Wyoming was the country’s first state to institute a statute for Limited Liability Corporations (LLCs). But that’s not the reason why you should form a Wyoming LLC. What follows, however, are several good reasons.
Obviously, if your business is located in Wyoming or you do significant business in Wyoming, it would behoove you to get a Wyoming business license. The question then becomes whether to set up a Wyoming LLC or some other type of business in Wyoming.
The benefits of setting up an LLC in Wyoming as opposed to other business structures are that Wyoming LLCs offer:
- Lower fees – Setting up an LLC costs significantly less than incorporating.
- Better protection for assets – The business owners get personal protection against all present and future business liabilities and court judgments.
- Lower taxes – Single-member LLCs only get taxed at the sole proprietorship rate, whereas single-member corporations are still taxed as corporations. LLCs with multiple members can choose to be taxed at the corporate rate, which is less than the default partnership rate charged to LLCs otherwise.
Regardless of the number of members, LLCs also retain several other tax advantages of sole proprietorships, including profit distribution for owner compensation, getting taxed at a lower individual rate, and business loss pass-throughs to offset other owner income not related to the business.
Why Choose an LLC Over an S Corporation?
If you’re trying to decide between setting up a Wyoming LLC or a Wyoming S Corporation, consider that LLCs will let corporations or partnerships be owners. If you own another business or expect to, LLCs let you maintain over 80% ownership in a separate corporation.
For multiple owners, LLCs allow you to establish different ownership percentages and ratios for each individual owner. If you have or anticipate a large pool of owners, LLCs let you have more than 75 owners. They allow non-resident aliens to be owners. LLCs allow deductions for business losses to flow-through to the owner’s own personal finances, provided it reflects an actual investment by that owner.
S corporations do not allow any of these. Shareholders are limited to 35 people. Income cannot be spread to family members in order to lower an owner’s income tax obligation. Profits must be distributed evenly amongst all owners according to each one’s percentage of ownership.
To talk more about your options for setting up a business in Wyoming, contact Silver Shield Services today.