Wyoming Close LLC

LLC

"A Company without double taxation"

A Limited Liability Company (LLC) may elect to pass gains or losses, credits or deductions, on to the members of the LLC in much the same manner that partnerships are taxes. An LLC status avoids the corporate potential problem of "double taxation." Individual members may benefit from a reduction in their taxable income if the corporation operates at a loss. Despite their unique tax treatment, LLC’s maintain full corporate attributes like limited liability. If you are not sure about what type of corporation to start with, this would be the one to choose. An LLC can later be converted to a C corporation, much easier than converting a C to an LLC.

General Characteristics

  • Member instead of shareholders.
  • Members do not have to be citizens of the United States.
  • A Managing Member runs the LLC.
  • Special action necessary--all members must consent to LLC status.
  • Special action necessary--the corporation must file IRS Form to show the profits or losses passed to the members.
  • Tax advantage--may avoid double taxation by passing gains and losses on to members.

Advantages

  • Corporate attributes--offers members limited personal liability, the same ones that a C corporation offers.
  • Tax advantage--corporate income tax payments are not required. Gains and losses are passed on to members who pay taxes in a manner similar to partnerships.
  • Early loss benefit—LLC’s may operate at a loss in their first years. Members may benefit from a reduction in their personal taxable income by receiving their share of corporate losses.
  • Shareholder restrictions—foreigners, corporations, and partnerships can be members of an LLC

Disadvantages

  • Corporation continuity – life of company has a set ending date.

The first LLC statutes in the United States were instituted in Wyoming in 1977. Since Wyoming has had limited liability companies available longer than any other state and has strong laws protecting members and managers of an LLC, we feel it is the state of choice for establishing LLC's.

CLOSE LLC

The main differences between a regular LLC and a Close LLC is that there is a restriction on the selling of a member's shares. A member must offer the shares, for sale, to the other member(s) of the LLC, before they can be sold to anyone else. All members also must approve of the sale of shares. This works well in a closely held family company, were the parents want to make sure that the children can not sell part of the company to outsiders.

A Close LLC is not required to hold annual meetings, unless requested by a member.

The Close Limited Liability Company Supplement, articles of organization, and operating agreement of a close limited liability company may also restrict transfer of ownership interests, withdrawal or resignation from the company, return of capital contributions and dissolution of the company.