Wyoming LLC Pros and Cons for Non-Residents in 2023

As a non-citizen founder of a Wyoming LLC myself, I have intimate familiarity with the benefits and drawbacks of this structure for non-citizen and non-resident founders.

In my case, the benefits were many; including access to an online US bank, minimal reporting obligations, and an effective tax rate of 0%.

The biggest benefit beyond tax flexibility is cost; total annual costs are well below $200 per year, with all paperwork easily handled by third-party vendors like IncFile.

However, a Wyoming LLC may not be for everyone. For example, founders seeking VC capital often opt for Delaware despite the higher fees.

Your residence country also has a big impact on the tax rate. If most of your customers are outside the US market, jurisdictions like Singapore or even the UK can be more advantageous. Some countries, such as Canada, also have poor taxation rules regarding US LLCs.

Pros Cons summary

Remember — these pros and cons only apply to non-residents of the US. This is not legal or tax advice; I’m just sharing my experience operating with this structure.

Wyoming LLC Pros for Non-Residents

Wyoming LLC provides more pros than cons for international founders who need an easy-to-run business structure that won’t drain their budget with administrative costs.

On top of that, it offers other perks, such as asset protection and anonymity.

For a better picture of what the State of Wyoming offers, here are the “pros”:

Low Barriers to Entry

Any individual or company worldwide can incorporate in Wyoming, except for citizens of a few countries under US sanctions. If your country is not engaged in a conflict with the US, you can open a company there.

To ensure that you are eligible based on your citizenship, ensure that US sanctions do not impact your country. The full list includes Cuba, Iran, North Korea, and Syria.

The other low barrier to entry is the low incorporation fees. The state fees are usually around $100. The service of incorporation will cost you a couple of hundred more. You can have your Wyoming LLC incorporated for less than $500. That’s all the money you need to get started.

Low Maintenance Costs

Compliance with state and US federal laws comes at a cost. A Wyoming LLC, however, is cheap to keep up and to run.

You will spend money on the following:

• The annual report state fee of $60
• The filing fee for your registered agent to keep your privacy is usually around $100
• The annual registered agent fee ranges from as low as $25 to around $100.

This is not a lot of money for a business.

You’ll also need to submit forms 1120 and 5472 for a single-member LLC. You may need an accountant to review your transactions and submit the forms on your behalf. That would cost you a couple of hundred dollars, depending on the number of transactions.

You may save on an accountant if you have very few transactions and know how to fill the forms yourself.

That’s all it takes to maintain a simple consulting business, a marketing agency with a few clients, a freelance web design business, a real estate holding, or something similar. A large e-commerce store with many transactions would require spending more on bookkeeping and accounting, but it won’t be a dealbreaker.

Reputable Jurisdiction

Wyoming is an offshore jurisdiction for non-citizens, but it is not known for shady practices like some Caribbean islands. Wyoming LLCs operates under US laws and are supervised by US institutions; therefore, it enjoys an excellent reputation worldwide.

Your customers won’t ask you if your tax rate is 0%. All they care about is that you work under reputable US laws.

Access to the US Market

Although international trade and business run smoother than ever, national laws still create friction points making companies want to work with other companies under the same jurisdiction. As a result, many US companies want to work with other US companies. By incorporating a Wyoming LLC, you’ll get access to the US market and plenty of potential customers.

Whether you are into e-commerce and selling on the US market or providing marketing, web development, or consulting services, a Wyoming LLC will simplify things. If you invest in real estate, an LLC is one of the best vehicles to get into the market that otherwise would be harder to break into.

Access to US Financial Services

The US has the world’s most developed financial market and one of the most developed fintech markets. As a result, US businesses enjoy plenty of innovative banking and financial services that are not as accessible in other parts of the world.

The US is one of the few places worldwide where you can open a small business bank account fully online, without ever going to the local branch of the bank. Several neobanks operate on the US market and provide LLCs and other businesses with financial services. Once you have your EIN, you can open a bank account from anywhere worldwide and start operating. In many countries, and probably yours is one of them, you must visit a local bank branch to open an account. Opening a Wyoming LLC eliminates that necessity.

Easiest Access to Stripe (and Other Payment Processors)

Stripe is the favorite payment processor for many online businesses. It is robust, simple to integrate, and affordable. However, it works in very few countries.

To get Stripe access, you must incorporate your company in a supported country. The US is one of them.

If you live in an unsupported Stripe country, registering a US LLC is the quickest road to a Stripe business account.

The easiness of incorporating is unparalleled. You’ll also need a bank account to connect with Stripe, and that’s where Wyoming excels again since it doesn’t require you to travel to the US to open an account.

Zero Percent Tax Rate

Only a little planning leads to a zero tax rate for your Wyoming LLC. It may sound too good to be true, but you can easily pay no taxes whatsoever for the income of your Wyomign LLC if you meet a few simple criteria.

That criterion are not to be engaged in a trade of business in the US. You are engaged in a trade or business in the US if you have dependent agents, including persons who work exclusively for you.

In practice, it means the following:

• Not having employees or exclusive contractors in the United States. Not having employees is self-explanatory. Not having exclusive contractors from the US means that the US individuals working for you also work for other companies. If they work only for you, they are exclusive contractors and will trigger a higher tax rate.

  You can hire freelancers from the US, but make sure you don’t limit them to work only for you.

• Not having premises in the US. You must not have premises where only you can operate from. For example, buying a warehouse for your e-commerce store means having premises in the US, so it is not a good idea. But renting one is fine. You can also use Amazon FBA warehouses and still not trigger increasing the tax rate.

