Wyoming vs Florida LLC: Which State is Better to Start Business?

Today, small businesses have hugely shifted from unincorporated forms such as partnerships and sole proprietorships to incorporated entities such as LLCs. An LLC formation is a new start on the modern business horizon that offers great opportunities for entrepreneurship and brings better peace of mind to the company owners.

While hybrids in other areas tend to have distinct drawbacks that often become repelling, it’s not the case with LLCs. The smart hybrid nature is what has made this form of business ownership so popular. Efficiently combining the features of disregarded entities and corporations, an LLC embraces the best of both worlds and stands out for the ultimate flexibility and adaptivity.

Similar to disregarded entities, LLCs enjoy pass-through taxation and are free from paying income taxes at a corporate level. At the same time, if the growing enterprise potential calls for further expenses optimization, you can switch to a corporate tax status to minimize the levy burden on the increasing income.

A limited liability shield is a feature LLCs have successfully adopted from corporations. LLCs are independent legal entities not legally associated with their owners. As such, they have their own rights and obligations, and overdue LLC liabilities or financial problems incur no charges or commitments over the owner's assets. In other words, whatever the business issues, your personal property and funds will stay intact. 

One more benefit of limited liability companies is that they are extremely easy and quick to establish. The formation process doesn’t involve too many formalities and you’ll be able to do it online. The only peculiarity is that LLC laws and regulations are state-specific. And some states create a more favorable business environment than others. For this reason, many businessmen-to-be end up choosing between certain states. 

Both Wyoming and Florida are among the top ten US states for business. It means both have a business-friendly atmosphere and provide some long-term incentives. Which one is better then? Which is a stronger competitor in a Wyoming vs Florida LLC comparison? This is what we are going to find out below.

Wyoming vs Florida LLC Formation: How They Stack Up

Recently, Wyoming has been confidently taking over the leading positions in the “Best US State for Business” race, especially regarding limited liability companies. It leaves behind Nevada and Delaware which used to be the business favorites and are still much loved by big corporations, venture capitalists, and angel investors. 

Wyoming currently pulls away thanks to an inviting tax environment that looks very attractive for startuppers and first-time entrepreneurs and ensures a lower burden of initial expenses for newly formed entities, thus, giving more chances for growth and expansion. 

Speaking of the Sunshine State, the high density of celebrities and wealthy people per square mile, warm weather, and sandy beaches are not its most prominent standout features. The state is also known for its pro-business tax policies and regulatory climate, making it a welcoming spot for all types of enterprises. 

Today, smaller businesses take over 99% of the state market. So, you will not only enjoy living in Florida but also will have a chance to set up the company of your dreams.  

Wyoming or Florida LLC? These two states have some features in common and stand different on many points as well. So, let’s look to what extent they are similar and what sets them apart.

Wyomiing LLC vs Florida LLC: Similarities

Since LLC laws are very similar in part of formalities and basic regulations, Florida vs Wyoming LLCs will offer pretty much the same basic features:

• Reliable asset protection: Both states ensure the corporate veil protections to the full. Your personal and business funds and property will be split from the start and kept separate, should any lawsuit involving your business entity arise;
• Pass-through taxation: Florida or Wyoming LLC, you’ll benefit from being taxed as a disregarded entity. You won’t have to pay business income taxes and your company profits will be taxed as your personal income. Not only will you avoid double taxation but also you’ll get an opportunity to choose the most appropriate taxation scheme for your business;
• Flexible governance: None of the states has any limiting rules for the company owners and managers. And none of them requires holding any compulsory meetings. It’s up to you and your partners to decide how your enterprise will be governed and managed. More than that, with an Operating Agreement at hand, you won’t have to observe default laws;
• Valuable tax benefits: Whatever of these states you choose as a domicile for your venture, you’ll benefit from a much lower tax burden. Florida and Wyoming have no personal income taxes and boast much lower sales tax rates as compared to other states;
• Domestication rules: Both states allow for LLC domestication. Following conversion rules for out-of-state or foreign LLCs in Wyoming or Florida, you won’t have to dissolve your company and form a new one. Instead, once you finish the domestication procedure and Wyoming or Florida will appear as your domicile state, not only all your initial LLC records and documents stay intact but also Wyoming or Florida will be mentioned as your initial formation state. Meanwhile, your company credit ratings and other essential data won’t change.

