When forming a business in the United States there are a few options to choose from as far as formation. The first is as a corporation, but a more reliable option is as an LLC. Although they both provide limited liability for their owners, an LLC allows more freedom than a corporation. An LLC is also different from a sole proprietorship because it protects its owners, but is similar because it offers similar tax advantages.
The state that you form your LLC in, will impact how your business operates, as well as the benefits that your LLC can receive. In some cases, you might want to start your LLC in your state of residence, but it is not true. Instead, you can obtain the benefits that another state offers in order to benefit from those LLC laws.
Common states to form an LLC include both Wyoming and New Mexico. You can do this by having a registered agent who resides in that state, or a registered agent company that provides services in that state.
Benefits of Starting an LLC in Wyoming
Aside from the standard asset protection and personal liability protection, there are a few reasons that you might want to start your LLC in Wyoming. The first is that there is no state income tax for LLCs. This is huge and can save your LLC a lot of wasted money in taxes.
Additionally, there are charging order protections that are offered to single-member LLCs. This means that it will not be treated differently by the state. All Wyoming LLCs are considered anonymous, as members and managers are not listed with the state during registration.
Benefits of Starting an LLC in New Mexico
Similar to that of Wyoming, New Mexico is an anonymous LLC state. This means your name and address will be kept private. You also do not need to be a citizen or resident of the United States, and there is no operating agreement required.
Out of all states, the formation cost for New Mexico LLCs is only $50 for the filing fee, and there are no franchise or entity taxes. This makes it extremely attractive in terms of forming an LLC in the state.
Which State Should You Form Your LLC in?
Although the choice of state to form in will depend on your needs, there are a few specific things you will need to consider. First off, forming in the state of New Mexico offers not only privacy and low fees but also a completely anonymous LLC. This is the same when it comes to Wyoming, but the main difference is the cost of formation. When forming your LLC in Wyoming you will spend $100, but for New Mexico LLCs it is $50. There is also a $50 fee with the Wyoming annual report that starts in the second year. You will also have to keep it in good standing and use a registered agent.
Who Should Start an LLC?
Many businesses will benefit from starting an LLC. If you are looking to protect personal assets in case of a lawsuit, then an LLC is right for your business. LLCs also offer the opportunity to go through less paperwork than that of a corporation.
LLCs offer a lot of flexibility, and if you do not want to have consistently organized meetings this is right for you. For example, lawyers, and doctors, as well as engineers and accountants often form LLCs for protection. In the event you have a business that is more of a hobby and loses money rather than makes it, an LLC may not be right for your enterprise.
How a Business Lawyer Can Help
Hiring a business lawyer to help you start an LLC will not only save you time but may save you money in the long run. Although it is definitely an investment, they might be able to go thoroughly through your paperwork, and ensure that everything has been completed properly.
Your business lawyer may also complete tasks for you such as registering your business name, ensuring it is available, and if the LLC name is available. This can ensure that you are in compliance, up to date, and have filed everything without mistake.