Looking for a business-friendly state to form your startup or scale your business? Wyoming may be the answer.
With the power to register your business in a different state, there's no reason to restrict yourself to your home state if it doesn't provide the best environment for growing your small business — not with states like Wyoming as an option. Business-friendly states like Wyoming have become more popular in recent years, and you don’t have to be a celebrity looking for a tax break to take advantage.
Small businesses can take advantage of Wyoming’s continuing growth and pro-business environment by establishing a Wyoming limited liability company (LLC) in the state, even if they aren’t physically located there. You can get a Wyoming virtual business address and appoint a registered agent to help manage business and legal correspondence.
Is it worth it? That depends on the specifics of your LLC and your goals. Here are some benefits of establishing a Wyoming business address so you can decide for yourself.
If you're looking for ways to save money on tax and direct it toward your small business or startup, Wyoming is your best bet. It's one of only two states (Wyoming and South Dakota) that don't levy both gross receipts tax and corporate income tax, meaning you'll have a lower tax obligation than you would in other states.
Here's a brief comparison between Wyoming laws and those of some other business-friendly states in the country:
Apart from saving money from not having to pay some business taxes, you can also save a lot from the state's low rates on the taxes it imposes. For example, the annual license tax, which enables you to remain in good standing with the state, is $60 for businesses with assets worth $300,000 or less and 0.0002% of the value of assets held by LLCs worth more than $300,000.
You can reduce your burden even further by electing to file taxes as an S Corporation (this is an option for both multi-member and single-member LLCs). When you file as an S Corp, the Internal Revenue Service (IRS) treats your business as a pass-through entity, allowing you to pass federal tax obligations to shareholders. You only need to pay tax on individual income (dividends from the LLC), not corporate income.
However, you can only elect to file taxes as an S Corp if your LLC has 100 or fewer shareholders, all U.S. residents.
You need to classify yourself as a C Corporation if you have more shareholders, or if some (or all) of them are non-residents. If you do, the IRS requires you to pay taxes on corporate income and shareholders' dividends. But, you can still register tax savings since C Corps typically have corporate tax breaks and lower maximum tax rates than S Corps.
Note: The S Corp or C Corp classification determines your federal tax obligations. While it doesn't directly impact your taxes in Wyoming (because the state doesn't impose state income taxes either way), it can reduce your overall tax expenditure.
Wyoming's privacy protection is another reason why LLC owners flock to the state. Whether you want to keep personal creditors away from business assets or your personal information away from the public eye, the state's anonymity provision has you covered.
The Wyoming Secretary of State doesn't require you to declare LLC members' information in the Articles of Organization. Instead, you can choose a registered agent to act as your LLC incorporator, eliminating a direct connection between you and your business.
Anonymous LLCs are hard to come by in the U.S. since only four out of the 50 states — Wyoming, Delaware, New Mexico, and Nevada — allow them. Consider Wyoming if privacy is vital for you.
You can form a limited liability company in any state in the U.S., even if you're not a resident. However, the process is challenging in many states. For example, in New York, you must file a notice of your LLC formation or copies of your Articles of Organization with a local newspaper for six consecutive weeks. While this also applies to residents, the requirement can be more restrictive on non-residents, as they are likely less conversant with New York regulations than residents.
Wyoming stands out from many states because of its low requirements. Non-residents form LLCs the same way residents do — they file Articles of Organization with the Secretary of State and pay the registration fee. The only extra requirement they need to meet is that they should have a registered agent with a physical address (not a P.O. Box) in Wyoming. Other requirements registered agents must meet include:
You can easily find registered agent services through virtual business address providers like Stable. With Stable, you get a permanent Wyoming virtual mail address as well as registered agent services, making it easy for you to stay compliant.
It's worth noting that not all mail service providers offer registered agent services. So, ask beforehand.
Wyoming helps small business owners maintain their profitability by imposing lower fees than other states. For example, the state's LLC filing fee is $100, and its annual report fee is $60 or 0.0002% of an LLC's assets (whichever is greater).
This is significantly lower than the cost of doing business in states like Alaska ($250 filing fee and $100 annual report fee), Massachusetts ($500 filing fee and annual report fee), Nevada ($425 filing fee and $350 annual report fee), and Tennessee ($300 filing fee and at least $300 annual fee).
As with any state, there are pros and cons to forming an LLC in Wyoming. Understanding both will help you make a well-informed decision on whether to set up or move your business entity there.
The major drawback to choosing Wyoming is, shockingly, its anonymity provision. Let's look at why it's not always a good thing:
For upstanding entrepreneurs, Wyoming's anonymity serves as mere exclusion from public records. It also protects them from creditors who may not want to adhere to the state's charging order protection, which prevents personal creditors from going after business assets.
However, some shady individuals take advantage of the anonymity to conduct illegal activities, such as creating shell companies for money laundering. Wyoming's privacy protections are so lucrative for unscrupulous characters that it receives tens and sometimes hundreds of thousands of shell company filings annually. It's also associated with cyber criminals and global hacks — hackers use Wyoming LLCs to make it seem like their internet traffic is coming from the U.S.
Unfortunately, these activities can impact the reputation of trustworthy LLCs and the state as a whole. Some investors may be unwilling to invest in Wyoming LLCs, and customers may be reluctant to associate themselves with these businesses. However, if you’re bootstrapping your business or have a well-established brand reputation with a loyal following, you may not be concerned with these drawbacks.
While there are concerns over the misuse of Wyoming's privacy protections, it remains one of the best states to form an LLC. Why? Because it has low state fees, allows non-residents to become business owners (quite seamlessly), and provides tax benefits.
Stable can help you if you decide to form your business in Wyoming. We offer registered agent services and permanent virtual addresses, enabling you to register and run your business in the state without getting a physical location. When you choose our services, our reliable support team and robust resource center will guide you through the process of changing your address.
Ready to create a new Wyoming business address or transition from your current one to a virtual address? Get started with Stable today!
