A limited liability corporation is one of the best legal structures to have, even if you’re a one-person business.
LLCs give you legal protections that you wouldn’t have as a sole proprietor. The big question that many business owners have is where to incorporate.
Delaware always comes up because of its court system, which is very business-friendly. However, one place that’s overlooked is Wyoming. Yes, Wyoming.
Believe it or not, a Wyoming LLC holds many advantages over other states. Read on to learn what they are and how to form an LLC in Wyoming.
1. No Income Tax
Wyoming is one of the few states that doesn’t have a business or personal income taxes. This is great news for businesses that are taxed as pass-through corporations, like S-Corps.
In most states, your business would have to pay state and federal taxes on your business income. You would collect a salary and pay income taxes on the money you earn from your LLC.
In Wyoming, you wouldn’t have to pay state income taxes on your business profits.
If you have a single-member LLC, that’s taxed as a pass-through income. You would show your profit and loss on your personal tax returns by using Form Schedule C. You’d still pay income taxes in the state where you live.
2. Business Liability Protections
When you’re a sole proprietor, you and your business are treated as one and the same in court. Should someone sue your business, your personal property would be at risk. You could lose your home, car, and savings in such a lawsuit.
People form LLCs because of the corporate veil, which legally separates you from your business. Most states require that you operate your business in a certain way or the corporate veil wouldn’t apply.
That’s called piercing the corporate veil. Wyoming’s laws are business-friendly, which makes it very difficult for someone to pierce the corporate veil and go after your personal belongings in court.
One thing that you do need to be aware of is if you operate your business or your residence is outside of Wyoming, a judge may defer to the laws of that state. However, most states will apply the law where your entity was formed, which would be Wyoming.
3. Easy to Form a Wyoming LLC
Sole proprietorships are the most common business entity because many people think it’s too hard or too expensive to form an LLC.
That may be true in some states, but not Wyoming. You don’t need to have articles of organization or an operating agreement to create a Wyoming LLC.
You can even transfer your LLC formed in another state to Wyoming.
Form a Wyoming LLC
It’s important to run your business like a business. The way to do that is to form an LLC. There are many benefits to form a Wyoming LLC over other states.
They’re easy and inexpensive to form and you have legal protections that you wouldn’t’ have in other states.
Ready for more business tips? Head over to the blog to see what the latest business news is.
