming a Wyoming LLC.
Using a Wyoming LLC in Your Home state
Now, keep in mind, you can use your Wyoming LLC back home. First, have us form your Wyoming LLC. Second, have us file documents that qualify your Wyoming LLC to do business where you live.
Moreover, places such as Yellowstone National Park and the Jackson Hole Ski resort are some of the favorite destinations in the US. How would you like to go to a 5-star luxury ski resort to have your Wyoming LLC meetings? Then you take that trip as tax write off? We’ve seen completely legal ways to do that. So before you do, check with your CPA for details.
Now, in addition to that what are the top 10 benefits for forming a Wyoming LLC?
Top 10 Benefits for Forming a Wyoming LLC
1. First, the names of the members (or corporate shareholders and CEO for that matter) are not filed in the public records in Wyoming.
2. Wyoming has zero business tax on corporations or LLCs and no personal income tax.
3. Wyoming does not share financial records with outside agencies.
4. You do not have to reside in Wyoming to form an LLC there.
5. Wyoming offers protection for acting members and managers or corporations and LLCs.
6. A one-person LLC offers charging order protection. So, when someone sues a Wyoming LLC member, personally, the law can protect the member from losing the company or the assets inside. As of this writing, only five states offer this benefit.
7. LLCs and corporations in Wyoming can offer stock or LLC membership in exchange for services, work, real estate and more instead of cash.
8. LLCs are flexible in terms of management. That is, you don’t even need to be a member or owner of a Wyoming LLC in order to have 100% of the management control.
9. Wyoming offers flexible profit distribution regulations to LLCs.
10. Finally, Wyoming minimizes the risk, time and cost when someone sues your business.
What if You Use a Wyoming LLC in Your Own State?
Now, there are some people who say that if you form a Wyoming LLC and use it back home that only the LLC rules back home apply. True for some things but not for all things. Study at the case law like we have. In just about all US jurisdictions, issues having to do with inner-company matters and matters among the LLC members are regulated by the jurisdiction where the entity was formed. In this case, we are talking about Wyoming. In Wyoming the laws are very business-friendly. So, the laws for these matters apply to where the company is formed and not by where the members or owners live.
What Is an LLC?
Now, if you are considering forming a Wyoming LLC, let’s first discuss exactly what an LLC is.
An LLC, or “Limited Liability Company,” gives limited liability to its owners (also known as “members”). It offers a pass-through tax structure by default. With a pass-through tax structure the business does not pay taxes on its own income. Instead, any gains or tax deductions are passed through to the owners and are reported on their personal tax returns.
Furthermore, you get to choose the tax treatment of your Wyoming LLC. You can choose to have it treated as a single member LLC taxed as a sole proprietorship. With two or more members, as a partnership. Or if you file additional forms with the IRS you can choose C corporation or S corporation taxation for your LLC.
As with any state, there are some guidelines you must follow when setting up an LLC in Wyoming. But there are also some significant advantages.
10 Wyoming LLC Benefits In Detail
So, now let’s detail some of the benefits of forming an LLC in Wyoming:
Members, shareholders, that is, owners as well as CEOs, and non-registered officers are not a matter of public record. That is, Wyoming provides privacy for owners of LLCs.
In Wyoming, you can have a “nominee Director” or “Nominee manager.” This is an optional service we provide so that one of our associates will show up in the public records as Wyoming LLC manager instead of you, should you so wish.
Wyoming LLC law states that the names of the LLC managers must be publicly filed. Whereas your nominee will have no real control, they can show up in the public records instead of you. So, when some contingency fee attorney goes sniffing around for assets, he or she won’t see your name online as being a part of the company. As a nominee, meaning “in name only,” this person does not necessarily need to have an authoritative position in the company. Using this option helps to add further anonymity for those associated with companies in Wyoming. Naturally, this service is to be used for ethical and legal purposes only.
Owners of privately held Wyoming LLCs and corporations do not need to have their names disclosed in the public records. This helps protect members and shareholders from lawsuits as the public cannot necessarily tie them to the company. So, if a member or shareholder has a nominee step in as LLC manager he can remain out of the public records.
2. No Income Tax
Wyoming has zero business tax on corporations or LLCs and no personal income tax. One of the most appealing aspects of forming an LLC in Wyoming, is that Wyoming is a zero income tax state.
Along with this, here are some other tax benefits Wyoming offers:
Zero corporate tax
Zero franchise tax
Zero stock tax
Wyoming does not have personal income taxes. For single member LLCs and LLCs taxed as partnerships, the income report is passed through to the individual members. This includes gains and losses. Since Wyoming does not have a state income tax, Wyoming resident members of LLCs are able to avoid this extra taxation.
