How much does it cost to form an LLC in Wyoming? Get a full rundown in our guide.
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Forming an LLC in Wyoming takes a bit of an investment. Aside from rent and labor costs, you also need to allot money for startup costs associated with forming an LLC in the state.
These costs can range from name reservation fees to business renewal costs. To help you in this effort, this article outlines the most common LLC startup fees in Wyoming.
But, before we delve into the cost of establishing an LLC in the state, you first need to understand LLCs and how this business structure can benefit you. Read on to know more about LLCs and the advantages and disadvantages of forming one.
LLCs in Wyoming
A limited liability company (LLC) is a business entity that protects its founders from personal responsibility for its debts or liabilities.
The limited liability feature is similar to corporations. Meanwhile, the availability of flow-through taxation to LLC members is a feature similar to businesses with a partnership structure.
LLCs don’t pay taxes on their profits directly. Profits and losses are passed through to members, who report them on their personal tax returns.
How Do LLCs Work?
LLCs are legal under state statutes. But, regulations associated with LLCs vary from state to state.
Several states don’t restrict the ownership of LLCs. This means that anyone can be an LLC member including individuals, foreigners, corporations, foreign entities, and other LLCs. But, entities like banks and insurance companies aren’t allowed to form LLCs.
LLCs can opt not to pay federal taxes directly. Instead, their profits and losses are reported on the members’ personal tax returns. But, if fraud is reported or if the company fails to meet its legal and filing requirements, creditors may go after the members.
Forming an LLC in Wyoming
Although the requirements for forming LLCs vary by state, there are some commonalities. If you want to establish an LLC in Wyoming, the very first thing you must do is to choose a name for your company.
You will need to document and file articles of organization with the state. These documents establish the responsibilities, liabilities, and other obligations of each member of your new LLC.
After filing the documents, you must submit paperwork and pay additional fees to obtain an employer identification number (EIN).
Pros and Cons of Forming LLCs in Wyoming
If you’re thinking of forming an LLC in Wyoming, you need to carefully weigh the pros and cons. Below is the list of advantages and disadvantages of creating an LLC in the state.
Unlike LLCs, corporations need to hold regular meetings that the board of directors and shareholders must attend. Corporations also keep written minutes and file annual reports with the state.
In contrast, the members and managers of an LLC don’t have to hold regular meetings, which reduces complications and paperwork.
No Ownership Restrictions
Some corporations have ownership restrictions. Some are not permitted to have more than 100 stockholders. These stockholders must also be a resident or citizen of the United States.
Meanwhile, there are no such restrictions for an LLC company.
Ability to Use the Cash Method of Accounting
LLCs are permitted to use the cash method of accounting. This means that revenue is recorded when cash is received and expenses are recorded when they are paid in cash.
This is not the case with some corporations, which use the accrual method of accounting. This means that revenue is recorded when a transaction is completed rather than when payment is received.
Ability to Place Membership Interests in a Living Trust
Members of an LLC can place their membership interests in a living trust. Meanwhile, doing this can be difficult for shareholders of certain corporations.
Ability to Deduct Losses
Active members or managers of an LLC may deduct their operating losses against their regular income to the extent permitted by law.
Meanwhile, shareholders of some corporations may not be permitted to deduct operating losses against their income.
Much like a sole proprietorship or partnership, LLCs function as a “pass-through” entity for tax purposes. This can avoid the case of double taxation. Members of an LLC can also opt to not pay unemployment insurance taxes on their own salary.
But, LLCs can also be treated as a corporation for tax purposes. This can be decided by the members upon the creation of the company.
Cons of LLCs
Profits Are Subject to Social Security and Medicare Taxes
In certain circumstances, members of an LLC may pay more taxes than owners of a corporation. This is because salaries and profits of members are subject to self-employment taxes.
In contrast, owners of a corporation have the same taxes only for their salaries and not profits.
Owners Must Immediately Recognize Profits
Some corporations don’t have to immediately share their profits with shareholders as a dividend. Meaning these shareholders are not always taxed on the corporation’s profits.
Meanwhile, the profits of an LLC entity are automatically included in a member’s taxable income.
Fewer Fringe Benefits
Employees of an LLC with fringe benefits must treat these benefits as taxable income. These benefits can include medical reimbursement plans, group insurance, medical insurance, and parking,
Although this can also apply to employees of some corporations, some of the employees aren’t mandated by law to report these benefits as taxable income.
Cost to Form an LLC in Wyoming
The Wyoming Secretary of State requires a $100 fee to file the Articles of Organization by mail. If you want to file the documents online, you have to pay $102.
Reserving a name for your business also requires a fee of $50. You also need to pay to file an annual report license tax, which has a minimum tax cost of $50.
These are just some of the payments you need to make when you form an LLC in Wyoming. Below is a more detailed breakdown of costs that you have to pay when forming and running an LLC.
LLC Formation Costs
There are several state filing fees you have to pay to form an LLC. The exact amount varies depending on where you’re establishing your business.
