Blog

Why so much interest in Wyoming limited liability companies (LLCs)?

Posted by Clyde Hutchins | Sep 08, 2016 | 0 Comments

Why so much interest in Wyoming LLCs?

When I ran the Attorney General's consumer protection unit in Wyoming, I was involved in many, many investigations and enforcement actions against Wyoming limited liability companies (LLCs) under the Consumer Protection Act. I would estimate that 99% of the Wyoming LLCs that I saw were owned by non-residents of Wyoming. They were owned by residents of California, Arizona, Florida and other states. Many of them were even owned by foreigners. I started to wonder what the big draw was to Wyoming LLCs.

I soon learned that there were several factors making Wyoming LLCs attractive to non-residents. Here are the factors:

1) Secrecy - The Wyoming LLC form provides secrecy for the owners. By operation of the Wyoming statutes and rules, a registered agent can form a Wyoming LLC and then transfer it to the purchaser in secret. The registered agent's name will show up on the public records at the Secretary of State's Office, but the purchaser's name will not show up. Unless voluntarily divulged, the Secretary of State's Office will not know the identity of the real purchaser of the LLC.

There is a rule that requires that the registered agent maintain the name and contact information of a natural person associated with the LLC (i.e. a "contact person"). However, that information is not voluntarily provided to the Secretary of State's Office, and never provided to the general public. The Secretary of State can request that information from the registered agent or learn of it through an audit of the registered agent. The information can also be obtained through a subpoena to the registered agent.

Providing even more secrecy, the "contact person" does not have to be the purchaser, owner or member of the LLC. The "contact person" can be the attorney for the LLC. This creates a double layer of secrecy as the attorney may assert the attorney-client privilege if asked to divulge the name of the true owner of the LLC, and keep that information secret even from the Secretary of State's Office.

2) Tax Implications - Wyoming has no corporate income tax. So, many people assume that if they form a Wyoming LLC no state taxes will be paid for income earned from that LLC. I am not an expert on taxation issues, but I do not think that the tax issue is so straightforward.

3) Ease of formation - Many Wyoming registered agents are very efficient at forming LLCs. They can form a LLC in a matter of just a few days. And they can do everything online, through email communications. This is very attractive to those in a rush to get their business going.

4) Low Ongoing Costs - The formation fee and annual filing fees are relatively low for Wyoming LLCs. For those wanting to maintain a low overhead, this is a very attractive feature.

5) Favorable State Law - Wyoming was the first state to allow for the formation of Wyoming LLCs. It has favorable state law protecting and limiting the liability of the members of a LLC. For those seeking to truly limit their liability, the Wyoming LLC is on the short list of entities to choose from.

6) Office Location - Many registered agents specialize in providing "virtual offices" for their Wyoming LLC clients. When the registered agent forms the LLC, it gives the LLC a street and mailing address in Wyoming. This feature helps those who are engaging in commerce online from their homes. LLC owners can avoid having their home address made a public record. Instead, the registered agent's address is given as the LLC's address. 

These seem to be the most common factors that lead people to favor Wyoming LLC's over other states' LLCs. During investigations and interviews I heard many non-resident LLC owners voice these factors as the basis for choosing a Wyoming LLC over their own state's LLC.

About the Author

Clyde Hutchins

Clyde Hutchins is the founder of Harmony Law. Prior to opening Harmony Law, Mr. Hutchins worked in the Wyoming Attorney General's Office for several years where he developed a strong consumer protection enforcement unit. In that position he led over 120 investigations and enforcement actions under the Consumer Protection Act. He worked on numerous joint cases with the Federal Trade Commission and other states, including Colorado, on consumer protection matters. Mr. Hutchins is also a contributing author to Consumer Protection Law Developments, Second Edition. Previous to his work in the Attorney General's Office, Mr. Hutchins was in private practice in Anchorage, Alaska where he was the chief litigator for a firm. Mr. Hutchins represented municipalities on various matters. Mr. Hutchins provided counsel to businesses and investment advisors regarding compliance with securities laws. He was also a bond lawyer and worked on municipal financing matters. Prior to that, Mr. Hutchins practiced civil litigation with a law firm in Cheyenne, Wyoming. Mr. Hutchins devotes his spare time to his family, traveling and enjoying the great outdoors.

Comments

There are no comments for this post. Be the first and Add your Comment below.

Leave a Comment

Comments have been disabled.

Member of the National Association of Consumer Advocates

Naca badge medium blue grey 0

Harmony Law is one of the few law firms in Colorado and Wyoming that focuses on consumer law. Mr. Hutchins is a member of the National Association of Consumer Advocates and state chair for Wyoming. If you have a consumer law issue, please feel free to call 970-488-1857 and speak with Mr. Hutchins.

Explore your Options

It is difficult to make important decisions without knowing all your options. Explore your options with Harmony Law and you will be better equipped to make the right decision in your legal affairs.

Menu