Florida LLC vs Wyoming LLC: Differences

While Florida vs Wyoming LLC similarities are rather generic by nature, the differences between them relate to more important areas and aspects:

• Confidentiality: The privacy screen delivered by a Wyoming LLC is hard to beat. The state doesn’t require company owners to reveal their personal data to the state and allows them to stay anonymous. In Florida, though, you won’t have that benefit since it’s a state requirement that you provide LLC member data to the regulator and make them publicly available;
• State fees: By and large, forming and maintaining a limited liability company  in Florida will be more expensive than running an LLC in Wyoming. Filing fees and other compulsory charges are overall higher in Florida creating a heavier regular burden on the company budget;
• Added legal protection: While both states ensure a regular LLC safety shield, Wyoming offers better protection to both company and owner assets. The state offers charging order protection that limits creditors’ ability to force the sale of company or owner assets and further enhances the asset security; 
• LLC lifespan: In Wyoming, LLCs are perpetual by default, unless you state some specific dissolution date in the LLC statute. In the meantime, in Florida, an LLC could be dissolved, should any of the members die, resign, or get expelled, unless you have an Operating Agreement in place that states otherwise and describes the detailed regulatory algorithm for such situations along with ownership and leadership transfer principles. 

Creating an LLC Wyoming vs Florida: Pluses and Minuses to Consider

Now that you see how these two states stack up in general, it’s high time to dig deeper and explore the individual features of each state. Wyoming and Florida have advantages and drawbacks of their own. And you should be aware of them before making a final decision since your final choice will greatly determine the future of your business and its success.

Wyoming LLC Pluses and Minuses

In the table below, we’ll summarize the key positivities and negativities you should take into account and then decipher them in more detail for you to get a better understanding of how significant those traits are.

Wyoming LLC Pros

• Solid privacy screen: In fact, creating an LLC in Wyoming, you can form an anonymous limited liability company, with the company members info kept secret and not popping up in public or state registries. That’s a huge plus for companies with multiple members who strive not to show up and stay anonymous to keep their business ownership records out of public sight. There are only a few more states in the US offering a similar level of privacy protection; 
• Outstanding tax incentives: Dedicated to business with all its “heart”, Wyoming comes up with excellent tax incentives that allow minimizing tax liabilities for your business. Thus, your profits in the state will be exempt from taxes thanks to zero corporate and personal tax rates. That’s a huge benefit for LLC incomes taxed at a personal level. Wyoming has also eliminated gross receipt and inventory taxes, excise tax, and per capita taxes while the sales and property tax rates are the lowest across the US;
• Charging order protection: It’s a legal tool available only in four US states. It’s meant to lend an added protection layer to LLC and owner assets and prevent unauthorized property and fund seizure by creditors. This document is issued by the court and strictly limits the creditor scope of actions in relation to debtors; 
• Flexible governance standards: Wyoming doesn’t restrict company members, managers, and officers by the state residence. Besides, LLC meetings could be held out of state and all decisions made will be fully enforceable and eligible. This allows foreign LLC owners to be in control of their businesses and keep a closer eye on the company operations; 
• Lower LLC costs: Formation-related expenses and company maintenance costs in Wyoming are at the lower side of the price range. All fees are clear and will enable you to calculate the regular charges and one-time costs without a problem; 
• Series LLC availability: Wyoming is among a few US states allowing for a Series LLC Formation. Thanks to a more complex legal framework, you can create a kind of corporate structure with a number of independent LLCs in it. Notably, secured by a corporate veil, each LLC’s assets will be independent and liabilities won’t overlap.

