More young and experienced entrepreneurs choose an LLC as their company structure once they decide to start/expand their business. Typically, this is due to a number of advantages an LLC provides to businesses and the opportunity to choose the most suitable state for your commercial activities, regardless of where you live.
In this article, we shall talk about why you should consider both Wyoming and Nevada for your business, how they stand out from the rest of the U.S. states, and which of the two states is more favorable for limited liability companies.
We'll try to answer these questions by identifying the strengths, weaknesses, and features of Wyoming and Nevada. And in case you will need more information to make a decision, we recommend reading an article on the llc.services portal.
Wyoming VS Nevada: Common Ground
Despite the pandemic and crisis intervention in the business world, Wyoming and Nevada are still at the forefront of popular states for limited liability companies. What's more, the above-mentioned unfortunate events have somewhat shifted the way people look at doing business, unlocking the potential of remote work.
Thus, in the states represented, new LLCs have become more common than before. For example, if we look at last year's statistics, we will see that over 73,000 small business applications were sent in Nevada and over 70,000 in Wyoming.
However, it wasn't just the pandemic that caused this surge - an important engine for many are the pros of the states:
● Privacy. Business owners and shareholders have the ability to maintain their complete anonymity while remaining compliant with the laws and regulations of the two states;
● Management protection. No matter if you choose Wyoming or Nevada for your LLC, as a business owner, you won't be required to hold your annual or regular business meetings within the selected state;
● Security. The business structure itself protects companies through the separation of personal and business assets. And if you open a company in WY or NE, you can count on stronger protection due to favorable state laws;
● Taxes. Only 9 out of 50 states do not levy income tax on businesses, and Wyoming or Nevada are among them. Also, there is no corporate income tax. Instead, you can expect favorable state programs to support your LLC;
● Series LLC. You may want to create a series LLC to get protection for every company in the state. Both Wyoming and Nevada provide this opportunity.
Differences Between Nevada And Wyoming For LLCs
Lately, registration fees for new LLCs in Nevada have increased significantly in contrast to Wyoming. And it's not only the price for filing Articles of Organization and other important documents that need to be submitted with them.
Thus, in Wyoming, you will only need to pay $100 + $2 for online filing. However, you won't have to file your initial annual report along with the Articles. It's only after one year (by the 1st of the anniversary month) that LLCs need to file such a report, and the cost of online filing is $60 + $2.
In Nevada, you won't see the same favorable numbers at the start because, along with the Articles of Organization, you'll have to prepare your first annual report and get a business license.
This means that apart from the $75 registration fee, you will also need to pay an additional $150 for the report + $200 for your business license. As a result, at the very beginning, future LLC owners need to spend $425 on paperwork.
As for foreign LLCs, the price policy of both states is similar to the one for local companies.
Differences Can Also Be Found In Other Areas As Follows:
● Taxes. Although you don't have to pay income and corporate taxes in both states, there are other mandatory contributions you can't ignore. For example, Wyoming's sales tax has a lower percentage rate than Nevada's. Also, NE has its own tax tricks, which can be shocking to some LLC owners;
● Legal protection. The main advantage of WY over NE is that the former state has a special court (The Wyoming Chancery Court) that deals exclusively with business matters. The court was established following the examples of other states like Delaware and North Carolina. And that's a big advantage for businesses that are heavily exposed to litigation costs. Why? Because without such a court in the state, in case of any lawsuit against your LLC, creditors are more likely to find a loophole in the corporate veil and win the case;
● Registration. As mentioned above when describing the differences in registration fees, to form an LLC in WY, you won't need to file many documents at the registration state - only Articles of Organization, which are required in all U.S. states. However, in NE, you will need to get a business license and file an initial annual report;
● Privacy. In Wyoming, business owners will get more confidentiality than in Nevada. Thus, the former state allows not to provide the names and contact details of the business owner(s), whereas the second one requires such information.
Which State To Choose?
We could talk for a long time about which of the two states is most suitable for businesses. After all, each one has its unique advantages, although both Wyoming and Nevada have favorable conditions for LLCs.
Wyoming offers cheaper registration fees and flexibility in tax matters. Also, the state has a separate business court that deals exclusively with commercial, business, and trust cases. In its turn, Nevada LLCs are not subject to taxation on corporate shares or stock transfers. The state has no personal income, franchise, gift, business, or occupation tax.
Remember that your home state will always be the best state for your LLC. When talking about Wyoming and Nevada, however, you want to consider your business niche and specifics to make the right choice. And if you can't find the answer, we recommend that you address legal experts in this matter - they know exactly how to help you.