MURANE & BOSTWICK, LLC
Attorneys at Law

Questions About . . .

Murane & Bostwick, LLC has prepared this page for general information concerning Wyoming law. The information below does not constitute legal advice with respect to any particular circumstance. You should not act, or refrain from acting, based upon any information provided. If you have a question or a problem which may involve legal issues or relationships, you should seek the assistance of an attorney. Murane & Bostwick’s attorneys who emphasize this area of the law are listed at the end of this page.

Wyoming is a business friendly state from both regulatory and tax standpoints. Under Wyoming law it is possible to do business under a wide variety of business entities, ranging from sole proprietorships to partnerships, to limited liability companies to corporations. The business entity chosen must necessarily be based upon a number of considerations which the attorneys at Murane & Bostwick LLC are prepared and qualified to discuss with you. Considerations range from the purpose of your entity, to the number of owners or investors, to protection from liability, to tax advantages. The choice of your business entity is really for to you to decide after you have an understanding of the basic features of the types of business entities available and how one or another may fit your needs.

Types and features of business entities. The following are descriptions of a very general nature about typical types of business entities used to conduct business and are not intended to be used other than as general guide. If you want further information, you may call or e-mail us.

Sole Proprietorship. A sole proprietorship is the simplest form of business entity. It is most easily described as a business conducted by one person and owned exclusively by that person. A sole proprietorship has no formal legal structure other than a single owner. A sole proprietor has no protection from personal liability, and apart from protection afforded by insurance, a sole proprietor exposes his personal assets which are not part of his business, such as a personal residence, personal bank accounts, motor vehicles and the like. A sole proprietorship is not required to be registered with the Wyoming Secretary of State, although the proprietor may need to register or qualify with other state or local agencies.

Partnership. A partnership consists of two or more persons who go into business as co-owners to make a profit. The formation of a partnership does not require that any written agreement be signed by the partners. It may be created just by the actions taken by the individuals, which means that a partnership may be formed without the parties even knowing that is what they have done. In an appropriately formed partnership, agreements are prepared to define the partners’ agreement with each other. As with a sole proprietorship, a partnership does not provide liability protection for a partner’s personal assets which he may own outside of the partnership. In addition, each partner is liable for the actions of other partners in the conduct of the partnership business. As with a sole proprietorship, there is no requirement that a partnership be registered with the Wyoming Secretary of State.

Limited Partnership. The limited partnership has the same characteristics as a partnership with the exception that it has two classes of partners, general partners and limited partners. In a limited partnership, limited partners provide cash or other investments in the partnership but may not participate in the control the business. A general partner in a limited partnership has all the rights and duties of a partner in a partnership without limited partners. Limited partners are protected from personal liability and, in general, are only liable to third parties for the amount of their investment in the partnership. Unlike a partnership, a limited partnership must be registered with the Wyoming Secretary of State and must use the words "limited partnership" as part of its name.

Limited Liability Partnership. A third form of partnership is that of the limited liability partnership. In this type of partnership all partners are general partners. A limited liability partnership is created when a partnership files a registration as a limited liability partnership with the Wyoming Secretary of State. The registration is effective upon filing. After the filing of the registration, a general partner is not personally liable for any of the debts, obligations or liabilities of the partnership solely by reason of his being a partner. However, he - or she - still remains liable for any actions he takes as a partner individually. In addition, a majority of the partners in such a partnership have the ability to agree to impose liability on all partners for specified debts, obligations or liabilities. The partnership must use the words "Limited Liability Partnership" or the letters "L L P" in its name after registration.

Corporation. A corporation is created by the filing of articles of incorporation with the Wyoming Secretary of State. The basic structure of a corporation is set out in specific statutes governing corporations. A corporation may be formed for any lawful business purpose. In general, a corporation has shareholders, directors and officers. It also has by-laws which are the rules by which it conducts its meetings, holds elections, etc. At least one meeting is required for shareholders each year. In a corporation the shareholders are not personally liable for the actions of the corporation or its employees, unless, of course, a shareholder personally acts in a capacity other than as a shareholder, such as an employee of the corporation. One of the main reasons for the formation of a corporation is for protection against personal liability.

Close Corporation. A close corporation is a special type of corporation allowed under Wyoming law. A close corporation may not have more than 35 shareholders. It may have only one shareholder. The purpose of a close corporation is to provide a more informal structure for doing business than a regular corporation. A close corporation does not need to have a Board of Directors. Neither does it need to adopt bylaws, so long as provisions usually required in bylaws are set forth in the articles of incorporation or a shareholder agreement. There is no requirement of an annual meeting unless requested by a shareholder. Existing corporations may elect to do business as a close corporation by filing an election to do so with the Wyoming Secretary of State and so long as they meet the requirements of a close corporation.

Limited Liability Company. A limited liability company is created by filing articles of organization with the Wyoming Secretary of State. Unless election is made to form a flexible limited liability company, a limited liability company may only stay in business for a period of 30 years. It has no "shareholders," but its owners and investors, of which there must be at least two, are called "members." A limited liability company also has no Board of Directors. Instead it is governed by its members or a manager. Generally, members of a LLC are not personally liable for debts, obligations or other liabilities of the LLC, which is very similar to the liability limitation of shareholders of a corporation. A limited liability company must include in it's title the words "Limited Liability Company" or the letters LLC, otherwise its members may lose their liability protection. If an election is made to have a flexible limited liability company, then the duration of the LLC may exceed 30 years and it may only have one member. In addition to liability protection for members, these entities are treated by the Internal Revenue Service as partnerships for tax purposes. As a result there is a tax benefit to the members which may be realized by using this type of business entity.

Nonprofit Corporation. A nonprofit corporation is a "public benefit," "mutual benefit" or religious corporation, as those terms are defined in Wyoming's Nonprofit Corporation Act.  As with a regular corporation, articles of incorporation must be filed with Wyoming Secretary of State in order for the entity to be authorized to do business. While a nonprofit corporation has a Board of Directors and officers, it does not have stockholders. However, it does have members who participate in the business of the corporation.

What type of business entity is right for me? As noted above, the type of business entity is somewhat dependent upon a person's desires and goals in conducting their business. Typical considerations relate to limitation of liability, the complexity of the required business structure of the entity (i.e. regular corporation vs. close corporation), tax advantages, and the number of investors or shareholders. A decision as to which is right for you should be made after appropriate consultation with an attorney and possibly an accountant to discuss the various options available.

What must I do to maintain the status of the business entity? Most business entities are required to file annual reports and/or pay annual fees to the Wyoming Secretary of State in order to maintain authorization to continue business as an authorized entity. In addition, there may be requirements such as an annual meeting which must be met. You should consult your attorney as to the specific requirements of your particular business entity.

Is it possible to sell shares in a corporation I own? Generally, yes. Shares of a corporation as a general rule, are freely transferable unless they are subject to restrictions on transfer by way of separate agreement or by statute. In the event you choose to contact prospective investors for the purpose of selling stock in your corporation, and depending on the number of prospective investors, securities laws of both the State of Wyoming or of the federal government may come into effect. Prior to taking steps to sell shares to investors you would be well advised to consult with an attorney to make sure that you're doing so in compliance with the law.

The Wyoming State Bar does not certify any lawyer as a specialist
 or expert. Anyone considering a lawyer should independently
 investigate the lawyer’s credentials and ability, and not rely
upon advertisements or self-proclaimed expertise

Top of Page