Wyoming LLC Cons

• Anonymity gap: While Wyoming LLC members’ and managers’ identities are not required to be submitted to the state regulator, the law calls them to disclose their personal data to the registered agent. Thus, there is still a route for the Secretary of State to get that data on demand; 
• Asset protection loophole: With a charging order being a unique protection aspect, it’s exclusive within the state. It means that any disputes arising for out-of-state LLCs in other jurisdictions might be settled under the law of that jurisdiction, nullifying the charging order benefit;
• Higher cost burden for non-residents: Wyoming is an attractive business environment for many different entrepreneurs who choose to reside in other states and run their ventures in Wyoming. In this case, though, they’ll be exposed to dual tax expenses and registration costs related to filing a foreign LLC.

Florida LLC Pluses and Minuses

Lagging behind Wyoming in some essential regulatory aspects, Florida has a lot going for it too. Let’s see how Florida LLC's benefits and flaws stack up.

Florida LLC Pros

• Lower taxes: With no personal income taxes, Florida is a haven to LLCs that are taxed as pass-through entities and pay taxes at a personal level. S-Corps will make use of this zero rate too. Sales taxes in Florida hit the midground and some groups of products and items are even free from sales tax levies. Besides, August is a sales tax-free month in Florida. Corporate income tax rates, property taxes, and unemployment taxes are at a lower level as well;
• Better access to capital: Recently, Florida has become more and more attractive for private investors thanks to the increasing presence of investment-friendly high-tech projects and stably growing potential for investments in technical, scientific, construction, and property areas. Hence, today, sourcing a starting capital in Florida is much easier, with an investment market activity close to that of metropolitan areas;    
• Reasonable living costs: Though living costs in Florida are not the lowest in the US, they are more than reasonable as compared to other highly developed economic areas. Thus, the cost of living in Florida is noticeably lower than that in New York, Chicago, or Los Angeles. So, even smaller private business owners with stringent budgets will be able to smoothly integrate into the inviting economical climate of Florida;
• Anonymity opportunity: Florida does require LLC owners to make their identities available to the public. At the same time, though, the state allows for making use of the anonymity shield ensured by other jurisdictions. Thus, you can form an anonymous LLC in Wyoming and make it an owner of your Florida LLC to hide the private data.

Florida LLC Cons

• Seasonal economy: Florida is a holiday or vacation state, with tourist and recreation businesses prevailing. Naturally, the tourist inflow is lower during spring and summer when the weather is warm in the northern states. So, you should be ready for leaner months across the year and plan your business accordingly;  
• Higher running costs: Formation, annual, and maintenance fees in Florida are considerably higher than in Wyoming. Besides, the state has rather strict licensing requirements in most counties that will further add to your grand total on compulsory state payments;
• Dissolution risks: Florida has no law requirements for an Operating Agreement. Yet, it’s advisable that you execute it for your LLC to avoid the risk of the entity dissolution in case of the member’s death or resignation.

Wyoming vs Florida LLC: Taxes and Fees

Similar to LLC laws, LLC formation and maintenance fees as well as compulsory tax rates are state-specific. As stated above, all in all, Wyoming is a more affordable state in this concern. It combines zero income tax rates with lower business costs to attract more first-time filers and smaller entities.

Final Thoughts

Growing corporate presence, diverse business opportunities, and favorable tax climate make Florida a business-friendly state consistently attracting new ventures and projects and pushing existing companies to relocate. In the meantime, of these two, Wyoming still feels to have more benefits for LLCs and the private business sector, with its solid privacy protection, hard-to-beat tax incentives, and low LLC costs.

Yet, if you choose between Florida or Wyoming and your home state, give preference to your domestic state since increased non-resident expenses will “eat up” the financial benefits that lure you into other states.