2023-07-20 11:09:37
This article discusses New Mexico vs. Wyoming vs. Nevada vs. Delaware LLC formation, their differences, and their benefits.
New Mexico, Delaware, Wyoming, and Nevada are the only four US states allowing the formation of anonymous LLCs. That’s why they’re also sometimes referred to as Anonymous LLC states.
Anonymous LLC states are excellent for US investors and entrepreneurs who want to acquire some degree of privacy and asset protection without leaving the US territory. It’s also an excellent option for foreign investors and entrepreneurs who want to plant a business flag in the US while keeping some information about their corporate affairs undisclosed.
Whether you want to benefit from the entrepreneur-friendly regulations in the anonymous LLC states or tread offshore to gain the ultimate personal and financial freedom, Nomad Capitalist can help you find the best solution.
Our all-in-one exclusive Action Plan covers everything from tax planning to second residency or citizenship and all relevant real estate and company formation matters. Set up a call with us if you don’t want to waste your time comparing states and offshore jurisdictions for all the benefits they’re promising to offer.
Delaware – State Overview
Delaware is a US state bordering Maryland to its south and west, Pennsylvania to its north, and New Jersey and the Atlantic Ocean to its east. Delaware is the sixth-most densely populated US state. Its capital is Dover, and the largest city is Wilmington. The population of Delaware is 945,934. The state is known for its pristine beaches and rich history.
New Mexico- State Overview
New Mexico is a state in the Southwestern United States. It borders Texas to the east and southeast, Oklahoma to the northeast, and the Mexican states of Chihuahua and Sonora to the south. New Mexico’s Capital is Santa Fe (the oldest US state capital), and its largest city is Albuquerque. The population of New Mexico is 2,110,011. New Mexico is known for its stunning landscapes.
Wyoming- State Overview
Wyoming is a state in the Western United States, bordering Montana to the north and northwest, South Dakota and Nebraska to the east, Idaho to the west, Utah to the southwest, and Colorado to the south. With a population of 583,279, Wyoming is the least populous US state. The state capital and most populous city is Cheyenne. The state is known for its natural beauty and stunning national parks like Yellowstone.
Nevada- State Overview
Nevada is a state in the Western region of the United States, bordering Oregon to the northwest, Idaho to the northeast, California to the west, Arizona to the southeast, and Utah to the east. Nearly three-quarters of Nevada’s population lives in Clark County. Nevada’s capital is Carson City, while Las Vegas is the most popular and largest city. The state is known for its gambling scene, desert landscapes, and hyper-active nightlife.
What is an Anonymous LLC State?
An anonymous LLC is similar to a regular limited liability company, with one difference – the names and contact information of owners, shareholders, and members are not publicly disclosed.
An anonymous LLC state allows the formation of an anonymous LLC.
Anonymous LLC states have the necessary regulations in place that support the formation of a company where ownership information is kept anonymous.
An anonymous LLC can also be called:
- Confidential LLC
- Secret LLC
- Private LLC
Also, you may have heard about forming foreign LLCs in the US. Here foreign doesn’t mean a foreigner-owned company or a branch of a foreign business. Simply, if you form an LLC outside of your home state, you’ll be required to register that out-of-state LLC as a foreign LLC in your home state.
Difference Between Delaware, Nevada, New Mexico, and Wyoming LLCs
Why are these four states heavily mentioned when discussing LLC formation in the US? Because only these states allow forming an anonymous LLC.
Each state comes with its own set of benefits in addition to anonymity – such as tax benefits, low cost of maintenance, or some other perk.
Depending on your business, you may prefer one state over another. However, people mainly choose these states for privacy and asset protection.
Below, we’ll talk about LLC incorporation in each state.
Forming an LLC in Wyoming (WY LLC)
Wyoming has been something of a trailblazer in LLC formation in the US. The state is known countrywide for its business-friendly environment and entrepreneur-friendly regulation. The same can be said about Wyoming LLCs. LLC structures in Wyoming enjoy great anonymity and some of the best legal protection from the state protecting single-member LLCs.
Let’s discuss significant aspects of a Wyoming LLC.
Anonymity
The most significant reason to form an LLC in Wyoming is to acquire anonymity and to benefit from the absence of state income taxes. A Wyoming LLC does not require you to disclose business information regarding the identity of owners, shareholders, managers, directors, etc. However, you must name a filer while filing your annual report. You can always use a nominee if you don’t want to disclose your real identity. Wyoming allows the “nominee service,” allowing you to replace the names of real owners with nominees (a law firm, person, legal entity, etc.). The public records will show the name of the nominee you chose instead of your name.
Depending on your business, you can expect one of the fewest reporting requirements in Wyoming. Only real estate owners’ information is reported to the Internal Revenue Service (IRS). Moreover, your information is not reported to the Secretary of State.
Cost Involved
You must file an Article of Organization to form an LLC. The fee for filing your Articles in Wyoming is $100. You must also pay an annual report fee worth (at least) $50 starting the second year of LLC formation. That’s all that you have to pay regarding your Wyoming LLC. There are no additional business licenses or fees.
