Starting a business is a huge decision with many factors to consider. For example, many prospective business owners must decide which state to incorporate in.
Although many states in the United States are business-friendly, Wyoming and Nevada are two of the most favorable for entrepreneurs due to their favorable business laws and low tax rates, among other reasons.
Nevada and Delaware are currently the most talked about types of incorporation or LLC formation states. However, Nevada is also often the number one state to incorporate in.
So, what’s the difference? Delaware and Nevada Incorporations are certainly not the same.
Benefits of Incorporating in Both States
- No State Income Tax: Wyoming is one of only seven states that do not have a state income tax. As such, businesses incorporated in Wyoming do not need to pay state income tax on their profits.
- Low Fees: The filing fee for a Wyoming LLC is only $100. This is significantly lower than the fees charged in many other states.
- Privacy: Wyoming does not require the names of the LLC members to be listed on the public record. As a result, the identities of the business owners can remain confidential.
- Asset Protection: The state has some of the strongest asset protection laws in the country. This means the business owner’s personal assets are protected from lawsuits and other legal claims against the business.
- No State Income Tax: Nevada does not have a state income tax, which means that businesses incorporated in the state are not subject to state income tax on their profits.
- Low Fees: The filing fee is only $75, making it more affordable than Wyoming’s. Additionally, the annual fee for maintaining a business in Nevada is only $150, which is lower than in many other states.
- Privacy: Similar to Wyoming, Nevada offers high privacy for business owners. The state does not require the members of an LLC to be listed in the public record, which means that the owners’ names can be kept confidential.
- Favorable Tax Laws: The state boasts some of the most favorable tax laws in the United States. Nevada does not have a corporate, franchise, or personal income tax. This may result in remarkable tax savings for businesses.
Process of Incorporation
Step #1: Choose a Business Name
Your business name must be unique and not already used by another state company. Check the availability of your preferred business name through the business name database of the Nevada Secretary of State. Once you have chosen a name, you must pay a $25 reservation fee at the Secretary of State’s office.
Step #2: File Articles of Incorporation
Articles of Incorporation establish the creation of your corporation and provide information about its structure and purpose. In Nevada, the legal document must include the following:
- The name of the corporation
- The purpose of the corporation
- The number of authorized shares of stock
- The name and address of the registered agent
- The name and address of each incorporator
You may file your Articles of Incorporation online or by mail. The fee for filing online is $75, while the fee for filing by mail is $125.
Step #3: Appoint a Registered Agent
Every corporation in Nevada must have a registered agent. They are responsible for receiving legal documents on behalf of the corporation. The registered agent needs a physical address in Nevada and is available during normal business hours. You may either appoint yourself or hire a professional registered agent service.
Step #4: Create Corporate Bylaws
Corporate bylaws are a set of rules and procedures that govern the operation of your corporation. Bylaws typically include information about shareholder meetings, officer roles and responsibilities, and the process for electing directors. Although bylaws are not required, they are recommended to help ensure your corporation operates smoothly.
Step #5: Issue Stock
Stock represents ownership in the corporation and may be bought or sold. In Nevada, corporations must have at least one shareholder. You can issue stock in any amount and price if it is not less than the par value.
Step #6: Obtain Business Licenses and Permits
Depending on your industry or nature of business, you might need to secure additional licenses and permits to operate legally in Nevada. Some common licenses and permits include the following:
- Business License: For all businesses operating in Nevada
- Sales Tax Permit: For businesses that sell tangible goods
- Professional License: For professionals such as doctors, lawyers, and accountants
- Occupational License: For occupations such as real estate agents and barbers
You can secure these licenses and permits from the Nevada Secretary of State’s office or other state and local agencies.
Step #1: Pick a Business Name
The name must be unique and distinguishable from other registered businesses in Wyoming. You can check the availability of your desired name on the Wyoming Secretary of State’s database. You may reserve the name for 120 days through a Name Reservation Application with the state if the name is not taken.
Step #2: Select a Registered Agent
Wyoming law requires all corporations to have a registered agent in the state. A registered agent can receive tax and legal documents on the corporation’s behalf. A physical address in Wyoming is another requirement for the registered agent, and they need to be available during business hours to claim the documents.
Step #3: File Articles of Incorporation
The Articles of Incorporation include:
- The company name.
- Registered agent information.
- Purpose of the corporation.
- Number of shares authorized.
- The names and addresses of the initial directors.
You can file the Articles of Incorporation online or by mail; the filing fee is $100.
Step #4: Obtain a Federal Tax ID Number
A Federal Tax ID Number or an Employer Identification Number (EIN) is required to open a business bank account, hire employees, and file tax returns. Apply for an EIN online through the Internal Revenue Service (IRS) website.
Step #5: Draft Bylaws
Bylaws outline the directors’ and officers’ roles and responsibilities and the procedures for holding meetings and making decisions. These are not required to be filed with the state, but bylaws are crucial for the smooth operation of the corporation. You can draft your bylaws or seek the assistance of an attorney.
Step #6: Secure Business Licenses and Permits
Regardless of your industry, you are likely required to get additional licenses and permits to operate in Wyoming. Some common licenses and permits include a Sales and Use Tax Permit, a Professional License, and a Contractor’s License. You can check the Wyoming Business Council’s website for a list of licenses and permits required for your industry.
Get Help from Business Incorporation Experts
Wyoming and Nevada offer many benefits for incorporating your business, but the right choice depends on your specific needs and priorities. Wyoming might be your best choice if you’re looking for low taxes and fees, strong privacy protections, and flexible operating agreements. However, Nevada might be the right choice if you want strong corporate veil protection and a business-friendly regulatory environment.
If you opt for the latter, call our Nevada Corporate Headquarters, Inc. at 1-800-508-1729. We will help you incorporate your business in Nevada!