Reasons to Incorporate in Wyoming
There is no state tax for LLCs, so the profit is taxed only by members. When the members are Wyoming residents, they don’t pay personal state tax.
C Corporations are taxed based on their revenues which is calculated in the state’s annual license tax (also know as the franchise tax or fee). The tax is $50 or two tenths of one mill per dollar of assets ($.0002), whichever is greater.
Wyoming is one of the most affordable states when it comes to incorporating and maintaining the company. It has no State Business License, which will also save you few bucks. If you’re not Wyoming resident, you can use virtual office to be perceived as 100% Wyoming company or you can use any another address all around the world.
It’s highly recommended to get as serious Wyoming virtual office as possible - no PO BOX, as this is the thing banks look at when creating a bank account for your company.
One of the main reasons for forming LLC or C Corporation is protection of your personal assets. With Wyoming’s LLC rock solid asset protection you don’t have to worry about anything. There were cases in few states when one-person LLC was threatened as individual, not as an LLC. This won’t happen in Wyoming.
Don’t you want others to easily find what do you own? Shareholders of C-Corporation and members of LLC in Wyoming are not listed in any public records. Well, I used word “easily” by purpose.
Though your name is not publicly listed, if someone will be very, very motivated to find out who are the ones behind certain company, they will be able to. But don’t worry, your envious neighbor probably won’t be the one, unless he’s got either a lot of money or great contacts.
Wyoming vs Nevada
A few years ago we would have probably advised you to incorporate in Nevada, but after Nevada drastically increased their fees and approved Gross receipts tax Wyoming became certainly the cheaper option. Like I mentioned earlier, Wyoming doesn’t have State Business License.
Nevada does - $200 for LLC and $500 for C-Corporation. This comparison is great example of how it works in Nevada nowadays.
Wyoming vs Delaware
When it comes to Delaware, we can say that they are pretty much equal. Wyoming is few hundred dollars cheaper though - Delaware State Business License fee is $75 and Franchise tax is $175. When you ask investors where you should incorporate your next Facebook or Uber, they’ll likely tell you Delaware, thanks to its investor-friendly company structures.
When it Doesn’t Make Sense to Incorporate in Wyoming
Everyone wants to enjoy the benefits of Wyoming business-friendly culture, but sometimes it’s just not possible. Let’s say you own small shop in San Diego, CA.
Even when you incorporate in Wyoming, you still have to make foreign qualification for your company to be allowed to physically do business in California, which costs almost the same as forming new company in California. And, since you are California resident, even if your Wyoming LLC doesn’t pay any state taxes in Wyoming, you still have to pay California taxes, including personal tax, if you reside there.
My main advice when incorporating is: Form your company in the state where it’s doing business. Unfortunately, even if you incorporate your business in Wyoming when physically doing business elsewhere, you’ll be limited by the given state. In this case it’s better idea to say hello to Wyoming.
But if you’re not doing physically business anywhere (no properties, employees, etc in other state), Wyoming is great choice for you. Its cheap, business friendly and bureaucratic-free approach will save you from a lot of headache (and save you a lot of money too!).
About the Author
John Vanhara, Founder & CEO of IncParadise.com, which already incorporated over 10,000 companies. IncParadise.com is one of the biggest incorporators in the U.S.A. helping entrepreneurs to set up corporations and LLCs in all 50 states.
John strongly believes that successful companies can be built even with minimum investments and can produce substantial results in short period of time. Investor on Czech TV show Den D (Dragons' Den). Connect with him on LinkedIn or Twitter.