Wyoming Close LLC

• What Is A Wyoming Close LLC?
• Advantages Of Forming Wyoming Close LLC
• Potential Disadvantages Of Wyoming Close LLC
• Taxation Of Wyoming Close LLCs
• FAQ
• How Triple B Business Can Help You?

What Is A Wyoming CLose LLC?

A Wyoming Close LLC is a type of business entity that is formed under the laws of the state of Wyoming. It is characterized by having a maximum 35 members and providing them with greater control over the management and direction of the company. Wyoming Close LLCs offer more flexibility in terms of management structure, member rights and responsibilities, and may have more relaxed regulatory requirements compared to other forms of business entities.

The Wyoming Close LLC is designed for small businesses in Wyoming with a limited number of members, typically those with close relationships such as family, friends, or small business partners. This unique relationship allows Close LLCs to operate with fewer regulations, similar to partnerships. The laws for close LLCs in Wyoming permit small businesses to forgo many traditional corporate formalities while still enjoying the benefits.

The main difference between a regular LLC and a Close LLC is the restriction on the selling of a member’s shares. Before being sold to others, a member must first offer their shares to the other members of the Close LLC, who must approve of the sale. This structure is ideal for closely held family businesses, for example where parents want to prevent children from selling part of the company to outside parties.

Meetings are not required unless requested by a member. Additionally, the Close LLC’s articles of organization, operating agreement, and Close Limited Liability Company Supplement may also restrict transfer of ownership, withdrawal, resignation, return of capital contributions, and dissolution.

Key Characteristics of Wyoming Close LLCs:

• Limited Shareholders: A corporation can only be considered a Close Corporation if it has no more than 35 shareholders.
• Legal Basis: The Wyoming Statutory Close LLC Supplement to the Wyoming Limited Liability Company Act (W.S. 17-25-101 et seq) provides the legal basis for a Close Corporation.
• Abbreviated Governance: Shareholders may opt for abbreviated governance by agreeing in writing to operate as a partnership, no annual meetings, and a shareholder agreement (which must be stated in the Articles of Organization).

Converting to a statutory Close LLC:

Previously formed LLCs in Wyoming can change to a Wyoming Close LLC if the members choose to do so.
It is important to note that, if formed before January 1, 1990, all members must agree to transform the LLC into a Close LLC, which can be stated in the Articles of Organization or in an amendment. For LLCs formed after January 1, 1990, then 66% (2/3) of the members must agree.

Don’t Confuse Close Corporation Types: A Wyoming Statuary Close LLC is not the same as a “Closed LLC” or “Closely Held LLC.”

The Wyoming Close LLC is formed under specific state corporation laws and formally it is Wyoming Close LLC.

Not all LLCs referred to as “Close LLC” or “Closed LLC” or “Closely Held LLC” are statutory close LLCs. To be a statutory close LLC, the LLC must be formed in a state that allows this option and have the appropriate language in its articles of organization.

Advantages Of Forming A Wyoming CLose LLC

• Limited Liability: Members have limited liability just like regular LLCs, even with relaxed formalities in operations.
• Ease of Operation: Easy to operate with fewer meetings and formal notices.
• Low Operating Costs: Fewer formalities lead to lower legal, accounting, and administrative fees, reducing the overall cost of operation.
• Restricted Transfer of Shares: Shares can only be transferred if all shareholders agree to a buy-sell agreement (with a few exceptions).
• Unanimous Shareholder Consent: Company decisions must be made with the unanimous consent of members (unless the Articles Of Organization gives full decision-making power to a single member or manager).

A Wyoming Close LLC also shares the same benefits as a regular Wyoming LLC, including:

1. Wyoming prioritizes privacy: Its strict privacy laws provide more protection for businesses than in other states like Nevada, Delaware, and New Mexico. Anonymous LLCs and Corporations can be created via state-registered agents, keeping owners’ information confidential and not disclosed on public documents. Wyoming also doesn’t report beneficial owners or managers to the IRS. This makes Wyoming a better option for those seeking privacy and anonymity.
2. Lower Fees: Wyoming has lower fees for forming and maintaining a business.
3. Ease Of Formation: Forming an LLC in Wyoming is generally easy, the process is simple and less time-consuming, and there are fewer requirements for businesses to meet. After filing the necessary documents to the Secretary of State Of Wyoming, an LLC is usually formed within a few business days.
4. No Business License Requirement For Most Businesses: Fortunately, there is no general Wyoming business license per se. For most businesses in the state of Wyoming, a business license isn’t necessary, so there are no extra fees to pay or forms to file. You must only pay for an annual report and maintain a registered agent in Wyoming.
5. Fewer Requirements: Wyoming has fewer requirements for maintaining company records and holding annual meetings. This is especially true with Wyoming Close LLCs that have reduced reporting and other bureaucratic requirements. These benefits drive new companies to Wyoming every day.
6. Favorable Tax Treatment: Wyoming has no state corporate income tax, which can be a significant advantage for businesses looking to minimize their tax burden. Wyoming does not tax out-of-state income, which means that even if the majority of your business is conducted elsewhere, it won’t be taxed by the state.
7. Business-friendly Environment: Wyoming has a reputation for being a business-friendly state, with a relatively simple and straightforward process for incorporating a business.
8. Certificate Of Good Standing is FREE: Unlike many other states, including Delaware, Certificate Of Good Standing for an LLC or Corporation is free of charge in Wyoming and can be easily obtained online at the Wyoming Secretary of State’s website.
9. Annual Report Due Date: Annual Reports for corporations and LLCs are due on the first day of the anniversary month of formation. For example, if your ‘initial filing’ date is December 30th, your Annual Report is due December 1st of each year.

Potential disadvantages of a Wyoming close LLC

Generally, Wyoming Close LLCs are viewed as a favorable and versatile option for small to medium-sized businesses. However, there could be some drawbacks, such as:

• Limitation on transfers: Restrictions on transferring ownership can have both benefits and drawbacks. On one hand, it makes it difficult to sell your stake in the company. On the other hand, it also restricts your partners from selling their shares to unfamiliar individuals. This is particularly useful for families, as it ensures that a family member’s ownership in the company cannot be sold without prior consultation.
• Limited Access To Capital: The limit of 35 members restricts the amount that can be raised from them.

Taxation of Wyoming Close LLCs

Wyoming Close LLCs are taxed like regular LLCs as pass-through entities by default. You may also elect for either “C-Corp” or “S-Corp” taxation if you prefer.

It is important to consult with an accountant before deciding on S-corp or C-Corp status.