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Benefits of Forming an LLC in Wyoming

Written by:

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by:

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Benefits of Forming an LLC in Wyoming

If you’re starting a business in Wyoming, you’re in luck! Wyoming is a very favorable state for creating a limited liability company (LLC). In fact, it was the first state to recognize LLCs as business entities, way back in 1977. 

Wyoming strives to create a supportive environment for all types of businesses. If you don’t live in Wyoming and you’re starting a business, you may want to form your LLC in Wyoming instead of your home state to take advantage of the state’s pro-business environment. But this only applies to certain types of businesses. 

An LLC is a business entity that offers liability protection for owners, as well as pass-through taxation, much like a sole proprietorship.

Advantages of Forming an LLC in Wyoming

1. Tax Benefits in Wyoming

Wyoming is one of the few states in the U.S. that do not impose a personal or corporate income tax. Moreover, there is no franchise tax. This is a major advantage as it can result in significant tax savings for the LLC’s members. This absence of state-level income tax helps businesses keep their overhead costs low, potentially leading to higher profits.

2. Low Setup Fees

Establishing an LLC in Wyoming is cost-effective. The initial filing fee is only $100, which is lower than many other states. This affordability extends to yearly costs as well, with the state’s annual report fee typically being $50 or $0.0002 of the company’s assets located in Wyoming, whichever is greater.

3. Ease of Formation

The process to set up an LLC in Wyoming is straightforward and user-friendly. The state requires a minimum of paperwork and no operating agreement is mandated. This simplifies the process and reduces the potential legal fees associated with drafting complex operating agreements.

4. Flexibility with Series and Nonprofit LLCs

Wyoming permits the formation of Series LLCs and Nonprofit LLCs. A Series LLC is advantageous for businesses that require a separation of liability among various parts of their operations. It allows a single LLC to segregate its assets into separate series, each being its own entity with independent finances. This segregation can be particularly beneficial to real estate businesses, where each property can be its own series, insulating the others from liability.

5. Strong Asset Protection

Wyoming provides some of the strongest asset protection laws in the U.S. In many states, creditors may seize an LLC’s assets or a member’s ownership interest to satisfy a debt. However, Wyoming laws protect LLCs from such actions, making it challenging for creditors to claim LLC assets or member’s personal assets. This heightened protection can provide peace of mind to LLC owners.

6. Limited Fiduciary Responsibilities

In Wyoming, members of an LLC have limited fiduciary responsibilities. This can be especially attractive for passive members, who can invest in an LLC without the worry of getting involved in management or day-to-day operations. It provides a protective shield to members, limiting their liability to the amount of their investment.

7. Anonymity and Privacy

Wyoming does not require disclosure of manager or member names in the public filings of an LLC. This anonymity can be advantageous for businesses or individuals who wish to keep their involvement in an LLC private. In a time when privacy is increasingly scarce, Wyoming’s laws offer a valuable layer of privacy protection.

Should You Choose Wyoming to Form Your LLC?

If you’re thinking of forming an LLC in Wyoming, but Wyoming is not your home state, going ahead with forming an LLC in Wyoming may only double your paperwork and filing fees. This is because you will likely still need to register as a foreign LLC in your home state and be subject to its laws and taxes as well as those of Wyoming.

This is true even if you merely base your business in your home state, but don’t do any sales there. This is because your business headquarters must be in the state where you live, whether you work from your home or not. Most state laws dictate that you must physically move to the state in which you form your LLC in order to avoid registering as a foreign LLC in your original home state.

A foreign LLC is simply an LLC doing business in a state other than the one in which it’s registered. For example, if your LLC is registered in Wyoming, but you also do business in Georgia, you’ll need to register a foreign LLC in Georgia.

If you have an LLC in your home state but do business in other states, you need to register as a foreign LLC in all of the states where you do business. Each state has different rules defining what doing business in their state means. Check with the secretary of state in any states where you may be doing business to see if you qualify. Generally, you’re doing business in another state if you:

  • Have a physical presence of any kind in that state
  • Have employees in that state
  • Regularly meet with clients, managers, or investors in that state
  • Are licensed to do business in that state

You also may be considered a foreign business if your business has a bank account or property in that state. However, if you’re an online business in one state and happen to make a lot of sales in other states, you’re probably not considered a foreign business and thus not required to register a foreign LLC.

In Closing

If you’re starting your business in Wyoming and forming an LLC, you get to take advantage of all the benefits that Wyoming offers to LLCs. If you’re in another state, but considering forming your LLC in Wyoming, it may or may not be in your best interests.

It’s recommended that you speak with an attorney and tax advisor who are familiar with the laws of Wyoming and of your home state to determine if forming your LLC in Wyoming is the best decision for you.

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Benefits of Forming an LLC in Wyoming