Wyoming LLC Benefits: The Complete Guide for Sole Proprietors

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Are you a sole proprietor evaluating which state is best to form your single-member LLC? Read this article about why a Wyoming LLC benefits and it is your best choice.

Learn about the benefits of a Wyoming LLC, keep reading.

Are you a self-employed sole proprietor or independent contractor with a growing business and researching how to create a single-member LLC?

Are you at the point in your research where you are trying to decide which state is the best state to form your LLC?

If you answered, yes, you’ve come to the right place.

Here at Falcon Expenses (the company that publishes this blog), we are familiar with the challenges of evaluating the most appropriate state for the formation of a single-member LLC that supports the needs of a one-owner business. This is because recently we went through the same process you’re going through right now. 

After much evaluation, we chose the state of Wyoming to form our single-member LLC. 

In this article, we go over the benefits of forming a single-member LLC in Wyoming. Also, we explain why Wyoming is the best choice (for most) to form your single-member LLC. 

In addition, in this article, we provide you with all the resources you need to form a single-member LLC in Wyoming. 

So keep reading.

What is an LLC?

An LLC is a Limited Liability Company. An LLC is the simplest of all legal business entities offered in the United States. The business structure, and legal entity of an LLC, is the most ideal structure for most small businesses. This includes small businesses such as growing sole proprietorships that need a more robust business structure to support their growing business. An LLC provides a one-person owned business with the liability protection and separate legal entity distinction needed for a growing business.


What is a single-member LLC?

A single-member LLC is a Limited Liability Company that only has one owner. Owners of LLCs are known as members.


Why Wyoming LLC

Believe it or not, Wyoming is the first state in the United States to offer the legal business entity of an LLC (Limited Liability Company).

However, why Wyoming LLC?

Wyoming was the first state to offer the Limited Liability Company (LLC) legal business entity. Therefore, this might explain why Wyoming has probably the most experience and favorable LLC and small business laws. 

But seriously, some of the main reasons to choose Wyoming to form your single-member LLC include the following:

Low cost (probably the cheapest)

No state taxes

Privacy

Wyoming LLC Benefits

No state taxes

There are no Wyoming state taxes on LLCs formed in Wyoming. In Wyoming there is not business income tax, and there is not personal income tax. Therefore, it’s likely you won’t have to pay state taxes if you form your single-member LLC in Wyoming. Historically, Wyoming has never had a state income tax on LLCs. 

Best Asset protection laws and limited liability

An LLC is considered a separate legal entity from its owners. Of course, if it’s formed properly. Wyoming offers members and owners of LLCs formed in its state a high level of liability protection.

What does this mean?

This means that your Wyoming LLC is responsible for its own debts and liabilities. Not the owners. Therefore, if your Wyoming LLC takes out a small business loan and misses a few payments, the bank can’t go after your personal assets to collect the money.

In addition, a properly formed LLC has its own tax ID number.

Lowest startup costs

The cost to form an LLC, including a single-member LLC in the state of Wyoming is one of the cheapest compared to other states. The initial formation costs to form a Wyoming LLC is $100.

Perpetual life

An LLC is a separate legal entity. In addition, an LLC exists until it’s dissolved. A sole proprietorship typically ends when its owner passes away. Therefore, with a Wyoming LLC, you build a brand that lasts into the future and can be passed down to future generations.

Build credit & raise capital

Because a Wyoming LLC is its own local entity and has its own tax ID number it can also build its own credit. A single-member Wyoming LLC can build credit by opening its own business bank account, take out a small business loan, or sell equity to raise money.

Are you interested in a small business loan?

Check out this article, How to Get a Business Loan Approved.

Owner privacy

Compared to other states, the privacy offered by a Wyoming LLC is near unparalleled. Therefore, a Wyoming LLC should be your top choice if privacy is important to you.

  • In Wyoming, LLC ownership is not listed on public record. 
  • Minimal Reporting and Disclosure obligations.
  • No requirement to list a manager or member with the state  for the duration of your LLC.

Ownership transferability

The ownership of an LLC can be transferred to another person. This is because an LLC is a separate entity from its owner. However, the ownership of a sole proprietorship cannot be transferred because the owner and the sole proprietor are one and the same.

Unlimited number of owners

This article is targeted at sole proprietors that want to form a single-member LLC. A single-member LLC is one person owned business. However, it is important to note that one of the benefits of a Wyoming LLC is that you can have as many business owners as you want. Therefore, if you plan on expanding your business to take on equity investors or to add partners or owners then an LLC provides an appropriate business structure to support this growth.

No citizenship requirements

You can live anywhere in the world and operate your single-member (or even multi-member) Wyoming LLC. In addition, you don’t even have to be a US citizen to form a Wyoming LLC. 

Wyoming LLC Cost

To form an LLC in Wyoming, including a single-member LLC, the cost of formation is only $100. The formation costs of a Wyoming LLC are one of the lowest in the entire United States. This is appealing to small businesses where keeping costs and expenses low are of great importance. 

The formation costs are just a one-time fee. The cost savings of forming in Wyoming go beyond the initial formation costs. The minimum cost of maintaining a Wyoming LLC is only $50 per year. The minimum $50 fee to maintain a Wyoming LLC is the fee to file a required annual report, which is submitted to the Wyoming Secretary of State, Business Division. A Wyoming LLC has no minimum tax or minimum franchise tax like many other states.

