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DELAWARE LLC VS. WYOMING LLC

Delaware Corporation or Wyoming Corporation? Delaware Corporation or LLC?

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WHY A DELAWARE CORPORATION OR DELAWARE LLC?

llc, wyoming llc, delaware llc, nevada llc, limited liability company, limited-liability company, limited, liability, charging order, charging order protection

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Form a Delaware Corporation or Delaware LLC if you intend to go public with an initial offering.  Large companies, traded on an exchange, are best served by Delaware.

On the contrary, a Wyoming corporation or Wyoming LLC is the best option for the small and family-run business.

Unless you're planning to run another Amazon.com, IBM, Microsoft or other large corporation, then you're best option is Wyoming. 

Wyoming has a great respect for property rights of the small business person, provides secure limited liability protection, excellent privacy and there's no tax income tax for companies doing business in Wyoming.  There's no report of ownership of a Wyoming company to the Wyoming Secretary of State.  Wyoming has a financial surplus with no income tax.  This is because the taxes on mineral rights and a local sales tax pays the bills.  Wyoming is pro-business, pro-property rights, pro-family, and self-sufficient.  It's a state where the Constitution and the rule of law is widely respected.  Wyoming is a state where family, hard-work and the small business person is King.  Wyoming is now what America was, before it became a trough of welfare programs and a socialist playground.

In 1977, Wyoming was the first state to pass a Limited Liability Act.  This was the first time the Limited Liability Company (LLC) was introduced to American business.  Once the IRS recognized the LLC can be taxed as a partnership (that is, as a pass-through entity), all 50 states passed statutes creating their own version of the LLC.

Why a Wyoming LLC? 

Wyoming  LLC Statute 17‑15‑145.  Rights of creditor.

“…The charging order is the exclusive remedy by which a judgment creditor of the member or transferee may satisfy a judgment against the member's interest in a limited liability company.”  

The Wyoming LLC: The Assets Are Made Unattractive To The Creditor

The manager of the Wyoming LLC can refuse to distribute the earnings.  (If the operating agreement so allows.)  What is the advantage of withholding the distribution from the hostile creditor?

This means that the creditor is now liable for income taxes on those Wyoming LLC earnings, whether or not they’re distributed.  The hostile creditor is now liable for taxes on earnings not yet received or for what is typically referred to as “phantom income.”  This places the member in a stronger position to negotiate a favorable settlement.  Hostile creditors don't want to pay taxes on earned income that's out of reach.

For this charging order protection to be most effective, the Wyoming LLC must

·          Have at least two (2) members [Important!] in the Wyoming LLC

Managers can be people or another business.

·          The Wyoming LLC is taxed as a partnership

·          The Wyoming LLC is managed by a manager, not the members. [Important!]

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