If you are thinking of incorporating your business in Wyoming, it’s a very good idea. That’s because Wyoming has the most business-friendly tax system of any state. Thanks to mining royalties, there are no state personal or corporation income taxes and probably never will be. Also, Wyoming is one of the only states with a budget surplus.
In addition, you don’t have to live in Wyoming at all to incorporate your business there. You can communicate by telephone. And for operational ease, one person can hold all director and office positions. Finally, a unique Wyoming procedure known as “continuance” means that out of state companies can become Wyoming corporations without having to move their operations.
Best of all, perhaps, Wyoming is one of the few low-cost incorporation states. You can do it yourself, or have it done for you relatively inexpensively.
Why Incorporate At All?
Incorporation reduces personal liability. Otherwise, law suits against sole proprietors and partnerships can mean the loss of homes, cars, and other personal assets like savings. There is unlimited personal liability in those cases. The shareholders of a corporation, by contrast, can usually only lose the money they put into the company and no more. Personal assets cannot be touched.
So incorporating helps make you as a person different from that of your business. Sole proprietors and partners are subject to claims of unlimited personal liability for business debt or law suits against their company. Creditors of the sole proprietorship or partnership can bring suit against the owners of the businesses and can move to seize the owners’ homes, cars, savings or other personal assets. Once incorporated, the shareholders of a corporation have only the money they put into the company to lose.
Here’s the information you need to incorporate in Wyoming:
Director and Officer Information
You need a minimum of one or more directors. You don’t have to disclose residences or ages. Directors must be listed in the articles of incorporation. Officers do not have to be listed there.
There are no filing fees based on the amount of shares or amount of their value.
You will need annual statements computed on Wyoming assets.
The license tax is based on the corporation’s Wyoming capital, property and assets as follows:
$50,000 or less — $25 from $50,000 up to $100,000 — $50 from $100,000 up to $500,000 — $100 from $500,000 up $1,000,000 — $200.
The maximum annual license tax cannot exceed $50,000 per year. And, of course, there is no income tax at all.
The Close Corporation
The Close Corporation is considered to be a Wyoming business advantage. It was created especially for small corporations with few stock holders who are usually related to one another.
Unlike traditional business corporations, which must:
- Conduct shareholder and director meetings
- Elect a board of directors
- Provide shareholders with written proposals for any major corporate action to be voted on in the annual meetings
Family corporations don’t have to do any of these things. They often make important decisions at home. They do not require a Board of Directors or detailed paperwork for daily operations. The Wyoming Close Corporation Law allows small corporations to forgo many traditional corporate processes.
Advantages of the Close Corporation
- Limited liability
- Ease of operation
- Costs reduced for legal, accounting and administrative fees
There are few disadvantages, as small and medium business which use this structure are delighted with the flexibility it gives them. However, they might have a problem with limited ownership transfer, which is prohibited except for stated circumstances.
1. Make sure your choice of company name is available. File all the initial paperwork with the Wyoming Secretary of State in the State’s filing office. These include the “Articles of Incorporation.”
2. Adopt the company’s Bylaws at an Organizational Meeting.
3. Obtain a Federal Employer Identification (FEIN) for your corporation and open a company bank account.
4. Get a local business license from the city or county where you will be doing business.
More Advantages to a Wyoming Incorporation
No information on shareholders is collected or shared with the IRS. Nominee officers and directors can be used to enhance privacy.
Wyoming has perhaps the strongest asset protection laws in the country with only minimum formalities.
These laws are designed to protect people from fraudulent or greedy creditors who would attempt to deplete their assets without cause. It is said that “every three seconds another American is sued.” Most of these claims are frivolous, aiming only to harass and squeeze money out of innocent people. It is often too late to take steps to protect your assets once you have been sued.
With incorporation, you are shielding your personal assets from business risks. You are protecting your home and bank account from claims against your business. This is much better than using a sole proprietorship which offers no asset protection.
Low Cost Incorporation
Compared to other states, it is inexpensive to incorporate in Wyoming. The filing fees are minimal, usually less than $100.
Wyoming has one of the country’s lowest annual fee structures. You may pay as little as $50 annually to continue your non-resident Wyoming entity if you and your employees do not live in the state.
Wyoming has no minimum capitalization requirements. Some states, such as Texas, insist that you put at least $1,000 into your entity on formation. However, in Wyoming you don’t have to pay extra filing fees for unlimited numbers of shares.