Wyoming Close LLCs & Corporations

Wyoming Close LLCs & Corporations

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Wyoming CLOSE CORPs


The Wyoming Close Corporation is intended for small companies with a limited number of shareholders. This typically means those who are “close" through family relationships, friendships, or small business partnerhships. The unique relationship among shareholders means that Close Corporations are allowed to operate with fewer regulations - like partnerships. The Wyoming Close Corporation Law allows small corporations to forego many traditional corporate formalities, while still enjoying the benefits.

A departure from regular business corporations, Close Corporations do not require a board of directors, this means ongoing operations generate less paperwork. (It is important to note, however, that if you do opt for a Close Corp, then you must inform us of this when placing order, so that we can include this information in the Articles of Organization.)

The Basics

  • Abbreviated governance: Shareholders may agree (in writing) to treat the corporation as a partnership, operate without a board of directors, dispense with annual meetings, and make a shareholder agreement. (Note: this must appear in the Articles of Incorporation.)
  • Limited shareholders: Close Corporations are limited to 35 shareholders.
  • Special actions may be required: The Close Corporation Law took effect in 1990. This means that if incorporation took place in advance, and you want to modify your company to a Close Corporation, then shareholders must be unanimous. Alternatively, if you were incorporated after January 1, 1990, and you wish to transform your corporation to a close corporation, then 66% of shareholders is the threshold. Ultimately, you become a Close Corporation by so stating in your Articles of Organization, or in an amendment to the Articles.

The Benefits

  • Liability Limitations: The law maintains that shareholders do not have any personal liability. This is because of the corporate veil which can only be pierced in extreme circumstances such as fraud.
  • Costs: Reduced bureaucratic hassles mean cheaper administrative, and professional fees for accountants and attorneys for example.
  • Ease of operation: Operates informally.
  • Buy-out provisions: Existing shareholders are given rights of first refusal in the event of a sale and deceased shareholder’s shares are offered to existing shareholders first. This ensures the company remains “close”.

The Close designation is available for both Wyoming Corporations and Wyoming LLCs . To further reduce your workload consider using our registered agent service and/or virtual office to save you the headaches.

Drawbacks
We find the Close Corporation has several highly desirable attributes and is a popular entity for small and medium sized businesses. Do be cognizant of possible disadvantages, which include:

  • Share Sale Restriction: Share transfers are prohibited except in explicit circumstances. Further, right of first refusal must always be given to existing shareholders.
  • Restricted Access to Capital: The 35 person limit necessarily limits how much money can be raised from shareholders.

Tax Implications
The IRS treats Close corporations the same as regular business corporations. The only alternative is to opt for “S” tax treatment. To know more, please refer to IRS Publication 542 along with instructions for IRS Form 2553.

Not sure a close corp is for you? Then browse some of our other popular articles on incorporating in Wyoming , LLC s, registered agent services and more.

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