The state of Wyoming in USA is considered as one of the best business locations that offers excellent opportunities. It has a strong economy which offers benefits and opportunities to small businesses. A LLC can be incorporated in Wyoming through online or offline mode. Everything that needs to be done to form a Wyoming corporation can usually be handled online making the entire incorporation process highly flexible and time-saving. Wyoming makes business operations easy. Various options are available to get your business established in a variety of sectors or industries like manufacturing of durable goods & non-durable goods, personal services, wholesale, and retail trade, drop shipping business etc.
There are certain driving factors which lead to a favorable decision of forming & running business in Wyoming like excellent transportation infrastructure, low incorporation cost, less tax compliances with low tax burden when compared to other states like the District of Columbia, Illinois, and New York
Non-Residents Alien (NRA) can choose to run their business smoothly in Wyoming and can have strong privacy protections. It is most popular and least expensive state to form an LLC in US.
We can here discuss the main advantages of incorporating and starting a business in Wyoming:
Nil Tax Liabilities — Income Tax is not levied on any income in Wyoming benefiting NRAs in long run. Apart from Income tax, there are no inventory taxes, state franchise taxes, occupation taxes and value added taxes. That is the reason Wyoming is a popular corporate haven due to its absence of taxes
Asset Protection Law —Personal Assets of Business owner are outside the purview of Business Liability arising in case of winding up of business if they run business through an LLC in Wyoming. Strong laws for Asset Protection and Limited Liability attracts new entrepreneurs and small businesses. Also, as an officer or director, you cannot be held responsible for the debts of the corporation
Close Enterprises Structure — Running a small company like an E-Commerce company will not require holding annual meetings. Only one meeting is enough at the time of commencement of the business.
Unlimited Share Issue— Wyoming law allows to issue any number of shares in a Wyoming Corporation without any limit by making the proper entries in the Articles of Incorporation.
No Minimum Capitalization—There are no minimum capital requirements for a business corporation to start a business in Wyoming. This simply means that you can form your business with an amount as small as $1
One Man Army— One can enjoy great flexibility and control by starting business in Wyoming as various positions of officers, directors, treasury can be held by single person that give him freedom to take decision without any outside interfere.
Maintain Privacy for business— Wyoming offers the relaxation for entrepreneurs not to disclose any information about shareholders, officers or directors on government public portal which leads to ultimate privacy for the business.
No bureaucratic Restrictions— Wyoming is the right place for a business to grow freely without excessive regulation or rigid conformity.
Low annual fees — The annual fees in Wyoming are generally $62 and if the value of corporate assets located in the state exceeds $ 300000 than additional $.0002 per dollar of all business assets will be levied
Favourable Tax Exemptions—There are business incentive programs for new and existing businesses in Wyoming reducing the overall cost of incorporation. Top exemptions are: Manufacturing Sales Tax Exemption and Sales tax exemption on Electricity Consumption in Manufacturing.
US Citizenship not required—There is no restriction on foreign ownership of a corporation formed in Wyoming. To start a business in Wyoming, US citizenship is not required. That means a non-resident Alien solely can operate a business in the U.S to generate revenue and pay taxes. Also, while living anywhere in the world, you can still have a registered address for your business in Wyoming by taking services of registered agents.
Wyoming can be a preferred destination for business owners due to lack of personal income tax, inventory tax, corporate income tax, and franchise tax, excise tax, and reduced sales and property taxes.
In brief, Wyoming doesn’t require:
Personal income tax
Corporate income tax
Gross receipts tax
Disclosure of shareholders
Business or “per-capita” tax
Sales and property taxes are at the lowest in USA
A list of the members and managers of LLCs on the public record
Following are some general business compliances for an LLC in Wyoming:
Wyoming mandates a minimum age of 18 years for LLC owners.
The LLC shall file an annual report each year. The annual report in Wyoming is due by the first day of LLC’s anniversary month and is filed with WY Secretary of State. It can be completed online on the Secretary of State Website.
The LLC shall also file Form 5472 along with Form 1120 reporting transactions between the single-member (owner) and the LLC and/or between any other related party and the LLC.
Apart from the above, the single-member might be also required to file Form 1040NR reporting U.S. source income and expenses/deductions related to the US source income. The existence of a 1040NR filing requirements depends on:
Magnitude, scale, and continuity of U.S. operations. In other words, it shall be determined if the NRA is conducting any U.S. trade or business through the LLC.
Any U.S. source income. A determination shall be made to evaluate if income generated by the LLC is U.S. or foreign source one. NRAs are only taxed on U.S. source income. If no U.S. source income, then no U.S. tax liability.
If U.S. source income is found to exists, the tax treaty benefits available to the NRA shall be considered too.
It is always beneficial to file 1040NR as the amount withheld from the average non-resident’s payment is over the tax amount due, hence failing to file would means loss of refund.
Form W-8 BEN is also required to be filed by foreign individuals or entities to verify their country of residence for tax purposes, certifying that they qualify for a lower tax withholding.
Your LLC MUST have an EIN to be able to file these forms.
If An LLC is providing services remotely, there’s no income connected to the US as the owner of the LLC is not physically present in the US. This means that the LLC would owe no US tax, except for the annual registration fee in the state of LLC registration, and there is no requirement to file income tax either. But keep in mind, though you might not be producing your income in the U.S., you still could be liable to income tax on this income in your home country.
If you are selling goods in the US, you are required to report your business’s income to the IRS. If you are a non-resident, you report your US income on the 1040NR form which is then sent to the IRS.
If your LLC in Wyoming has employees, you need to register it as an employer with the Wyoming Department of Workforce Services for unemployment insurance and workers’ compensation accounts. Although there is no state withholding tax in Wyoming, employers are required to pay state unemployment taxes.
Non-resident aliens are only subject to U.S. taxation on income from U.S. sources. Foreign-sourced income received by non-resident aliens is not subject to U.S. taxation. This is unlike resident aliens who are taxed on worldwide income (income from both U.S. and foreign sources).
Generally, U.S.-sourced income includes all income received from U.S. organizations or individuals and compensation received from both U.S. and foreign organizations or individuals for work performed in the U.S.
Income is considered foreign-sourced if the location of the activity for which the payment is being issued is not in the U.S.
If the source is unclear at the time of payment, the payment is treated as U.S.-sourced income and taxed accordingly.