US Business Structure
When you start a business, you are responsible for choosing a business structure. One structure you can select is a limited liability company, or LLC. Unlike some other business structures, you can form an LLC in any state, regardless of your physical business presence. With so many states to choose from, it can be difficult to determine where to establish an LLC.
A limited liability company (LLC) is a business structure in the U.S. that protects its owners from personal responsibility for its debts or liabilities. Limited liability companies are hybrid entities that combine the characteristics of a corporation with those of a partnership or sole proprietorship.
Members and Managers
An LLC structure is the simplest form of legal business structure for business operations. In this LLC setup, the owner (Member) would designate persons as officers and directors of the firm (Managers). An LLC acts in a way that offers advantages to a company for taxes, profits and losses for its owners. LLCs can either be (i) Single-member; or (ii) Multi-member.
Owners of an LLC have financial and legal protection similar to corporations without double taxation. Plus, owners are not responsible for business debts. If the business owes money and can’t pay, only their business assets are at risk.
In certain U.S. states (for example, Texas), businesses that provide professional services requiring a state professional license, such as legal or medical services, may not be allowed to form an LLC but may be required to form a similar entity called a professional limited liability company (PLLC).
The owner of beneficial rights in an LLC is known as a “member,” rather than a “shareholder.” Additionally, ownership in an LLC is represented by a “membership interest” or an “LLC interest” (sometimes measured in “membership units” or just “units” and at other times simply stated only as percentages), rather than represented by “shares of stock” or just “shares” (with ownership measured by the number of shares held by each shareholder). Similarly, when issued in physical rather than electronic form, a document evidencing ownership rights in an LLC is called a “Membership Certificate” rather than a “Stock Certificate”.
US LLC Tax Advantages
Pass-through income taxation
LLC is a type of unincorporated association distinct from a corporation. The primary characteristic an LLC shares with a partnership is the availability of pass-through income taxation. As a business entity, an LLC is often more flexible than a corporation and may be well-suited for companies with a single owner.
Although LLCs and corporations both possess some analogous features, the basic terminology commonly associated with each type of legal entity, at least within the United States, is sometimes different. When an LLC is formed, it is said to be “organized”, not “incorporated” or “chartered”, and its founding document is likewise known as its “articles of organization”, instead of its “articles of incorporation” or its “corporate charter”. Internal operations of an LLC are further governed by its “Operating Agreement”, rather than its “Bylaws”.
Which State to form your LLC
You can form an LLC in any state regardless of where you are based; however, it likely makes most sense to form an LLC in the state where you live. Many businesses form LLCs across multiple states, but you must be aware of each state’s requirements for establishing and maintaining an LLC.
US Tax Identification Number
EIN – Employer Identification Number
The SS4 is the IRS form required to obtain an EIN (Employer Identification Number, frequently called a Tax ID number). The EIN/Tax ID number can be thought of as a Social Security Number for your business. It is usually required to open a bank account in the name of the business and to properly pay and account for any wage/payroll employees of your company. Our Firm will obtain your federal EIN electronically and have it back to you via email within one business day. Because an EIN is a federal tax code for business entities, a new EIN is generally not required when a sole proprietor is moving to another state.
Start your Business LLC in Wyoming
When you look into starting an LLC, you might think you can only create an LLC in the state you live or do business in. However, you can actually form an LLC in any state, regardless of where you’re based. A foreign LLC is an LLC that is formed in one state but wants to carry out business in another state.
Each state has different laws for LLCs. Some states are more strict, while others are more lenient. And states might offer financial advantages and other perks for LLC formation.
Advantages of Incorporating a Business in Wyoming
Wyoming is a leading incorporation domicile due to low fees, no taxes, simple filing and maintenance requirements along with allowing anonymous corporations. Wyoming is a leading incorporation provider with low fees and no corporate income taxes.
While each business is different, a few states stand out as excellent options for starting a business. Wyoming, Nevada, and Delaware are especially ideal for incorporating your business due to their business-friendly rules, enhanced privacy, and knowledgeable courts.
The main benefits of forming a LLC in Wyoming are:
No state income tax on limited liability companies. Asset protection and limited liability. LLC assets are safe from personal liabilities. Charging order protection extended to single member LLC’s.
Why is Wyoming a tax haven?
Instead of directly putting assets in a trust, families can own assets through a Wyoming limited liability company, which is then owned by the trust. This provides a double layer of secrecy and protection. Some families form a second company to oversee the trust.
How is a Wyoming LLC taxed?
Moreover, because Wyoming also doesn’t have a personal income tax, LLC members generally will owe no state tax on income they earn from a Wyoming LLC. The only tax for LLCs, mentioned above, is the annual license tax of $50 or a small percentage of the value of your LLC’s assets located in Wyoming.
Wyoming LLC Benefits
– Privacy and anonymity
– No LLC members are listed with WYO
– No LLC managers are listed with WYO
– No requirement to store the LLC operating agreement in state
– No requirement to come to Wyoming
– You do not have to be a resident of Wyoming to own a WY LLC
– The best charging order protection in the country
– The ability to have a closed LLC
– No fees based on capital contributions
– Ability to open a bank account anywhere
– No need to come to Wyoming
– No LLC operating agreement required, but you should have one
– Fees not based on number of members or owners
– No personal or corporate income tax
– Diverse options for membership protections and controlling interests in LLC membership
– Wyoming LLCs can be formed instantly. No waiting times.