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Is Wyoming the Best State for Setting Up an LLC?

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An AccountingWEB reader recently sent in a question about three business partners opening an LLC in the state of Wyoming when two of the partners were not US citizens and one was from a different state. Nellie Akalp lends her expertise on LLCs, S corporations and rules surrounding business operations and offers the following information in response.

May 19th 2021
CEO and Founder CorpNet
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It's my pleasure to field the following question from a reader who reached out to AccountingWeb for information about starting a limited liability company (LLC) in the state of Wyoming. Please know that what I share here is for informational purposes only and is not intended as legal, accounting or tax advice. Anyone starting a business should reach out to their trusted attorney and tax professional for expert guidance that addresses their unique situation and requirements.

Hira from Canada asks...

I am Hira from Canada. We, three partners, are going to open an LLC in Wyoming. Two partners are from Canada, and one lives in New York. Can we apply for a resale certificate in Wyoming?

Answer

Thanks for your question, Hira! To give you some broader insight, I'm going to address three questions related to your initial inquiry. I hope this will provide you with some food for thought as you consider your options, opportunities and next steps.

1. Can we set up an LLC in Wyoming if we'll have two non-US citizen members, and one of the members is in New York?

Yes. Generally, eligible individuals could form anywhere. I can’t recommend where entrepreneurs should form their businesses. Know that there are rules for who may own certain business entities. For instance, foreign-based individuals may not be shareholders of an S Corporation. However, they may be members of an LLC or shareholders of C Corporation.

If the company will have operations in Wyoming and New York, where one of the owners resides, then it may need to foreign qualify the LLC in New York if the owners choose to initially form their business entity in Wyoming. 

2. Is Wyoming the best state for setting up a business?

I can't answer that because there are legal and tax ramifications to consider, but, generally speaking, we have heard from many tax and legal professionals that often, it benefits entrepreneurs to form their companies in the state where they will conduct most of their business or will be headquartered. There may be exceptions to that. Some firms choose to form in Delaware, Nevada, and Wyoming, seeking favorable corporate laws and tax breaks. It's essential that business owners ask for guidance from their attorney and CPA so that they make an informed decision about where to form their company.

3. Can a business that resells products and services in Wyoming obtain a reseller permit in Wyoming?

If a business sells tangible items in the state, it may have to apply for a sales and use tax account. Wyoming requires companies with sales tax nexus there to obtain a resellers or sales tax certificate if they sell or will sell physical merchandise. The following articles offer information about sales tax nexus and getting a sales tax certificate:

Do You Need to Get a Sales Tax Permit in Wyoming?

How to Register for a Sales Tax Permit in Wyoming

You can find information about the steps to start a business in Wyoming on the Wyoming Secretary of State website. Sales and Use Tax License application forms are available on the Wyoming Department of Revenue website.

Final Thoughts

Keep in mind that every state has its own rules and requirements for starting a business and keeping it in good standing. There's no one state that's the optimal choice for all businesses, so it's critical for business owners to research how a state's laws and tax codes will impact them.

I wish Hira and her business partners much success as they make their entrepreneurial dream a reality!

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