Wondering which state to domicile your corporation? It depends on your goals. Delaware is the preferred jurisdiction for Fortune 500 companies because of its laws regarding corporate governance and its fast track legal system designed to settle corporate disputes quickly.
Here is why we recommend doing business with a Wyoming Corporation:
(i) the lowest state filing fees (take that Nevada);
(ii) no state taxes (take that Delaware);
(iii) the strictest privacy laws.
If your aim is to become a Fortune 500 company, you plan on attracting venture capital, or intend on an IPO then Delaware's case law offers wonderful insights into what you may and may not do, along with the likely consequences of such a course.
Unfortunately, though, Delaware has both a corporate and personal income tax, a franchise tax, stricter reporting requirements and considerably more regulations compelling disclosure of personal information. Our guess is that you aren’t a Fortune 500 executive, but that you are looking to minimize taxes, avoid bureaucratic over-reach and maintain privacy.
Areas of Similarity Between Nevada and Wyoming
Piercing of corporate veil:
A corporate veil separates the liabilities of a company from its owners. This limits an owner’s risk to the capital contribution. Where fraud is not present, the veil may not be pierced. Wyoming’s proof in piercing the veil is much more stringent than the burden in Nevada and Delaware.
Nevada is presented as the only state which does not provide information to the IRS. Wyoming, on the other hand, only provides information when a company owns real estate. Resultantly, should you not own real-estate then, the two states are identical. In Delaware the information is made readily available.
WY, Delaware & Nevada Differences
Nevada and Delaware have raised filing fees for several years in a row due to budget pressures. Listing and business license fees which were already the 3rd highest in the nation were increased to $350 for LLCs and a whopping $650 a year for profit corporations.
Wyoming has left its filing and incorporation fees the same for a decade. This is because we have a $10 billion dollar rainy day fund and know that increases in filing fees scare away companies. These enhanced fees in Nevada and Delaware are an unnecessary burden.
Because of Nevada’s and Delaware’s reputations as a haven, their corporations draw increased scrutiny, including from the IRS. Wyoming doesn’t have this stigma. This means you may fly under the radar. Because of Nevada’s symbol as a haven, such corporations draw increased scrutiny from the IRS. Wyoming doesn’t have this stigma meaning you may more easily fly under the radar.
There are no income taxes on companies or individuals in either Nevada or Wyoming. However, Nevada is ranked "the worst state to do business in" by the Tax Foundation because of new changes to Nevada taxation.
There is a new “Commerce Tax” on GROSS REVENUE! Nevada now combines the income of multiple corporations if there’s a common owner and applies the Commerce Tax when the combined revenue exceeds the $4 million threshold. While limited to those with more than $4M in revenue, with recent trends in their tax laws and filing fees it’s not hard to imagine things become worse rather than better.
Wyoming is not considering ANY tax and neither needs nor wants to. Wyoming consistenlty runs a budget surplus and has over $10 BILLION dollars saved for rainy days. You may also be able to save more in taxes by filing a Wyoming S Corp.
Continuance (moving your company to Wyoming)
Wyoming provides for true continuance in its corporate laws. Many states allow domestication, but they are different. When a foreign corporation redomesticates in a new state it must either create a brand a new corporate entity in that state or may choose additional domiciles. However, Wyoming creates the legal fiction that the corporation has always maintained its domicile in Wyoming. This is a huge benefit to any corporation wishing to change domicile. Our state also offers the unique Close Corporation.