Compare Forming an LLC in Wyoming or Nevada

By Michelle Kaminsky, J.D.

Compare Forming an LLC in Wyoming or Nevada

By Michelle Kaminsky, J.D.

Wyoming and Nevada are often mentioned as two of the best states in which to form a limited liability company (LLC)—and with good reason. As with an LLC in any state, Wyoming and Nevada offer LLC members limited liability (in most situations, they are not personally responsible for LLC debts) as well as pass-through federal taxation, which means the LLC itself does not pay taxes but rather profits are "passed on" to LLC owners for tax purposes.

Man crossing arms proudly and smiling standing in front of large glass doors and entrance to store

Wyoming and Nevada provide additional generous incentives to attract businesses, including low costs, minimal bureaucracy, tax benefits, and privacy. Deciding which state is better for you depends on your specific situation, but what follows are some factors to consider.

Costs

The first cost you'll encounter when forming an LLC is the fee for filing articles of organization. In Wyoming, the fee is $100, while in Nevada it is $75.

But this is the just the tip of the fee iceberg, if you will, because you must also consider annual fees. Wyoming charges the greater of $50 or .0002 percent of the LLC's assets located in the state. Nevada charges an annual flat fee of $150, required with a list of the LLC's managers. In other words, your Wyoming assets would have to be greater than $625,000 before the annual fee reached Nevada's $150.

Another cost is a certificate of good standing, which many banks require for an LLC to open a business account. While Wyoming has no fee for issuing a certificate of good standing, Nevada requires you to pay $50.

You should also consider business license fees. Not all businesses require a license in Wyoming, and fees vary, as some licenses must be obtained at the local level through city agencies. Nevada requires an LLC to have a business license, which costs $200 to purchase and another $200 annually to maintain.

Taxes

Neither Wyoming nor Nevada have a corporate sales tax, a franchise tax, or a personal income tax. Wyoming's sales tax is very low, at only 4 percent with an additional 2 percent optional county sales tax. The lowest effective sales tax rate in Nevada is 6.85 percent, though it may go as high as 8.265 percent with the addition of various local taxes.

In the past few years, Nevada has also instituted a gross receipts tax (alternately called the commerce tax), though no tax is owed unless the business's Nevada gross revenue in a taxable fiscal year is more than 4 million dollars.

Tax rates and rules change with some frequency, so do be sure you have the most up-to-date information when factoring taxes into your decision.

Privacy

Wyoming does not require the disclosure of LLC members and managers in the articles of organization, while Nevada does require this information.

Moreover, Nevada does not have an information-sharing agreement with the Internal Revenue Service (IRS), which means it does not share names, bank account numbers, and other identifying information with the federal tax authority.

Wyoming, on the other hand, does share this information with the IRS as requested. Some may argue that regarding privacy, actually being more open to IRS inquiries is beneficial to avoid being a target, but it's also important to note that the IRS is still able to gather the information it wants—even in Nevada.Done

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.