Like Nevada, Wyoming does not impose a state corporate income tax or other taxes. And like Nevada, the key is you must have nexus in the state of Wyoming in order to qualify for the tax savings, otherwise your Wyoming Corporation or LLC will need to register (or qualify) to do business in the state where you live and operate your business. This will negate any tax savings that Wyoming may have to offer. Even an Internet business must determine where nexus is created in the operation of their business.

“The state of Wyoming does not levy a personal or corporate income tax. Wyoming does not impose a tax on intangible assets such as bank accounts, stocks, or bonds, either. In addition, Wyoming does not assess any tax on retirement income earned and received from another state. Further, there is no legislative plan to implement any of these types of taxes.”

Less State Fees

Wyoming’s initial state fees are less than Nevada’s. Wyoming does not require an initial list of officers or managers, which will save you $125, although Wyoming does require a state business license of $100. The key, however, is to evaluate the benefit of Wyoming as the “pivot point” for your business and financial future, not the fees involved. 

One of the biggest mistakes made every day is using as the main criteria for business decisions, “What do you charge”? Price can be the worst way to evaluate the quality and results of a product or service. True, it’s a factor… but there are so many more important ones. Saving $200-$300 on incorporating fees when you are going to be investing (and must protect) tens of thousands in your business is not a wise decision.

Asset Protection

Many companies conclude that since LLCs started in Wyoming in 1977, Wyoming must offer the best protection. Let’s be clear: oldest does not mean best. Many more cases have gone through the Nevada and Delaware court systems and found stronger level of protection. Specifically, Nevada vigorously protects officers, directors, and the entity veil itself.

Privacy

Wyoming allows Nominee Officers and Lifetime Proxies. Attorneys and accountants are often asked to provide an anonymous “company cover” for their clients for added privacy. To do this, you need to appoint nominee officers and/or directors for the company. NCP recommends that you avoid this strategy, because privacy is very different from asset protection.

The key question here is, how did your assets get into the corporation or LLC? Typically, transferring assets into an entity is done in exchange for ownership of the entity. Therefore you exchange one asset (your cash or real estate) for another (most commonly, ownership interest in the LLC.) Money wired from your personal account to the newly-formed LLC also leaves a trail.

Unfortunately, privacy as a benefit is in many cases over sold by slipshod corporation formation services.

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Scott Letourneau is the founder and CEO of Nevada Corporate Planners, Inc. Over the past 10 years NCP has assisted more than 4,500 business owners form LLCs and corporations in the state that’s right for them! Visit right now to find out what state is right for you!

The “Safe” and “Simple” choice for you in deciding which state to incorporate in is to form your entity, LLC or, corporation in your Home State.

This may be the best choice for some, especially if you’re operating with a low budget and particularly if you’re still equivocating: “I’m not even sure if my business will work.” Your absolute worst option is to operate as a sole proprietorship, so at the very least you should establish a separate legal entity.

Keep in mind that “simple” and “asset protection” are inversely related. That means if you want more protection for your current and future net worth, keeping it simple (meaning using your home state because it costs less) and/or not having separate entities for separate assets are recipes for disaster and much more expensive than doing it correctly from the start!

The more financial success you enjoy the more complex your structure should be. The key here is to outsource these services to a company that can make it easy for you.

But Wait…Planning to Move Out of Your State in the Next Few Years?

Then your best “pivot point” is Nevada. Here’s why:

Imagine you live in and have incorporated your business in California. An unexpected opportunity arises, and a year later you move to Florida. California has an annual franchise tax fee ($800 at a minimum.) Florida does not. Do you want California to be your state of domicile, and now have to foreign register into Florida?

In this case, there’s no advantage to being linked to California. So do you dissolve the California Corporation and form a new one in Florida? That strategy means you’d lose 1-2 years of track record, which is very important when it comes to establishing business lines of credit.

If you anticipate even a possible change of circumstances in the next 2-3 years, the best approach is to incorporate or form your LLC in a state like Nevada and foreign register from the start.

It is opportunity to incorporate and keep that corporation alive in the 21st century business community. With many people, a home based business is the answer to their dreams and having the freedom to move about the country is one of the advantages of forming your entity in a state like Nevada. Makes sense, doesn’t it?

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Scott Letourneau is the founder and CEO of Nevada Corporate Planners, Inc.  Over the past 10 years NCP has assisted more than 4,500 business owners form LLCs and corporations in the state that’s right for them! Visit right now to find out what state is right for you!

…especially if you are a sole proprietorship! The IRS would love for you to continue as a sole proprietorship in your business, because that makes you an easy target! They know that sole proprietorships are most likely to under-report their income and over-report their business expenses. Definitely, low hanging fruit!

 

The IRS believes there to be a $300 BILLION tax gap — $300 BILLION in uncollected taxes — each year! The biggest culprit? Not large corporations, but small business owners. In fact, sole proprietorships are 300% more likely to get audited than someone who does not file a schedule C!

 

And watch out all you E-Bay users! Want to get the IRS really hot and bothered? Don’t run your business like a business. Run it like a hobby, and just watch them have their way with you!  Ignore proper accounting systems from Day 1… just “try” your new business to see if it works (all the signs of a hobby)… and see how fast those business deductions are disallowed!  

 

If you fall into the “hobby-business” category, don’t expect to get your IRS “love letter” notice right away. This particular valentine may take its sweet time to get to you, in the form of an audit with penalties plus a few years’ interest!  Who said love doesn’t last?

 

Solution: Run your business like a business.  Document all your business expenses, use QuickBooks® or some other accounting software to operate your business, and DON’T operate as a sole proprietorship! Incorporating is a much better approach.

 

 

 

Scott Letourneau is the CEO of NCP, Inc. and an authority in helping people form entities, grow their business, and protect the assets of that business. His Top 5% Club is highly acclaimed by business experts around the country. Visit www.nvinc.com to receive your free guide, Costly Mistakes To Avoid When Incorporating in Nevada!