One of the calls I receive most often are from business people and investors around the country who have heard of the favorable legislative structure Wyoming has for limited liability companies, and they call asking me to set up a LLC for them here.
However, the threshold question is whether you have domicile or "presence" in this state. Let's take a look at what that means.
Domicile v. Residence.
In the legal world (meaning according to the IRS and state statutes) there is a big difference between one's domicile and one's residence. For one, you can have as many residences as you want, but can have only one domicile legally speaking. Your domicile is your home, which you treat as your fixed and permanent location. It is where you do your laundry. Where you started your business. It is your principal establishment.
Residence is more of a transient concept. It can be a temporary place of abode. For example, many people have residences or homes in more than one state. But that does not mean the home you have in another state is your domicile. Maybe you spend a few winter months in your home Arizona, but the rest of the year you live in your home in Wyoming. The home in Arizona is a residence but it is not your domicile.
Why does this matter and who cares?
Well, the state agencies in charge of raising revenue care very much. Your domicile's location will determine which state can tax your income when you pass away, and for our purposes in this article, whether your LLC is a Wyoming LLC. If minimizing or eliminating state taxes is important to you then you should make it clear that your domicile is in a low tax state. For an LLC in Wyoming, the Wyoming Secretary of State will require an annual report stating your domicile or principal place of business.
But domicile is a "question of fact". This means you need to look at your particular circumstances. In the majority of cases, determining domicile is easy. But sometimes it is a close call.
For the purposes of setting up a LLC in Wyoming, domicile is required and means that you must have a connection to this state. That connection is based on the assets you have in the state. For example, the procedure to set up a LLC in Wyoming is to file articles of organization. After that, each year, once your LLC is created, an annual report is required to be filed naming your principal place of business and your business assets. The annual report is a balance sheet required in the form of a worksheet, similar to a IRS form for partnerships, showing the items to be included in computing total assets. Those assets can be:
- loans to shareholders
- mortgage and real estate loans
- buildings and other tangible assets, real and personal
- depletable assets (minerals, precious metals)
- intangible assets
The filing fee for your Wyoming LLC is based on Wyoming statute 39-11-101(a), which is two tenths of one mill on the dollar (.0002) or $60.00, whichever is greater. For example, for assets under $300,000, the filing fee would be $60.00.
Assets with an assessed value are reported on the worksheet. "Assessed value" is the taxable value of an asset subject to Wyoming ad valorem tax as defined by the statute above (39-11-101(a) and as shown on the annual assessment schedule prepared by the County Assessor. Generally, assets which have an assessed value are reported on the company's balance sheet when you prepare your annual tax return or the "balance sheet value".
What if I own properties in several states?
You can create your LLC in Wyoming if you have property in a variety of states. Often, the best entity choice for you would be a Wyoming Series LLC. If you own investment real property, a Series LLC is built for protecting real property assets.
What is a foreign entity?
A foreign entity is one that is doing business in another state, and has its principal place of business in another state, but is now doing business in Wyoming. There is a separate process for filing for a Certificate of Good Standing and Certificate of Authority to do business in Wyoming which is filed with the Wyoming Secretary of State.
Computation of License Tax.
This "balance sheet value" is the end of the tax year value of an asset entered on the company's balance sheet (and as contemplated in W.S. 17-16-1630) and can be used on the worksheet. (The worksheet is one page). The assets, other than assessed value assets, are reported as follows:
- The financial information is required to be current as of the end of the LLC's fiscal year immediately preceding the date the annual report is executed on behalf of the company.
- Capital, property and assets does not include the value of the corporation's stock, net worth or the net equity of the company. Capital property and assets means total assets from the company's balance sheet for the year most recently ended, with three exceptions
- for depreciable assets use the assessed value for any asset having an assessed value and use balance sheet value less accumulated depreciation for assets with no assessed value
- for depletable assets like coal, silver or gold, use the assessed value of the gross product from the mine or mining claim
- for land use the assessed value not the balance sheet value.
- A company whose assets are in Wyoming and in other states shall use balance sheet values for any assets located in Wyoming (with the three exceptions described above).
Not a public record.
The worksheet required with your annual filing is not a public record under the Public Records Act, W.S. 16-4-203(d)(v) and therefore is not disclosable to the public. The figures submitted on the Secretary of State's annual report form are public information and will be disclosed. Please note: the annual report is two pages; the first is the Secretary of States report, which is public, and the second page is the worksheet, which is not public.
What else is required for a Wyoming LLC on an annual report?
The annual report for a LLC in Wyoming asks for:
- current registered agent (an in state registered agent)
- mailing address for the company
- principal office address for the company (in state address)
- email address
- and the required worksheet described above
The annual due date for the report is on the report, and so is the ID for the company.
Your domicile is a legal question.
How do you make sure your domicile is clear to an objective observer? Keep in mind that if your domicile becomes a legal question then the courts tend to look at the following facts:
- residence at death
- your proclamation of domicile in your will, trust or deeds
- ownership of real estate
- place of automobile registration
- place to which you return to from trips
- where you are registered to vote
- the address you use on tax returns and whether you file them as resident or nonresident
- location of bank accounts
- location of your valuable personal property
- where your pets are kept
- location of deceased family members
- membership in clubs and religious organizations
- location of political activity
- place of birth
- local newspaper subscriptions
The Preferred Entity for Business - The Limited Liability Company
Over time, the business entity known as the LLC has matured and become preferred over other entities in most situations. There are many reasons to choose a LLC as a valuable tool: its increased flexibility regarding operating agreements which are now more contractual in nature; increased privacy regarding matters such as the number and names of members and managers; management rights and distributions to members can be as determined in the operating agreement and can be per capita on an equal basis; a creditor's sole remedy against a LLC member's interest is the charging order, and many other reasons to make the LLC your entity choice.
So long as you make sure you have domicile, file the Articles of Organization with the Secretary of State properly, maintain your company, have a Wyoming practitioner write your Operating Agreement and show you how to document your company's records, the Wyoming LLC is a great tool for your business. I help my clients with Wyoming LLC's file their annual reports, and the other required documentation to help maintain limited liability protection for your assets and to avoid personal liability.
Please contact me at 307.200.1914; I would be pleased to speak to you about starting or maintaining your Wyoming LLC.