Benefits Of Wyoming LLC: Everything You Need to Know
Benefits of a Wyoming LLC offer protection on liability limited to what assets the company owns while also allowing its profits to be taxed in a manner more like a sole proprietorship.3 min read
Benefits of a Wyoming LLC offer protection on liability limited to what assets the company owns while also allowing its profits to be taxed in a manner more like a sole proprietorship. Wyoming's pioneering past led it to become the first state to create the LLC, or limited liability company. As the birthplace of the LLC, with a business-friendly tax system, Wyoming is a great home for any new company, especially an LLC.
Wyoming first created the LLC in 1977 in an attempt to make oil investment easier in the state. Such filings quickly became popular, and the remaining states moved to pass similar laws of their own. While all states now have their own forms of the LLC, Wyoming remains a very popular place to file as an LLC,since the business climate and laws are quite favorable to such companies.
There are many different ways to form a company. These include:
In addition to choosing a type, the owner must decide in what state the company will be filed.
What Is an LLC?
An LLC, in many ways, is a filing status that splits the difference between a sole proprietorship and a corporation — though, oddly, an LLC may be either of those things as well, depending on the jurisdiction it is filed in. The LLC gains a liability shielding similar to that of a corporation, where those seeking damages against it are limited to what the company directly owns instead of also having access to the owner's assets. But the LLC also gets to use “pass through” taxation, where profits from the business count directly as income on the tax returns of the owners. This prevents a double-dip taxation, where the company owes taxes on the profits and then the owners owe taxes again on their share of the money.
Wyoming likes its businesses and offers many reasons for those forming a business to file in the state.
- There is no state income tax at all for either corporations or individuals.
- Lack of informational tax return requirements.
- Low fees and minimal paperwork for filing. A Wyoming LLC only requires $100 to file.
- Lack of operating agreement requirements. Wyoming does not require LLCs to have an operating agreement at the time of formation, allowing businesses to register first and then work out the agreements later.
- Low yearly fees. LLCs in Wyoming have to pay a yearly fee, but it is one of the lowest in the country. The Annual Report License Tax is $50 for any company with holdings less than $250,000 and $0.0002 per dollar of assets over $250,000 in the state. Beyond this, the state asks for a report every year.
- The liability protection of Wyoming LLCs is second to none, thanks to 2016 revisions to the LLC Act.
- Wyoming LLCs have a special protection from charging order laws, wherein the creditors of LLC owners are not able to force the owners into selling company assets to satisfy personal debts. This protection is not in place in many jurisdictions.
- In Wyoming, a Domestic Asset Protection Trust lets company owners place their ownership stakes into trusts to a second party, protecting them against any future creditors.
- LLCs operating out of Wyoming can operate more anonymously than in other states, and non-US Residents can operate them.
- Wyoming allows the transfer of out of state LLCs into the state easily.
- A Wyoming LLC survives its owners in the event that they pass away, making them a way to pool and use assets that carries on into the future easily.
No corporate organization is perfect, and there are several things to consider when deciding if a Wyoming LLC is the best formation for you. The first thing to consider is the living situation of the owner or owners. Other states might not be interested in the laws of Wyoming when considering the effects of a business run by someone maintaining a primary residence within their borders. When deciding how to organize your business, you'll need to consider all of these factors.
If you need help with your Wyoming LLC, whether to organize or maintain it, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Stripe, and Twilio.