Filing Articles of Organization
To establish your LLC in Wyoming, you need to file Articles of Organization. This document is sometimes called “Certificate of Organization” or “Certificate of Formation.”
You can file Wyoming Articles of Organization with your state’s business filing office. In Wyoming, you have to pay a filing fee of $100. An additional $2 is incurred if you file the document online.
Reserving an LLC Name
If you’re decided on going through your plan to form an LLC in the state, you need to come up with a name to identify your LLC.
The name of your business shouldn’t be too similar to the name of an existing Wyoming limited liability company. You can reserve a business name you like for one or two months by applying for a business name reservation.
Filing for a name reservation application can cost $10 to $50.
Filing a Fictitious Business Name Application
You aren’t required to do business under the legal name listed in your Articles of Organization. You’re always allowed to use a different name.
This is called an assumed name, trade name, fictitious business name, or DBA for “doing business as.” But, this is optional and you can operate with your original LLC name if you desire.
In Wyoming, you have to visit the Wyoming Secretary of State website to make sure your assumed name isn’t used by another registered business.
You can register your assumed name with the Secretary of State. There’s a filing fee of $100.
Obtaining a Business License
In Wyoming, you need to apply for a business license, which costs $60. You can apply for a business license at the Wyoming Department of Revenue.
Ongoing Costs of Running an LLC
Once you’ve set up your LLC, you’ll have to pay taxes and other fees to keep your business legal. It’s your responsibility to pay taxes so it’s recommended that you create a reminder on your calendar.
It’s important to note that if you fail to pay these taxes, you could lose the legal right to do business in Wyoming.
Minimum Annual LLC Taxes
Depending on where you’re forming your LLC, you may need to pay special minimum annual LLC taxes. This is also called franchise taxes or fees. In Wyoming, you’ll need to pay annual license tax if you own an LLC.
Annual Report Fees
If you formed an LLC in Wyoming, you need to file an annual report and send it to the Secretary of State online. You can download a template of the report from the SOS website.
When filing the annual report, you’ll confirm existing information, including:
The business name
The registered agent
The LLC’s mailing address
The company’s principal office address or physical address
You must file your report by the first day of the anniversary month of your LLC’s foundation. For example, if you established your LLC on November 15, your annual report is due on November 1 every year.
In Wyoming, you need to pay a minimum license tax of $50. The license tax is paid in conjunction with filing your annual report.
Registered Agent Fees
A registered agent is an individual or a registered agent service provider that accepts legal papers on your LLC’s behalf.
Several LLC business owners employ a professional registered agent company to complete their legal requirements. These companies can charge $100 to $300 for their professional service.
Business License Renewal Fees
In Wyoming, you need to renew your business license every year. You need to pay a $50 license fee to keep doing business in the state.
Non-US Resident and LLCs
You don’t have to be a US citizen or a resident to form an LLC in the country. You can establish a US LLC as a non-resident online and have your own LLC business, a US business bank account, and access to US payments.
Being a non-US resident owner of an LLC comes with useful advantages. The biggest one is that an LLC allows taxes to be passed through to the owners.
This means that your LLC would not be subject to US tax as long as:
It’s owned by non-US tax residents
It has no presence or economic substance in the country
Your first step in starting an LLC is deciding on a company name. Your LLC needs to have a unique name and shouldn’t be similar to an existing Wyoming business.
Step 2: Name a registered agent
Before filing your Articles of Organization or Certification of Formation, you’ll need to have a registered agent who will deal with legal documents for your company.
Step 3: Submit the Articles of Organization
Once you have a registered agent, you can file a Certificate of Formation or the Articles of Organization with the Wyoming Department of State.
Step 4: Write up an Operating Agreement
You need to create an Operating Agreement that outlines the duties and responsibilities of the members of your LLC.
You’re allowed to tweak the provisions and other important regulations in your LLC operating agreement. But, you need to make sure to not include provisions that may conflict with state law.
Step 5: Apply for an EIN from the IRS
Once you’ve filed the documents and paid the required LLC filing fees, you can finally apply for an Employer Identification Number (EIN). This number functions as a Social Security number for businesses.
Once you’ve completed all these basic steps, you can begin doing business in Wyoming as an LLC.
You’re now ready to start an LLC in Wyoming. Contact Doola if you’re ready to begin the process today!
Doola can help you get the legal documents you need to get started. Our support can also help you stay legal year over year once you’re finally an LLC owner in Wyoming.
FAQsAbout Forming LLCs in Wyoming
What does tax-free LLC mean?
A tax-free LLC means that the LLC itself doesn’t pay taxes. It means that the entity doesn’t have to file a return with the Internal Revenue Service. Instead, the members of the LLC must include all profits and losses of the business on their income tax returns.
How long does forming an LLC in Wyoming last?
In Wyoming, after your initial payment, you don’t have to pay additional fees, licenses, or taxes. Your company will be in good standing for a year.
How do single-member LLCs work?
A single-member LLC is a type of LLC with a single owner. This entity is considered a disregarded entity, meaning it’s ignored by the IRS for tax purposes. The IRS collects the LLC’s taxes through the owner’s tax returns.
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