Wyoming LLC Advantages and Disadvantages
Should I form a Wyoming LLC?
An Wyoming LLC satisfies a necessary condition of your business planning developement in that it meets the requirement that you establish a legal form of organization in order to gain the statutory benefits and protection available in Wyoming to your LLC. Your Wyoming LLC establishes a legal presence within the state, which you can use either as a platform for in-state operations or by registering your Wyoming LLC via your agent's physical address in order to meet the purely statutory requirement for tax and filing purposes absent an in state operation.
Advantages and Disadvantages Wyoming LLC
Advantages of LLC
- Limited Liability: Owners of a LLC have the limited liability protection of a corporation.
- Flexible Profit Distribution: Limited liability companies can select varying forms of distribution of profits. Unlike a common partnership where the split is 50-50, LLC have much more flexibility.
- No Minutes: Corporations are required to keep formal minutes, have meetings, and record resolutions. The LLC business structure requires no corporate minutes or resolutions and is easier to operate.
- Flow Through Taxation: All your business losses, profits, and expenses flow through the company to the individual members. You avoid the double taxation of paying corporate tax and individual tax. Usually, this will be a tax advantage, but circumstances can favor a corporate tax structure.
LLC Advantages specific to Wyoming
- No State Income Taxes
- No information collected to be shared with IRS
- Privacy allowed
- Shareholders are not listed with the state
- Best Asset Protection Laws
- Nominee officers are legal
- Citizenship not required
- State tax not being considered
- Wyoming draws little attention
- No Nevada "Stigma"
- Lower Startup Costs
Disadvantages of LLC
- Limited Life: Corporations can live forever, whereas a LLC is dissolved when a member dies or undergoes bankruptcy.
- Going Public: Business owners with plans to take their company public, or issuing employee shares in the future, may be best served by choosing a corporate business structure.
- Added Complexity: Running a sole-proprietorship or partnership will have less paperwork and complexity. A LLC may federally be classified as a sole-proprietorship, partnership, or corporation for tax purposes. Classification can be selected or a default may apply.
By Wyoming and other state law in order to proceed with forming a llc, you need to prepare a written abstract detailing your llc purpose, the names of your initial Wyoming LLC members, the name and address of your Wyoming registered agent, the details of which will be introduced into the body of your LLC operating agreement and related Wyoming LLC formation documents assembled for application to the state of Wyoming.
The Facts on Wyoming's Tax Climate
Here are some basic facts on Wyoming's tax system and how it compares to other states:
Tax Freedom Day Arrives on April 13 in Wyoming
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2011, Wyoming taxpayers work until April 13 to pay their total tax bill, ranking it 11th highest in the nation. This is 1 day after the national Tax Freedom Day (April 12). The Tax Freedom Days of neighboring states are: Montana, April 5 (ranked 31st nationally); South Dakota, March 30 (ranked 46th nationally); Nebraska, April 12 (ranked 15th nationally); Colorado, April 8 (ranked 24th nationally); Utah, April 10 (ranked 19th nationally); and Idaho, April 3 (ranked 36th nationally).
Wyoming's 2008 Business Tax Climate Ranks 1st
Wyoming ranks 1st in the nation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: Montana (6th), South Dakota (2nd), Nebraska (43rd), Colorado (13th), Utah (17th), and Idaho (31st).
Wyoming Levies No Personal Income Taxes
Wyoming levies no individual income taxes, joining six other states with the same policy. This makes the tax environment in Wyoming very competitive compared to other states.
Wyoming Levies No Corporate Income Taxes
Wyoming, in addition to collecting no personal income taxes, collects no corporate income taxes. Only four other states (Nevada, Texas, South Dakota and Washington) join Wyoming in levying neither income tax.