By Mark Pierce, Esq.
The Close LLC is designed with small businesses in mind. The Wyoming LLC Act allows close companies to sidestep onerous formalities while otherwise keeping the benefits of a Wyoming LLC. Generally, the designation is for single-member LLCs and for when members are close to one another, i.e. family and close friends.
The unique relationship between members results in the Close LLC being allowed to operate with fewer bureaucratic hurdles - somewhat akin to a partnership. Close companies may also be used to enhance asset protection and for estate planning purposes. Those benefits are discussed further below. Note, this entity is sometimes referred to online as a "Closed LLC". However, there is no "Closed" designation - only "Close".
Follow this link to learn more about Wyoming LLCs in general.
Basic Outline
Close LLC Benefits
Wyoming LLC Benefits
The Close designation is available for both Wyoming Corporations and Wyoming LLCs.
Potential Drawback
Close companies have desirable benefits and are becomingly increasingly popular among small businesses. Be aware of potential disadvantages, though, which include:
Tax Implications
The Internal Revenue Service considers Close LLCs to be regular LLCs. The default taxation is as a pass through entity. You may also elect for either "C-Corp" or "S-Corp" taxation if you prefer.
Wyoming Close Corporation
Wyoming's close designation is not limited to the limited liability company. You may also form a close corporation in Wyoming . The benefits of a Close Corporation are more marked only because the operating requirements of a corporation are more onerous to begin with. Corporations in other states can be required to not only hold quarterly meetings, but to keep copies of the records at their place of business. For times when a c-corp is required, regulations such as those just mentioned make a Wyoming Close Corporation that much more appealing.
Close Wyoming LLC Summary
We encourage our clients to form close LLCs whenever feasible. Their reduced complexity comes with little if any trade off for most. They are also ideal for subsidiaries of holding companies where holding an annual meeting for each would be superfluous. Learn more about Wyoming LLCs here.
Frequently Asked Questions
An LLC in Wyoming may be closed via either Administrative Dissolution (failure to pay the annual report) or by filing Articles of Dissolution, this is commonly referred to as a formal dissolution.
Wyoming was the first state to allow the formation of LLCs, they then began allowing Close LLCs, which have reduced reporting requirements, and Series LLCs which allow you to cost effectively form dozens, or hundreds, of companies at once.
A Closed LLC, technically a "Close LLC", is unique to Wyoming and provides the same benefits as a traditional LLC without requiring the corporate formalities of an annual meeting.
The least expensive way to close an unused LLC is failing to file the annual report. The state will dissolve your company automatically, and you may then work with a CPA on whether any tax forms are required to finalize closing the company.