Wyoming has one of the lowest minimum maintenance costs.

Wyoming Single-Member LLC

How to Start a Wyoming LLC

Starting a Wyoming LLC is easy. Follow these simple steps to start your single-member Wyoming LLC.

It takes four simple steps to create a Wyoming LLC, with a fifth optional step.

Keep reading to learn about each step.

Step 1: Pick a name for your LLC

Step 2: Choose a Wyoming registered agent

Step 3: File your Articles of Organization

Step 4: Get an EIN

Step 5: Create an Operating Agreement (Optional)

How to start a Wyoming LLC, Each Step Explained

Step 1: Pick a name for your LLC

This is the fun part. As a sole proprietor, you’ve been limited to the brand name of your surname (unless your state offers a DBA). With a single-member LLC, you get to choose your brand name, and it can be anything, not just your name. For example, if you’re a graphic designer you could call yourself something like Elephant Designs. 

However, first, make sure your business brand name is available in the state of Wyoming. Otherwise, you might have to register a DBA for your LLC if your top choice name is already taken. 

Step 2: Choose a Wyoming registered agent

When you form an LLC in any state that is different from your home state, even if you’re living abroad, you need a place to receive mail in the state where your LLC was formed. Therefore, if form a single-member LLC in Wyoming you need a registered agent in Wyoming.


What is a registered agent?

A registered agent accepts tax and legal documents for your business. A Registered Agent is either a business entity or an individual. A registered agent is also known as a statutory agent or a resident agent. 


A registered agent in Wyoming costs a nominal fee of as low as $50 a month.

Step 3: File your Articles of Organization

An Articles of Organization is required for all LLCs before they can legally operate.


What is an Articles of Organization?

An Articles of Organization is a formal legal document that establishes an LLC at the state level. In some states it is also known as a Certificate of Formation.


Don’t get too discouraged about the idea of drafting an Articles of Organization. The State of Wyoming provides you with a Wyoming Articles of Organization form to fill out. It’s straightforward, easy to complete, and for more single-member Wyoming LLCs this Articles of Organization should be enough. However, if you feel that your single-member LLC has more complex needs then it might make sense to consult with a lawyer to draft a custom Articles of Organization. 

Step 4: Get an EIN

Some sole proprietors already have an EIN. You need a new EIN for your single-member Wyoming LLC. An EIN is a federal tax ID number like a Social Security Number. There are many benefits of an EIN number even if you don’t form an LLC.


What is an EIN?

An EIN is a 9-digit number issued by the IRS and used by the IRS for tax reporting. An EIN looks like and is very similar to a Social Security Number. However, instead of being used for an individual to be identified by the government and to file their taxes, it is used for a business.


Step 5: Create an Operating Agreement (Optional)

LLC’s are formed under state laws. Therefore, the requirements to have an operating agreement vary from state to state. Some states require a written operating agreement. The state of Wyoming does not require an operating agreement. This adds further support to why Wyoming is the best state for you to form your single-member LLC.


What is an Operating Agreement?

An Operating Agreement describes the operations of an LLC and describes the agreements between an LLC’s owner. The purpose of an Operating Agreement is to govern your LLC’s internal operations specific to the needs of the owner(s).


Articles of Organization vs Operating Agreement

Are you evaluating an LLC and confused about some new LLC terms and concepts such as Articles of Organization vs Operating Agreements?

If you answered, yes, then keep reading.

An Articles of Organization and Operating Agreement are two legal documents associated with Limited Liability Companies (LLCs). Sometimes people get confused or don’t even know what they are, to begin with. 

Articles of Organization is a legal document at the state level that informs the state of your plan to establish and run an LLC. An Articles of Organization is required in each state. 

However, an Operating Agreement is not required in all states. For example, you are not required to have an operating agreement if you have a Wyoming LLC. An Operating Agreement details how your LLC operates, it is the LLC’s version of corporate by-laws that are used for more complex legal business entities such as C Corps.

Do I need a new EIN to convert to an LLC from a sole proprietorship?

Yes! You need to get a new EIN number if you already have one for your sole proprietorship. In most cases, you cannot use the EIN you have been using for your sole proprietorship.

Do I need to open a new business bank account if I convert to an LLC from a sole proprietorship?

No. If you already have a business bank account most likely they will let you update your business account to reflect your entity change. Our advice is to contact your bank and ask.

Conclusion

Hands down, Wyoming is our top choice for sole proprietors that are switching entities to a single-member LLC, or even a multi-member LLC.

The benefits and conveniences of a Wyoming LLC are unmatched for sole proprietors and other small business owners looking to start an LLC. We highly recommend Wyoming as your state of choice for starting your LLC. 

Falcon Expenses Blog is are a community of freelancers, self-employed sole proprietors, and small business owners. Our community would love to hear your story. 

Why did you convert to an LLC?

Was the process challenging or straightforward?

What state did you choose to form your LLC and why?

Please share your answers in the comments below. Our community could really benefit from your story. 

You can also share it with us here, suppprt@falconexpenses.com.

Thanks for being a part of our community. 

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