Wyoming Limited Liability Company-Main Reasons For Formation

The Concept Of A Separate Legal Identity

September 3, 2004
By Akhilesh Goenka

The primary reasons for forming a Wyoming Limited Liability Company are credibility, tax savings, deductible employee benefits, lawsuit protection, asset protection, etc. A Limited Liability Company based in Wyoming has an expansive assortment of powers that go beyond a sole proprietorship. When the business is sued the owners can be protected from being sued personally as they have a distinct entity from the business.

There are many tax advantages with Limited Liability Companies. Few examples of these are medical expenses, business trips and entertainment. It is much simpler to raise capital for Limited Liability Companies than partnerships or sole proprietorships. Since the Limited Liability Company is separate from the owners, people have a tendency to be more willing to invest money without accepting responsibility for the company business.

A Limited Liability Company has members as its owners whereas a corporation has shareholders. According to Corporate law the stocks of the individual holder can be confiscated in an individual lawsuit. In dissimilarity, there are provisions in the law such that when an individual is sued personally, the membership in the Limited Liability Company is sheltered from being taken away.

A Limited Liability Company based in Wyoming can send an officer, director or any other employee to stand for the company in small claims courts. This is quite unlike a sole proprietorship; here the owner is free to operate the business while his employees take care of legal matters. The Limited Liability Company acts as a strong shelter and protects the personal assets of the members.

A Limited Liability Company continues to exist even after the death of the owners. An excellent example of this is General Electric Company, which was founded by Thomas Edison in 1882 and is one of the world’s largest corporations to exist as of today. The operating agreement has a huge role in determining the life of the limited liability company, as it may be limited upon the death, withdrawal or bankruptcy of a member. The laws of many states allow a limited liability company to have uninterrupted existence.

Limited Liability Companies have members and, if favored, managers. One person has the power to hold all the positions in most states. The personal and company funds should not be combined in the same account.