What Are the Advantages of an LLC in Wyoming?
A limited liability company (LLC) is a legal entity you can form in Wyoming that combines the protection from liability provided by a corporation with the flexibility and simpler governance structure of a partnership. Wyoming LLCs are governed by the Wyoming Limited Liability Company Act.
Wyoming was the first U.S. state to recognize limited liability companies as a permitted entity form in 1977. Since that time, Wyoming has updated its laws numerous times to stay current with the latest innovations in structure and liability protections for members (owners) and managers of these companies. Wyoming, like Delaware and Nevada, provides a favorable legal environment for these kinds of businesses established in the state. Below are some of the advantages.
No Income Taxes and Lower Fees
Wyoming is one of only a handful of U.S. states that does not levy an individual or corporate income tax, but keep in mind that if your Wyoming LLC has operations in other states, the income generated in those states is probably taxable under those states’ tax laws.
Wyoming charges very low formation and maintenance fees compared to other states. Even LLC-friendly Delaware and Nevada charge higher fees than Wyoming does to form and maintain an LLC.
Simple Formation and Domestication Documents
The articles of organization you must file to form an LLC in Wyoming require only five pieces of information—the business’s name, its mailing address, the street address of its main office, the address of its registered office in Wyoming, and the name of the registered agent in that office. If the business will be categorized as a series, the articles must also include a statement to that effect.
Wyoming does not require an LLC to have a written operating agreement signed by the members, so a verbal agreement among the members qualifies as a valid operating agreement.
LLCs formed in other states can also transfer to Wyoming through a domestication process. Although other states offer this, Wyoming requires the filing of very simple articles of domestication that include the business’s name, its mailing address, the street address of its main office, the jurisdiction where it originally formed, the address of its Wyoming registered office, and the name of the registered agent.
Recognition of Series and Nonprofit LLCs
Wyoming is one of the states that permit series LLCs, which is an LLC with the ability to issue different classes or series of membership interests that each have separate assets and liabilities associated with them. The assets and liabilities of each series are segregated and protected from the assets and liabilities of the other series of membership interests. A series can dissolve and liquidate its assets while leaving the rest of the business intact.
Series LLCs are commonly used by companies that invest in real estate because they allow each series of membership interest to own different properties and sell interests to different sets of investors, so a separate entity is not required for each investment property.
Wyoming is also a state that permits nonprofit entities to organize as LLCs instead of corporations, but you should consider that the U.S. Internal Revenue Service, which grants 501(c)(3) status to nonprofits, has not yet fully accepted the use of nonprofit LLCs.
Protections from Creditors and Corporate Veil Piercing
An unpaid creditor of a member that obtains a judgment for a member’s debt cannot seize or foreclose on their membership interest in the Wyoming LLC or its assets. Wyoming law strictly limits the creditor’s remedies to a “charging order” against the member’s interest. While the order is in force, all distributions the member is entitled to receive must be paid directly to the creditor.
Wyoming law also limits the ability of an LLC’s creditors—such as lenders, landlords, and employees—to hold a member personally liable for the business’s debts, known as “piercing the corporate veil.” Like the shareholders of a corporation, members are generally not liable for the debts and obligations of the LLC. But there are circumstances when the law permits an unpaid creditor to proceed against the members’ personal assets, such as fraud or when the business fails to keep its finances separate from the members’ finances.
In Wyoming, before an LLC creditor can seize or place liens against a member’s assets, the creditor must prove multiple reasons why limited liability isn’t deserved. Crucially, the LLC’s failure to observe company formalities, such as convening member or manager meetings or keeping records of resolutions, cannot be the sole basis for piercing the corporate veil.
Limited Fiduciary Duties and Anonymity
A member of a Wyoming LLC has no fiduciary duty to the business or the other members because of his status as a member. In a manager-managed Wyoming LLC, a member has no duty of care and no duty of loyalty to the business.
Unlike in many states, the public filings for this type of Wyoming business, including the annual reports, do not require disclosure of the identity of the members and managers.
There are several advantages of forming an LLC in Wyoming, though you may want to consult an experienced attorney to make sure all the legalities are covered.
This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not Logovely, and have not been evaluated by Logovely for accuracy, completeness, or changes in the law.