  Renting a virtual address or using the registered agents’ address does not mean having premises in the US.

• Not spend more than 31 days a year in the US. You must not become a US tax resident if you want to keep the 0% tax rate. The safe route to avoiding the US tax net is not spending more than 31 days in a calendar year in the US. If you spend long enough time in the US, you’ll become US tax resident and have all your LLC income taxed according to the tax rates for US residents. If you want to understand it better, read the substantial presence test criteria set by the IRS.

However, there are some types of income that cannot escape US taxes. You’ll need to pay 30% taxes on the so-called fixed, determinable, annual, periodical (FDAP) income, which includes:

• Dividends
• Interest
• Pensions and annuities
• Real property income, such as rents, other than gains from the sale of real property
• Royalties
• A sales commission paid or credited monthly
• A commission paid for a single transaction

This is not an exhaustive list. To learn about all that FDAP income includes, visit this link.

If you have FDAP income, you’ll pay taxes only on your FDAP income, but not on the other income. If you provide marketing services and invest money in stocks to earn dividends, you’ll pay taxes only in the dividend income.

You Can Invest the Money Before Taxing It in Your Country

If your business does well, you’ll have enough money to invest in the markets to save for retirement. However, if you pay yourself capital gains or management fees in your home country, they will tax this money before letting you do anything with it.

You may want to invest the money before remitting it to your home country. Allowing 100% of your profits to compound over many years is different compared to allowing 80% or 90% of your profits to compound.

Let’s say that you start with an initial investment of $10.000, and you invest $300 each month for 25 years. With an average annual interest of 6%, after 25 years, you’ll be able to withdraw:

• Around $240.000 if you earn 100% of your profits, money being invested before taxes, and
• Around $216.000 if you pay 10% taxes and invest what is left.

These numbers will change depending on how much you invest and how high personal income tax rates are in your home country, but you get the idea.

Asset Protection

You, as an individual, and your Wyoming LLC, as a legal entity, are two different persons under the law. As a consequence:

• When creditors come after your LLC’s assets, your personal assets will remain protected, and
• When creditors come after your personal assets, your LLC’s assets will remain protected.

Again, you and your LLC are two different persons. When one of you gets into trouble, the assets of the other are protected.

Wyoming LLC Members’ Privacy

The names of LLC founders, called LLC members, are not published in the Wyoming Company Register. Only the name of the registered agent who will register your company will be listed there.

The registered agent is obliged to know your name, but they won’t share it with the state.
Your name will be included in the operating agreement as an owner of the LLC, but you are not required to submit it anywhere.

Let’s say that you work on side projects and your current employer doesn’t want you to do so. Side hustling through a Wyomign LLC ensures two things:

• Your employer has no way to learn that you work on side projects. Your name won’t be published and even a private invvestigator would not (in theory) be able to discover that you own an LLC in Wyoming;
• Your LLC assets will be protected in case your employer wants to go after them if, in a highly unlikely scenario, they learn that you own a Wyomign LLC.

Wyoming LLC Cons for Non-Residents

There are no real cons if you incorporate in Wyoming and run the LLC from outside the US as a foreigner. Yet, there are two things you need to be aware of.

Some Investors May Prefer Delaware

Investors invest in companies all around the US and worldwide, but some of them may require you to transfer your company to Delaware. Many investors prefer Delaware over other US states because of the business-friendly legislation in the case of a dispute.

You may be able to raise an investment and run your company from Wyoming - that happens often. Yet, you need to be aware of the possibility of being asked to transfer it to another state.

It Doesn’t Allow You to Travel to the US Often

If your goal is to register a Wyoming company and use it as an asset to move to live to the US, it may help.

However, you’ll lose the main benefit non-citizen founders enjoy - the 0% tax rate. US residents can choose to be taxed as S-Corps and reduce the tax bill, but it will never be at zero. So, you’ll need to do a tradeoff if moving to the US is in your plans. If you live in the US you are not an foreigner who owns a Wyoming LLC anymore, but a US resident who owns it.

Summary: Why Is a Wyoming LLC Good For Non-Residents?

Wyoming LLC is probably the ideal corporation structure for foreigners who want access to world-class business services at a zero tax rate and low maintenance cost.

It is a good fit for any of the following:

• E-commerce businesses
• Bootstrapped SaaS businesses that wouldn’t seek investments soon
• Consulting businesses
• Freelancers
• Agencies
• Real estate holdings, but need to be aware of what is considered FADP income.

It is easy to set it up and run it — with low costs and established services to manage ongoing paperwork.

Frequently Asked Questions

Why is Wyoming so popular for setting up LLCs?

Wyoming is popular for setting up LLCs due to the low incorporation fees, low annual maintenance costs, and easy online opening of a bank account. Wyoming LLC members use the structure to protect the LLC assets from creditors and keep their identity private. Non-citizens can often reduce the effective tax rate to 0% and get access to financial services that may not be available in their home countries.

Does Wyoming offer the most anonymity for LLCs?

Wyoming offers enhanced anonymity and privacy for LLC members incorporated in the state, compared with other US states. Only the name of the registered agent who filed the incorporation documents are listed in the public registry. The names of LLC members are listed only in the operating agreements, but they aren't submitted to the state. LLC members remain anonymous if they communicate with the state through a registered agent.

Is a Wyoming LLC good for startups?

Wyoming LLC is good for startups that want to keep operating costs low while getting access to the US market and US financial services. Many investment funds these days invest in Wyoming corporations. Some investment funds may require a Wyoming LLC to transform into C-Corp or move to Delaware, but that can be done in a few days for a few hundred dollars, should an investment opportunity arise.