It’s the last week of our 50 states of incorporation series and we’re focusing on the Cowboy State – Wyoming. Smack dab in the middle of the Rockies, Wyoming is America’s least populous state, but is easily one of the most beautiful. The vast majority of the land in Wyoming is owned and protected by the Federal Government, and Wyoming is home to the world’s first national park, Yellowstone. Wyoming’s natural beauty has ensured the state’s tourism industry would flourish, and today it generates two billion dollars in state revenue. Along with tourism, Wyoming’s historic agricultural and mining industries continue to drive the state’s economy – Wyoming is the number one producer of coal in the country. Though largely rural, Wyoming is a great state for a small business, thanks largely to the low cost of doing business. So what does it take to get started there? And how do you incorporate in Wyoming?
How do you start a business in Wyoming?
We decided to do something a bit different with our weekly business basics post this time around, and instead look at a new service we’ve just started offering – business license compliance packages. We’ve covered business licenses before, but we thought it’d be a good idea to revisit the topic and explain why we decided to start offering this service to our customers. Our team kicked around the idea for awhile, trying to figure out whether or not there was any demand for this type of service, and we realized that there were three questions we’d have to be able to answer before launching.
Why offer business license compliance packages?
MyCorporation has always aimed to meet all of the needs of new business owners. The next logical step after creating your business is to apply for all of the licenses you need to legally open your doors. Without the right licensing, you’re effectively dead in the water. So expanding our offerings to include licensing just makes sense.
If there is one thing we’ve learned from over a decade and a half of helping small business owners, it’s that every business is different. For new small business owners, it’s important that you choose the business entity that will suit your unique needs. There are four basic entities that you can choose from, each with its own advantages and disadvantages. While there is no “right” choice, depending on what you sell, where you plan to take your company, and how ownership of the company is divided, there will be certain entities that will fit your business model better than others.
Sole Proprietorships and Partnerships
Sole proprietorships and partnerships are the simplest type of business entity. They are also the default option. It doesn’t take much to start a sole proprietorship or a partnership either. Just file for a ‘Doing Business As’ name, apply for the right licenses and permits, and open your doors. If the business is run by two or more people, you will also need an Employer Identification Number (EIN) and you’ll have to file another form come tax time. But this simplicity comes at a price. Everything the business owes and owns is tied to your personal assets. In other words, you, and your partner if you have one, will be held liable for the business’s debts if it fails. Also, if you do have a partner, you may not be protected if they decide to walk away from the business. So, while running a sole proprietorship or partnership is a lot simpler, it does put an undue amount of risk on the owner(s). To limit your liability, consider forming a corporation or limited liability company.
One of the most common questions we get here at MyCorporation about forming a limited liability company or corporation is, “How hard is it to actually run this type of business?” Running an LLC or corporation is very different than running a sole proprietorship, and the government will expect those running the business to adhere to certain rules. It should be noted that the only governance document need for Corporations and LLCs is an Articles of Incorporation or a Certificate of Organization. However, there are other types of governance documents that should be kept and maintained.
Articles of Incorporation and Certificates of Organization
In order to form a corporation, you have to file your articles of incorporation. And in order to form an LLC, you have to file what is normally called a certificate of organization. In both cases, these documents act a sort of birth certificate for the new business entity. They disclose the entity’s name, address, registered agent information, and the information of any managers or owners. A lot of states actually offer a “fill-in-the-blank” type of form on the website of their Secretary of State or department of corporations. However, these forms only meet the minimal requirements for a corporation or LLC as set by the state. They also don’t set the rules for how your company will actually be run. Along with these formation documents, you should consider drafting a set of bylaws or an operating agreement.
Operating agreements are one of the most vital, and overlooked, tools in running a limited liability company. We’ve actually covered operating agreements as part of our ‘ABCs of MyCorp’ series, but we never delved into what an operating agreement should actually say. As a quick refresher, an operating agreement is essentially a document that defines how the LLC will be run, and the SBA recommends that every LLC draft one. The trouble is that only a couple of states, like Missouri and New York, legally require new LLCs to have an operating agreement. But without the rules, structure, and regulations an operating agreement provides, your LLC could be in serious trouble if partners disagree, a member wants to leave, or if the state starts questioning the validity of your LLC. Operating agreements are also pretty easy to draft and only need to cover a few key areas.
Home to the late, great Elvis Presley and The Great Smoky Mountains, this week we’re taking a look at what it means to incorporate in Tennessee.
If you’re planning to start a business in the agriculture, manufacturing, or tourism industries, Tennessee might just be the place for you! You have the Great Smoky Mountains to thank for that – being one of the nation’s most visited national parks makes Tennessee a great spot for all things tourism. Companies including Ruby Tuesday, Saturn Corporation, and Eastman Chemical Company all call the state home to their headquarters as well.
