Why Incorporate in Wyoming?

By Michael Banner - May 31, 2013     

So what is all the bluster about Incorporating a corporation or forming an LLC in Wyoming?  Why would you want to form an INC or LLC in Wyoming when you’ll never set foot in Wyoming?  Heck, maybe you don’t even like rodeos!  Is it true that you can form and operate your Wyoming Corporation or Wyoming Limited Liability Company and hide from the your home state's tax collector or your ex in blissful anonymity?

 
I will attempt to give an overview of the main reasons why a Wyoming INC or LLC might be a good idea for some, as well as dispel some of the misunderstandings too.

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Low costs

One of the best reasons for forming your entity in Wyoming is the low fees.  The initial formation costs are average to below average ($100).  Even less expensive are the annual costs to maintain your entity of only $50 per year, assuming your entity has less than $250,000 in assets in Wyoming.  So, regardless of your INC or LLC’s income and/or profit, your state annual fee (when you file an annual report) is a fixed $50 per year.

You will also need to maintain a commercial Wyoming registered agent.  But, this is only $99 per year ($29 up front) when using Smallbiz agent’s Wyoming agent service.  So, your annual costs to maintain the entity are as little as $149 per year.

To find out how much it would cost you to form a corporation or LLC in Wyoming click here.

 

Not over taxed in Wyoming

Along with the low minimum fee, Wyoming only taxes entities based on the assets retained in Wyoming.  Consequently, if your entity retains below the minimum asset value in Wyoming, the annual state fee (or tax) is only $50.  Additionally, the annual report filing process is very simple,, often taking just a few minutes.  Annual reports can be filed directly online at the Secretary of State’s website (see Wyoming Research page for details), or they can be printed and sent in to the Secretary of State. All making for minimal state paperwork.

 

Being Anonymous

Probably one of the most discussed reasons for setting up a Wyoming entity is because it affords the owners/officers anonymity.  But just how anonymous are you when you set up your INC or LLC?  To answer this, we need to examine the Initial Filing, the Annual Filings (or Annual Reports), and Other Disclosure requirements

 

Initial Filings

INC & LLC initial formations do not require disclosure of any people involved in the entity, with only two exceptions: 

Ø  Wyoming Registered Agent – This of course can be a third party registered agent company, like Smallbiz Agents, Inc

Ø  Incorporator/Organizer – This can be someone other than the principals of the INC/LLC.  In fact, SmallBiZ Filings will provide the Incorporator/Organizer of each filing, unless otherwise discussed.

 

Annual Filings

All Wyoming Corporations and LLCs must file an annual report on the anniversary month of their formation.  We’ve already discussed the low cost of $50, but what’s also good is the minimum amount of information that is required.  Wyoming LLC’s don’t require disclosure of any member/manager info on the annual report.  Wyoming INC’s do require disclosure of at least one officer or director.  However, this can be a Vice-President for instance, with limited authority in the corporation.

 

Regardless of type, the principals of a Wyoming formed INC or LLC can be almost completely anonymous from public prying eyes.

 

Other Disclosures

Wyoming registered agents are required by statute to maintain records of the INC or LLC, which they can be compelled by the Secretary of State to turn over, but the SOS cannot make the information public and can only release the information upon a court ordered subpoena. 

 

Pro-Business

One of the best reasons why we feel Wyoming is a great state to form and operate an entity is because it is pro-business.  Besides the low costs, no corporate or personal income tax, & anonymity; the state has created corporate and LLC laws which are favorable to corporations and limited liability companies.  

A
dditionally, the Secretary of State (the agency that forms INCs & LLCs) is very easy to work with, unlike its cousins on the East and West Coasts.  The state even makes it simple to move your entity from another state to Wyoming, which is something a lot of other state agencies have not done.   Finally, forms are available for download and their staff make the process of changes, continuance, corrections, or dissolutions simple.

 

Move your Charter to Wyoming

As mentioned above, one benefit Wyoming offers is a formal process to move your charter from another state to Wyoming (assuming your formation state allows this). 

Wyoming Continuance is a simple process that requiring you pay the same state fee with your articles of incorporation or organization, along with the following additional documents:

Ø  A Certified Copy of Articles form formation state

Ø  A resolution that all agree to the continuance

Ø  A copy of a dissolution that you are planning to file in your formation state


Once submitted, assuming the name is available in Wyoming, within a few

days your entity is now a Wyoming entity! 

Please note:  continuance filing DOES require disclosure of your entities members/managers (for LLC’s) or officers/directors (for INC’s).

 

Foreign Authority

Most Wyoming INC’s and LLC’s are operated in states outside of Wyoming.  In fact, the vast majority of Wyoming Corp. or LLC owners/officers never set foot in Wyoming. This is usually a good thing, since most people reside in a state with higher fees or taxes.  However, once the INC or LLC is selling in another state and it has physical operations there, it is required by that “foreign” state to register the INC or LLC for the “authority to do business”

 in that “foreign” state.  This is known as Foreign Authority.   Check with your tax professional to better decide if your state, due to your entity’s operations would be required to register your Wyoming entity there.

 

If you do need to file for the authority to do business in another state, Wyoming makes it cheap and easy, allowing you to generate a new certificate of good standing online for free!  Only one other state does this (Colorado).

 

Warning

Beware, taxing agencies in some states like California have become very aggressive towards residents owning and operating businesses with out of state entities that have not been also registered in their state.  California Franchise Tax Board has gone after many entities recently, in spite of their not having physical presence in California, demanding a $2800 penalty and back franchise taxes.  Many of these cases are being fought in court, but it would be wise to check first with your accountant or tax advisor to find out which areas the Franchise Tax Board or your state’s equivalent agency is going aggressively after out-of-state companies. With the push for laws like the Internet Sales Tax, there is a big push for making put-of-statecompanies responsible for taxes of the residents of their customers and their owners.

 

 

There are many reasons why a Wyoming corporation or limited liability company makes sense.  Whether it is the low costs, minimal filing requirements, anonymity, its pro-business attitude, or the ease of obtaining documents to file for foreign authority in another state, Wyoming provides lots of pluses and very few minuses.  It is no wonder why so many are looking at the State of Wyoming to form their new INC or LLC.
 

About Michael Banner
  CEO & Founder of SmallBiZ.com, created over seventeen years ago to help small business owners simplify the process of starting & managing their small businesses. SmallBiZ.com now serves over 10,000 businesses per year with various filing and subscription services; in addition to the 1000's of daily visitors to www.smallbiz.com, accessing free services, help pages, & educational videos & webinars.


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