When it comes to keeping more of your hard-earned money, there’s one important geography lesson you likely didn’t learn in grade school.
Can you pick out which state is Wyoming?
If you’ve ever driven through the state, it’s hard to forget the desolate, flat, rolling hills with a car passing you by every hour or so. But, there are three other reasons why Wyoming is key in protecting your assets that you’ll never see on a road trip.
Asset-Protecting Reason #1: It’s a NO Tax State
Yes, you read that right!
Wyoming has no income taxes at the individual and the corporate level.
And, thanks to the passage of TCJA, which was effective on January 1, 2018, the Tax Cut and Jobs Act by the Trump Administration, the entire corporate tax structure was changed.
That means if you have an incorporated business like an LLC in the State of Wyoming, you pay a single flat tax rate of 21%. This holds true for all businesses, regardless of their size.
Asset-Protecting Reason #2: It’s a Full Anonymity State
Who doesn’t like to be a mystery to the world?
In Wyoming, that’s exactly what you’d be. If anyone were to look up the name of your business, only the registered agent is listed.
This is important for two reasons:
- Your private information is protected from people looking to take advantage of your success,
- Not even the IRS will know who owns the business.
So, if you were to get sued (for whatever reason), the other party would not be able to easily figure out what businesses you own and take you for all that you have.
In fact, I highly recommend limiting how many assets are held under your personal name and instead suggest they be owned by your business instead. Ideally, I even suggest transferring everything (property included) into a trust.
This offers you additional protection at each stage, and limits your exposure should you ever find yourself in litigation.
But, to cover your bases completely, you should never use any identifying names or words in your business name.
The idea here is, you don’t want to make it easy for someone to “guess” or stumble upon the businesses you own.
For me, I use biblical references for my business names.
Others may find creative spellings for common words.
Ultimately, the choice is yours. Just make sure you take full advantage of the anonymity Wyoming grants by not shooting yourself in the foot by. For example, using your name, would be shooting yourself in the foot.
Asset-Protecting Reason #3: It’s a Charging Order State
The key to safeguarding your assets is having contingency plans in place, in the event the worst-case scenario does happen.
Say, for instance, someone sues you AND they have the name of your business.
In this case, if they want to force you to sell your assets to pay them, they would need to have what Wyoming calls a “charging order”.
The creditor (the person suing you) would receive a “charging order” from a court in Wyoming which would allow a creditor to “step in your shoes” and receive a distribution.
However, a court in Wyoming cannot compel a business owner to take a distribution to satisfy a judgement.
And, as long as you don’t take distributions from the business, the creditor has no right to anything.
This isn’t the case in all states. California, as an example, is much more lenient and favors the creditor.
If you were to get sued in California, a judge could order you do a few things:
- Take distributions from the business to pay the creditor
- Sell units of your business to pay the creditor — or even —
- Give your business units to the creditor as payment
So, thank goodness for Wyoming’s built-in protection from creditors!
Since you now know the ins and outs of the reasons why Wyoming is the most business-friendly state in the country, spend some time thinking about the name for your operating company. I recommend coming up with three business names, while keeping in mind what you learned in this lesson.
Don’t forget! Securing your assets is a crucial first step, make it count!