Forbes has the state ranked at 15 out of their best states for business list, noted for its excellence in having a pro-business regulatory climate. Thumbtack.com also has Tennessee ranked with a positive B+. The state scored high in ease of starting a business, hiring and regulations, health and safety, employment, tax code, licensing, environmental, zoning, and networking. With grades like that, Tennessee passes with flying colors!
This week on 50 States of Incorporation, we take a look at ‘The Palmetto State,’ South Carolina! Also know as ‘The Rice State’ and ‘The Swamp State,’ South Carolina’s official nickname comes from the state tree, the Sabal Palmetto, which distinguished itself during the revolutionary war. It was a fort made of Palmetto logs that repulsed the British fleet from Sullivan’s Island back in 1776! But South Carolina has a lot more to offer than strategically useful flora. Though it was hit hard by the recession, its strong agricultural heritage, and the state’s friendly attitude towards business, has really boosted its recovery. So what should South Carolinian entrepreneurs know about their state? And what does it take to open up a business and incorporate in South Carolina?
Are there any benefits to running a business in South Carolina?
Plenty! South Carolina is actually one of the most business-friendly states in the USA. Thumbtack gave the state an A- in overall friendliness, and South Carolina has the tenth lowest tax burden of all states. It also makes sense to incorporate in South Carolina as the state boasts a low, 5% flat corporate income tax rate. Of course, South Carolina does all it can to help small businesses within the state. The South Carolinian Secretary of State’s office maintains a Small Business One-Stop Site to help new entrepreneurs find and file for everything they need to get their business up and running, and the Department of Commerce is proud to offer multiple growth incentives to businesses with the state.
For years, MyCorporation has been honored to help thousands of new entrepreneurs to get their new small business started on the right foot by incorporating or forming an LLC. But business maintenance doesn’t end when the articles of incorporation are filed! There are actually a few more steps to ensuring your new entity is compliant and ready for business. In order to help educate new business owners, and answer one of our most commonly asked questions, we are happy to reveal our new video, “What happens after you incorporate or form an LLC?”
Step 1. Apply for an Employer Identification Number. An EIN is going to be needed if you want to open a business bank account, or if you want to hire employees.
Step 2. File for trademark protection, and begin protecting your brand. You should also buy a domain name and secure social media properties as soon as possible.
Step 3. Look into what business licenses you have to apply for. Licensing varies depending on locality, entity, and industry, so it is a good idea to consult with a professional who can help you figure out exactly what you need.
Step 4. Remember to stay on top of annual maintenance. Most states will require business entities to file an annual report, which will have some basic information on your business like its name, address, registered agent, and industry. You also have to document any changes to the corporation or LLC. If you bring on new owners, or new investors, make sure to make note of it. You should also update your operating agreement or bylaws as new owners and investors will probably want a say in how the company is run.
Step 5. Thinking about expanding outside of your home state? Well, remember that you have to apply for permission to do business in any new state. If you don’t, you could be looking at hefty fines and dissolution of your business in that state. So don’t forget to file to qualify as a foreign entity in any state you plan to expand into.
Have any questions about corporate or LLC maintenance? Need help figuring out what you need to file? Just give MyCorporation a call at 1-877-692-6772 and we will be happy to help you out!
Traditionally, Limited Liability Companies are treated like partnerships. Two or more people get together, found a company, form an LLC, and then start running the business. But there’s more than one way to run an LLC. Member-Managed and Manager-Managed Limited Liability Companies are run very similarly, but there are also some key differences that anyone looking to form an LLC should know.
Member-Managed LLCs are, by far, the more common choice. Each member of the limited liability company is treated as equal to every other member, and everyone shares responsibility for the day-to-day operation of the LLC. Continue reading
Limited Liability Companies were, originally, meant to be a replacement for the standard partnership. In 1977, the IRS ruled that it would treat the very first LLC, a Wyoming-based oil company, as a partnership for tax purposes. That meant any money earned by the company would flow through it, directly to the members of the LLC. It wasn’t until 1988, however, that the IRS chose to recognize all LLCs as partnerships, rather than corporations. LLCs are thus, at the federal level, treated as partnerships, which complicates matters for Single Member LLCs. Single Member Limited Liability Companies thus face challenges unique to its business structure – challenges that anyone considering forming a SMLLC should know about and expect.
What are the differences between a Limited Liability Company and a Single Member LLC?
The main difference is right in the name. A single member LLC only has one member, or owner. Limited Liability Companies were primarily created to protect the interests of everyone involved in running the company. The assets and debts of the company were its own, and the assets and debts of each member was their own. If one member misbehaved and owed creditors money, the creditor could not seize control of the LLC – they could only collect on the proportional share being paid to that owner. Likewise, if the company went bankrupt, the personal assets of the members were safe. Single Member LLCs, on the other hand, are not partnerships and it has been up to the state courts to decide how much protection a single-member LLC should really provide.