Wyoming is the first state in the USA that recognized the limited liability company as a permitted entity form in 1977. And since then, this company type has become one of the best ones for many businessmen around the state and country due to the multiple Wyoming LLC benefits.
Wyoming has kept updating the laws since then a lot of times so that it can stay current with the latest innovations in structure and liability protections for its members and managers of these companies. Additionally, Wyoming also offers a favorable legal environment for the businesses established in the state.
What Is An LLC?
An LLC is a filing status that splits the difference between a corporation and a sole proprietorship. Even though it is this way, an LLC can be either of these two things as well, which mostly depends on the jurisdiction it is filed in.
An LLC gets a liability shield just like a corporation where those who are seeking damages against it are limited to what the company directly owns instead of having access to the assets of the owners. However, unlike the corporation, an LLC gets to use “pass-through” taxation where the profits from the business are considered as income on the tax returns of the owners. With this, the double taxation issue is avoided in which the company owes taxes on the profits and then the owners owe taxes on the shares they get from the company.
Why Start A Business In Wyoming?
There are a lot of Wyoming LLC benefits that have attracted many entrepreneurs to set up a Wyoming LLC. This includes:
- No state taxes (no income taxes and lower fees)
Wyoming does not have any state taxes on the LLC since it does not levy any corporate or individual income taxes. However, it should be noted that if your LLC has operations in other states, the income tax is generated as per those states. In addition to this, you will pay a low fee to maintain the company as compared to the fees in other stares.
- Recognition of nonprofit and series LLCs
Wyoming is one of the states that allows series LLCs. The series LLCs is an LLC that has the capability to issue different series or classes of membership interests that each have separate liabilities and assets associated with them. In addition, the assets and liabilities are protected and segregated from those of the other series of membership interests.
Basically, a series can liquidate its assets while leaving the rest of the businesses intact. This kind of business structure is used in the real estate industry. For this reason, Wyoming also allows nonprofit entities to organize as LLC instead of corporations.
- Protections from creditors and corporate veil piercing
Another benefit of the Wyoming LLC is that the Wyoming law strictly limits the remedies of a creditor to a “charging order” against the member’s interest. This means that when the order is in place, the member’s distributions have to be paid to the creditor directly.
Wyoming law limits the ability of an LLC’s creditors such as the employees, landlords, and lenders to hold a member (owner) of the company personally liable for the debts in a business. This is also called the piercing of the corporate veil. Therefore, no member is liable for the obligations and debts of the LLC and have their personal assets protected.
However, if you are not able to keep your business and personal expenses separately, the corporate veil will be torn and your personal assets would no more be protected. In addition, if you do a fraud through your LLC, you can be liable to pay all the debts through your personal assets, that is if the person is able to prove that you have done a fraud.
- No citizenship requirements
You do not have to be a USA citizen to form an LLC in Wyoming. In fact, you can live anywhere and operate the LLC from there after you have formed it in Wyoming. However, in order to gain credibility and open the business, you will need a registered agent in Wyoming, a Wyoming address and the Mail Forwarding service. Please note that Valsen offers all these services.
- Privacy allowed
A Wyoming LLC owner enjoys unparalleled security and privacy due to the following:
- There is no need to list a member or manager for the duration of the Wyoming LLC.
- Wyoming LLC ownership is not maintained on Wyoming public records.
- Disclosure and reporting obligations are minimal.
- Perpetual life – unlimited duration & Transferability of ownership
A sole proprietorship does not have a life apart from its owners and cannot be transferred to another person. On the other hand, an LLC has a life that goes on forever and can be transferred easily to another person.
- Ability to build credit and raise capital
Since an LLC is a separate legal entity, it has its own tax identification number where it can build credit on, borrow money and sell equity to raise capital. Most of the investors prefer investing in an LLC due to the ease of transfer of investment and the limited liability.