Accordingly, combined state and federal taxation in most states averages around 45%-54%. So, when you consider forming an LLC, where the tax burden goes straight to the members, it is important to consider your state income tax in addition to the federal taxation rate. Depending on which state you reside in, these tax breaks can be significant. As a flow-through entity you will pay taxes where you live but there will not be additional tax filings in Wyoming.
3. No Information Sharing
Wyoming does not share business or personal records with outside agencies. Since Wyoming does not have an information sharing agreement with the IRS, this keeps a conflict between a state and federal computer from creating a red flag.
4. Live Anywhere
You can live anywhere and own a Wyoming LLC. Aside from being 18 and older, there are few regulations about who can form a Wyoming LLC. This makes forming an LLC in Wyoming an ideal choice for those seeking to take advantage of Wyoming’s asset protection benefits.
You can be located in another state, or even another country, and still form an LLC in Wyoming. We also offer a Wyoming office program giving your company a Wyoming address and a phone number answered during business hours.
5. Legal Protection
Protection for acting managers, officers, and directors. “Piercing the corporate or LLC veil” does not generally apply in Wyoming.
For acting members of corporations, Wyoming offers immunity from lawful acts of the company. An individual can be protected from personal liability while holding a position in an LLC. This is true as long as it does not involve fraud or breach fiduciary duties. Acting members include anyone who manages day to day operations. This includes anyone who makes decisions or votes on behalf of the company.
Managers and acting members of LLCs can be protected to the same extent, however, the decision can be left to the majority vote of the members of the LLC. So, the bottom line is that in the case of most LLCs, no person can be held personally liable for lawful acts of the business.
6. Single-Member LLC Charging Order Protection
A one-person LLC offers charging order protection. So, when an owner is sued the law can protect the member from losing the company or the assets inside.
7. Own Without Cash
LLCs and corporations in Wyoming can offer stock or LLC membership in exchange for services, work, real estate, cash and more. That is, if you are a member of an LLC you have the option of receiving or offering services or and property instead of cash. Not all types of LLCs support this option. But it is still worth considering as an advantage. This may be useful for those who want to be Wyoming LLC members but are low on cash.
8. Few Regulations & Formalities
LLCs in Wyoming are not subject to formal management regulations like corporations. Corporations are run by directors who oversee major decisions on behalf of the corporation. Corporations also have officers who uphold and run the business on a day-to-day basis.
LLCs, however, are not generally held to the same stringent annual formalities as corporations. Since LLCs have no shareholders, it does not need to have shareholder meetings. Since there are generally no directors, there is no need for board of director meetings as there are with corporations. You simply need a registered agent, which we can provide. This makes the LLC easier to operate.
There are, however, some formalities to which you need to adhere. Please see out YouTube video on the 5 biggest mistakes people make with single member LLCs.
9. Flexible Profit Distributions
Wyoming LLCs have flexible profit distribution options. There is no limit on the number of members allowed in any particular LLC. Plus, there are also no regulations on distributing profits from the LLC. One person can own 10% and receive 80% of the profits and have 100% of the control, for example, if that is what is written in the operating agreement.
10. Minimal Risk
Finally, Wyoming minimizes the risk, time and cost when someone sues your business. By minimizing the need for extensive LLC or corporate formalities, Wyoming law helps minimize the risk of penetrating the company shield. And, with predictable commercial rulings in Wyoming courts, the risk of litigation is further decreased. Finally, Wyoming has low court demands which means fast hearings to reduce the time and expense of litigation.
Wyoming offers a highly regarded business legislation. The business mindset of Wyoming makes it appealing to many looking to start a business. Offering low taxation, privacy, and protection, many agree that Wyoming is the most favorable state in which to form an LLC.
Wyoming earned the Tax Foundation’s nod for best business climate in the United States for the fifth year in a row.
Wyoming LLC Cons or Disadvantages
From all the research we have conducted, Wyoming LLCs stand head and shoulders above other US states. So, coming up with disadvantages is a bit of a stretch. So here goes.
1. Wyoming has the lowest population of any US State. So, it may not have the appeal to visitors who prefer larger cities.
2. If you fail to pay the annual fee in Wyoming for two years, you can never reinstate it. You would have to file a new LLC. In many states, you can revive a company no matter how long it has been defunct.
So, those are the two minor disadvantages or cons with Wyoming LLCs that come to mind. So by and large, with the protection and the low initial and annual costs, there are many more advantages to disadvantages with Wyoming LLCs.
For More Wyoming LLC Information
If you would like to form a Wyoming LLC or have questions about the Wyoming Office Program or Nominee Privacy Service, call Companies Incorporated at 1-888-444-4812 or complete an inquiry form on our website.