Tax Liability
Wyoming is the most tax-friendly option among the four anonymous LLC states. The state levies no corporate income taxes for an LLC.
Asset Protection
As mentioned earlier, Wyoming is the only state with statutes protecting single-member LLCs, including charging order protection. Whatever assets you’re holding through your Wyoming LLC can’t be seized by personal creditors to satisfy debts, making Wyoming LLC one of the best tools for asset protection in the US.
Forming an LLC in Delaware (DE LLC)
Where Wyoming is known for its small-business-friendly regulations, Delaware is the opposite. The state is a suitable option for large corporations that are not hesitant to pay large sums to acquire privacy and asset protection.
Let’s discuss significant aspects of a Delaware LLC.
Anonymity
In terms of anonymity, certain entrepreneurs may prefer Wyoming over Delaware. Delaware does not publicly disclose a company’s owners, directors, etc., However, the state shares information with the IRS and checks companies against Treasury databases.
Cost Involved
Small corporations avoid Delaware because the fees and certain taxes associated total an amount that is often quite high for small businesses. To start an LLC in Delaware, you must pay several kinds of fees. You must also pay a $300 franchise tax and a $50 fee just to change registered agents.
Tax Liability
Delaware has no corporate income tax for an LLC. It also doesn’t have corporate sales tax. However, there is a franchise tax, and, as an LLC owner, you’ll have to pay personal income tax based on your income level. Taxes in Delaware are susceptible to change yearly.
State Regulations
Delaware is known for its corporate legal system – the Court of Chancery. It’s where business disputes are heard fairly and in a streamlined manner. The state of Delaware has no particular asset protection laws to protect LLC owners, unlike Wyoming.
Many smart entrepreneurs use a Wyoming LLC to hold shares in a Delaware corporation, getting the best of both worlds.
Forming an LLC in New Mexico (NM LLC)
New Mexico may be late to the game, but it is steadily gaining popularity in the US LLC climate. The state has assessed the weak points of other anonymous LLC states and addressed those points in its LLC regulations. It doesn’t have a dedicated business court system or specific asset protection laws, but it offers a low maintenance cost and excellent privacy protection.
Let’s discuss significant aspects of a New Mexico LLC.
Anonymity
New Mexico is the only state that doesn’t require an LLC to disclose any individual names to the state, not even ownership information. Other anonymous LLC states require disclosure of ownership information to the state. However, you are required to disclose whether it’s a single-member LLC or manager-managed.
Cost Involved
Setting up an anonymous LLC in New Mexico comes with perks such as minimal initial filing fees and no annual reports. The fee for filing Articles of Organization is only $50. Moreover, there are no additional setup or business license fees.
Tax Liability
New Mexico levies a state corporate income tax, which is why most entrepreneurs tend to avoid setting up New Mexico LLCs.
Forming an LLC in Nevada (NV LLC)
The characteristics of a Nevada LLC and a Wyoming LLC are almost similar. However, Nevada LLCs are slightly behind in privacy protection. Moreover, they also charge a higher fee.
Let’s discuss significant aspects of a Nevada LLC.
Anonymity
Nevada’s State Secretary does not disclose information about LLC owners, members, etc. However, the state has undergone many regulation changes, so there’s no guarantee of how long the anonymity will be upheld.
Cost Involved
The Nevada Secretary of State charges nearly $300 to start an LLC. Wyoming has a clear edge in this aspect with lower fees. Annual fees average a bit over $200 for an LLC.
Asset Protection
Like Wyoming, the state of Nevada has anti-creditor laws designed to help debtors. However, unlike Wyoming, no statutes exist for single-member LLCs.
Which US State is the Best for LLC Formation?
Asking which US state is the best to form an LLC is much like asking which country is the best to move to or conduct business in. There is only one honest answer to that question: it depends.
It depends on your personal lifestyle, corporate portfolio, tax liabilities, and many relevant aspects. All these puzzle pieces have to work together for you to acquire ultimate personal and financial freedom.
A corporate consultant dealing with only your business matters may advise you to do something that ensues chaos in your personal life. An immigration professional, on the other hand, may suggest a country that is bad for your business. To have it all, you need a tailored holistic strategy only Nomad Capitalist provides.
Our experienced team assesses each aspect of your life to help you to go where you’re treated best. If you want an all-in-one solution to your corporate woes, get in touch with us today.
New Mexico vs. Wyoming vs. Nevada vs. Delaware LLC Comparison FAQ
Which states allow anonymous LLC formation?
The following four US states allow the formation of anonymous LLCs:
Wyoming
New Mexico
Nevada
Delaware
Is an anonymous LLC different than a standard LLC?
An anonymous LLC is similar to a regular LLC, with one difference – the names and contact information of owners, shareholders, and members of an anonymous LLC are not publicly disclosed. Wyoming, Delaware, Nevada, and New Mexico allow the formation of an anonymous LLC.
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