If you’re considering a Wyoming LLC for your new business, you may also be wondering why you should not form an LLC in Wyoming.
In certain cases, Wyoming might not be the best choice for you or your business activities.
Fortunately, if you’re concerned with opening a bank account, that isn’t necessarily going to be a problem.
That said, there are other concerns to consider. We’ll explore these concerns and instances where Wyoming might not be the best choice for you in greater detail below.
Feel free to use the table of contents to jump ahead to any sections that are immediately relevant to your search.
Table of Contents
- Why You Should Not Form an LLC in Wyoming
- Considerations Before Registering an LLC in Wyoming
- Frequently Asked Questions
- Ready to Explore Your Options?
Why You Should Not Form an LLC in Wyoming
Before diving in, it’s important to point out that the Wyoming LLC is one of the most popular US structures for foreign non-resident individuals. And, there are plenty of reasons for this. Not the least of which include low cost, enhanced privacy, and minimal reporting compared to other US LLC options.
Additionally, while certain US LLCs can struggle to open bank accounts or might have state specific requirements in order to do so, Wyoming LLCs don’t have these problems. In fact, our team helps foreign non-resident business owners open accounts for their US LLCs regularly. And, in most cases, the entire account opening process is completed 100% remotely.
Of course, if you’re reading this article, you’re probably already convinced as to why a Wyoming LLC could be a good fit for you. So, let’s look at some of the reasons why you should not form an LLC in Wyoming.
State of Registration vs State of Operation
If you are registering an LLC in Wyoming but plan to operate that LLC from another state (e.g. California), you will need to register the LLC locally as a “Foreign LLC”.
Failing to register your Wyoming LLC as a Foreign LLC results in operating the LLC illegally. As a result, the Wyoming LLC would have additional reporting requirements in California, or in any state that it operates.
Of course, this scenario describes a US LLC that has been registered to carry out business in the United States. However, most foreign non-resident business owners will not be impacted by this since their US LLCs typically do not have any economic activity in the US. We’ll discuss a few additional considerations that you should consider before registering a Wyoming LLC below.
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Considerations Before Registering an LLC in Wyoming
Cons of Forming an LLC in Wyoming
In addition to the above considerations, you may want to consider the following before registering a Wyoming LLC. Depending on your reasons for considering Wyoming, the options below could impact your choice.
As we’ve discussed elsewhere, banker familiarity can sometimes be an issue with a Wyoming LLC. This doesn’t impact account opening options, but it can result in more questions about why you chose to register in Wyoming and your ties to the state.
In other words, a Delaware LLC is a much more common corporate structure. So, not surprisingly, most bankers have opened an account for a Delaware LLC before. That said, Delaware is a higher cost LLC jurisdiction, does not offer anonymity, and has additional reporting requirements.
Wyoming LLC Privacy
Wyoming LLCs are technically anonymous because members are not required to disclose their personal information in the Articles of Organization. In other words, if you are a member of a Wyoming LLC, your information will not necessarily appear in any public records. However, the registered agent that you employ will have a record of your personal information, address, and contact information.
If you compare the above to New Mexico, you may find that a Wyoming LLC offers a less secure option in terms of anonymity. That said, New Mexico LLCs are often more challenging to open bank accounts for.
Wyoming LLC Taxes
A common reason that foreign non-residents consider registering a Wyoming LLC is because of the rumoured tax benefits. Well, in most cases, the rumours are true. As a pass-through entity, the Wyoming LLC will not be taxed in the United States as long as it does not have Economically Connected Income (ECI) in the US. You can learn more about this in our free US tax article.
That said, ECI is not as straightforward as many people will have you believe. In fact, many accountants even debate the treatment of common income sources for US LLCs claiming to be non-resident. With this in mind, you should speak with a qualified tax professional before making any decisions to ensure that your LLC will meet your specific tax objectives.
Frequently Asked Questions
Below are two of the most common questions that we receive from people looking to register an LLC in Wyoming. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.
How Anonymous Is a Wyoming LLC?
Wyoming LLCs are considered anonymous because members are not required to include their personal information the Articles of Organization. However, the information of the personal information of each member and manager must be provided to the Registered Agent of the LLC.
Do LLCs Pay Taxes in Wyoming?
Wyoming LLCs generally do not pay tax in Wyoming if they do not have operations in Wyoming. Additionally, like all US LLCs, Wyoming LLCs are exempt from federal tax if they do not have US Effectively Connected Income (ECI). That said, before making any decisions, it’s important to confirm the tax status of your Wyoming LLC based on the specific activities that you plan to engage in by speaking with a qualified tax professional.
Is a Wyoming LLC the Best Option?
Whether a Wyoming LLC is the best option will ultimately depend on the objectives of the business owner, the activities being carried out, and where the location of the LLCs operations. With this in mind, before deciding on which LLC is best for your business, you should consider all of the available options. You can start by using the other free resources available on this website.
Ready to Explore Your Options?
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