It is understood in the business world that Wyoming is a state that is considered very friendly toward incorporation. This is due in large part to their positive laws covering incorporating, low fees, and low or nonexistent taxation at the state level, which allow for some effective asset protection strategies. There are many reasons a company would want to form its Limited Liability Company (LLC) in Wyoming. Below, we address the question: What does an LLC protect you from?
Corporate Veil
What is the corporate veil? This is what keeps the assets and liabilities separate from the assets and liabilities of the owners of an LLC. This is designed to protect LLC owners from direct financial risk from their business. The state of Wyoming provides its LLCs with specific criteria covering any reason the corporate veil would ever be pierced. This LLC protection does not apply to an LLC in Wyoming where fraud is present. Should this not be the case, and an LLC maintains corporate formalities, its corporate veil will not be pierced.
State Taxes
Individuals and companies in Wyoming do not pay state income tax. Requiring individuals or companies to pay any form of state income tax is not even a consideration for the future. This is because Wyoming has had a multiple-year state budget surplus. The fees to form an LLC in Wyoming are lower than in other states. This is also the case with any ongoing fees required to be paid to a state.
Continuance
A certificate of continuance is used when business owners move their company to another state. When companies move their business into Wyoming, the state will create a legal fiction. The corporation will be treated as if its location had always been in Wyoming. An LLC can retain its original incorporation date after it becomes a Wyoming LLC. This also means a company can become an LLC in Wyoming and not lose any of the benefits associated with the longevity and continuity of operating as a business.
Superior Asset Protection
The laws in the state of Wyoming provide only one remedy for creditors of LLC owners, and that is a charging order protection. This is an order issued by a court. It will direct a company to forward all distributions intended for the LLC owner to be sent to a judgment holder. This makes it more difficult for a creditor to collect a judgment. A creditor will not be able to force an LLC owner to sell any part of their ownership interests in the business. This also means a creditor will only be able to obtain distributions directly from the LLC after they’ve been sent to a judgment holder. This provides an LLC better leverage in seeking a settlement with their creditors. This type of Wyoming asset protection is also extended to a single-member LLC that has only one owner.
No Citizenship Requirements
There are no citizenship requirements associated with forming an LLC in Wyoming. It’s possible to open an LLC in Wyoming and have a residence at any place in the world. It is not required for LLC owners to be citizens of the United States. There are a number of Wyoming mail forwarding services that are a cost-effective way to give an LLC the presence necessary in the state.
Perpetual Existence
An LLC formed in Wyoming is a legal entity separate from its owners. It has its own perpetual life and existence. It is possible for an LLC formed in Wyoming to be in operation for a long time and pass on to a number of future generations. It can be doing business until the day it is dissolved. It’s possible to make shares in a Wyoming LLC a gift, sold or something that is given to others.
With LLC asset protection in mind, it is easy to see why Wyoming is the clear best state for LLC incorporation.