Registering Business in Wyoming
Wyoming is known as one of the three incorporation-friendly states, the other two being Nevada and Delaware. The popularity of Wyoming as a "corporate heaven" in enhanced by the very liberal Corporation Law which enables companies to be established quickly and with the broadest possible powers permitted under the law. There are little or no restrictions on any consequent business activities.
To learn more about specific advantages of incorporation in Wyoming please consult our article Advantages of Incorporating in Wyoming.
Who Should Register a Company in Wyoming
It is safe to assume that vast majority of companies registered in Wyoming have no physical connection to the state whatsoever. As far as our statistics go, Wyoming holds the record of new entities being formed, and it is popular both amongs domestic and foreign clients. In fact, Wyoming is perfect for foreign clients, looking to establish remote business in the U.S. (one with no physical connection), and is one most our foreign client indeed choose.
Wyoming entities can be useful tools for internet (ecommerce) businesses, remote technical support and outsourcing, export/import, etc., especially if such businesses have only virtual presence in the U.S., and they can be used for the purpose of asset holding (especially intellectual property), and generally as holding companies for other business entities.
Migration From Nevada To Wyoming
For years Nevada was extremely popular state to form companies with wide range of purposes, rivaling Delaware as the incorporation heaven of America. However, recent political and fiscal developments in Nevada, which brough introduction of expensive Business License and Initial List filing requirements, as well as outrageous renewal fees and rough treatement of delinquient businesses, have significantly reduced the attractiveness of the state.
As a result for the last several years there was a steady outflow of companies from Nevada through the process of domestication, with Wyoming being the primary beneficiary of this process. No positive change is expected any time soon, and this is one of the reasons we often recommend our clients, looking to incorporate in Nevada, to consider Wyoming instead.
Who Should Not Register a Company in Wyoming
Not everyone would benefit from registering their company in Wyoming. First, most technology companies would benefit from registering in Delaware, since professional investors such as VCs always prefer the familiar laws of Delaware over any other state.
Then there is a question of nexus - if your business is physically located in another state, and you think that by registering it in Wyoming you can escape registration in your state (for example, notoriously expensive California), we have to disappoint you. Even though your business will be organized under the Wyoming law, you will still have to foreign qualify it in your state, which in other words means you will have to maintain two entities instead of one.
Businesses Physically Located in Wyoming
If you decided to open a new business that will be based in Wyoming you can choose from several options:
- Sole Proprietorship: Sole owners of Wyoming-based businesses could opt for sole proprietorship as the easiest form of business organization. Not the most recommended, given the liability a sole proprietor assumes as a result of owning a business. No registration with Wyoming Secretary of State is necessary, but it is recommended to register a Trade Name, and if you plan to hire employees then also obtain an EIN.
- Single Member LLC: Limited liability company, as the name suggests, is an entity that allows its owners to limit the liability of the business to the entity itself, shielding the owners' personal assets. This type of entity is recommended for most small businesses.
By default your LLC will be taxed as "disregarded entity", meaning you will file your LLC tax return as part of your personal tax return. Keep in mind though - LLC is a flexible entity, which means you have the option of electing it to be taxed as S-Corp (assuming you are a U.S. person) or C-Corp. Learn more about LLC here, and about the details of forming LLC in Wyoming here.
- Corporation: You can also form a corporation and be a sole shareholder with 100% of all shares. Corporations have more formalities than LLCs (for example in Wyoming you are required to have bylaws and maintain minutes of meetings in corporate records), but provide similar limited liability protection. That's one of the reasons this entity type is often more suitable for bigger companies, or those who seek major investment.
Corporations can be taxed as S-Corp or C-Corp, with each form of taxation having its pros and cons. Keep in mind, you can elect your corporation to be S-Corp only if you, as the sole shareholder, are a U.S. person.
Learn more about corporations here, and about the details of incorporating in Wyoming here.
- General Partnership: Like sole proprietorship, this entity type does not require registration with the Wyoming Secretary of State, but it also does not protect the owners from business liability, and therefore is usually not recommended. A General Partnership needs to register a Trade Name, and obtain an EIN.
- Multiple Member LLC: like Single Member LLC for sole owner, Multiple Member LLC is often the entity of choice for small and new businesses with more than one partner.
- Corporation: Since corporation can have many shareholders, and transfering ownership is relatively easy (though share transfer) corporation might be a good choice of entity for business with partners.
Keep in mind though - S Corporations are limited to 100 shareholders who must be physical U.S. persons. That means corporations owned (partially or fully) by non-U.S. persons or legal entities, cannot be elected as S-Corp, and therefore subject to double taxation of an C-Corp. In cases like that it would be recommended to consider choosing LLC instead.
- Limited Partnerships: Limited partnerships come in different forms, depending on the state (LP, LLP, LLLP). Though Limited Partnerships have their own purpose and place, for most cases we believe an LLC would serve its owners well enough, therefore at this point we do not cover Limited Partnerships.
Existing Out-of-State Companies
An existing company registered in another state or country (called "foreign corporation", "foreign LLC", etc) looking to conduct business in Wyoming might be required to foreign qualify in Wyoming. This rule typically applies to companies looking to open a physical branch in Wyoming, lease an office or warehouse, hire employees, etc.
"Foreign" businesses that do not create "strong nexus" by moving physically to Wyoming might still be required to obtain Sales & Use Tax License from Wyoming Department of Revenue if selling taxable products or services using local dropshippers.
Existing Wyoming Companies
Companies registered in Wyoming enjoy from a wide spectrum of services provided by the Wyoming Secretary of State and Wyoming Department of Revenue. Such services include but not limited to:
- Certified copies of company documents
- Certificate of Good Standing