Limited liability companies are an increasingly popular choice among business owners. The LLC structure provides management flexibility, formation simplicity, tax benefits, asset protection and, sometimes, anonymity. While Florida LLCs offer these benefits, Wyoming's aggressive LLC laws take them a step further. If you do ultimately decide a Wyoming company is best, then we recommend working with Cloud Peak Law Group which has the website wyomingllcattorney.com.
While LLCs largely enjoy uniform benefits throughout every state, there are a few distinctions to be noted. Here, we’ll discuss some of the benefits of forming an LLC in Florida versus Wyoming to help you decide which state offers your business the best opportunity. We will also discuss whether forming an LLC in another state is a good fit for your industry.
Forming an LLC in Another State
Before deciding whether a Wyoming LLC is a good fit, you must first determine whether your business is eligible to operate using an out of state LLC. Location independent companies, such as holding companies, e-commerce companies and consultants have flexibility in where they domicile their company.
For these industries, a Wyoming company can be a good fit. However, if you have W2 employees, or a physical presence in Florida, then you require a Florida LLC as you're doing business here. Do note, this does not mean your Florida LLC cannot be owned by a Wyoming holding company.
Holding Company Benefits
This holding company setup can provide anonymity in Florida and additional asset protection. While Florida requires the members of an LLC be listed, another LLC can be used instead of your name.
If you list an anonymous Wyoming LLC as the member of your Florida company, then your name is kept off the public records and the Florida entity effectively becomes private as well. Having a second LLC also provides a double corporate veil, and Wyoming's LLC provides charging order protection. This means enhanced protection from both business and personal creditors.
Wyoming LLC Benefits
Wyoming companies offer superior asset protection, lower fees and better privacy when compared to Florida companies. The state also allows Series LLCs and aggressive trust laws for those desiring additional asset protection and privacy.
Formation & Annual Fees
The fee to file Articles of Organization is $100 versus $125 in FL. For the annual report, the fee is only $50 versus $138 here, and the late filing fee is $50 versus $400 here. In short, Wyoming doesn't penalize you with fees in the same way Florida does.
The additional benefit is that the annual fee in Wyoming is due on the first day of the month in which the company is formed. For example, if the company is formed in December, then its fee will be due next December. In Florida, however, all companies must file by May 1st, even if their company is only a few months old. Add in the significantly higher penalty fee for late filing and the costs add up over time.
Asset Protection
Both states offer the corporate veil, i.e. the company is liable for debts rather than the owner. This means a business creditor cannot sue the members unless there has been fraud or gross negligence. So long as a member acts within the boundaries of the law and does not personally back any loans, the member’s personal liability will be limited to the amount they initially invested into the company.
Wyoming's statutes also provide additional asset protection for single-member LLCs, including enhanced charging order protection with is only available to multi-member LLCs here. What's not clear, though, is how a judge in Florida will rule. If you live here and your assets are here, then it's possible they set aside Wyoming law and apply Florida law instead.
Privacy via an Anonymous LLC
Both Wyoming LLCs and Corporations are anonymous by default. Their secretary of state does not ask for the names of members, managers, officers, shareholders directors, etc. The simply want to know who the organizer of the company is. They additionally enjoy minimal disclosure and reporting obligations, no requirement on US citizenship for either formation or membership, and the ability to operate the LLC from any location outside of Wyoming, so long as good standing is maintained with the state.
Florida LLC Benefits
If you choose to form in the state of Florida, your company will enjoy a number of advantages. A few of the most common include personal liability protection, tax advantages, and management simplicity. For a fuller discussion, please visit our page on Florida LLC benefits, this section will focus on the contrasts and cons of using a Wyoming LLC.
Simplicity
Operating an out of state LLC can provide difficulties. For example, if you ultimately need to register in your home state, then you will be paying fees in both locations. It's also unclear which jurisdictions laws will apply. This can mean needing to consult with an attorney to ensure the strategy you have is sound. As a more practical matter, it can be difficult to open a bank account for an out of state LLC. This is not to say it's impossible, just that not every banker has familiarity with the process. As a result you may need to visit a few banks before finding one that's easy to work with.
Pass-Through Taxation
Unless otherwise stipulated, Florida LLCs enjoy pass-through taxation. This allows members to report the profits and losses of the company on their own tax return and thus avoid the double taxation that corporations are subject to. Any tax that pertains to the company’s profits will be paid at the individual level. Multi-member LLCs file their tax return like that of a partnership, while single member LLCs file their return like a Sole-Proprietorship. This is the same in both states, so there's no additional tax benefit to be had in either case.