I formed my LLC in Wyoming because of the low fees and no state income tax. Seemed like a no-brainer at the time. But now I'm dealing with registered agent costs, annual report fees, and the hassle of having a virtual address that doesn't match my actual operations. I don't even do business in Wyoming. Wondering if others have made this mistake and what they did about it.
LLC Formation
The cheapest state to form an LLC wasn't my best option
I almost went with Wyoming too. Ended up choosing my home state because the savings weren't worth the extra paperwork. What made you pick Wyoming over just forming locally?
This is super common. People see the low filing fee and ignore the ongoing costs. Wyoming's annual report is only $60 but you still need a registered agent, and if you're not careful you can get hit with penalties for not keeping your address current. Have you looked into foreign qualification in your home state? That might be adding to your burden.
I did the same thing with Delaware. Learned my lesson. Now I just operate as a sole prop. Much simpler for my small consulting gig.
I picked Wyoming because I thought I'd eventually have customers nationwide and wanted a neutral jurisdiction. But realistically, my business is local services. The virtual address thing is annoying because my bank flagged it as suspicious when I tried to update my accOunt info. I'm considering dissolving and reforming locally.
Before You dissolve, check if your state has any penalties for doing business without foreign qualification. Sometimes it's cheaper to just foreign qualify than start over. Also, dissolving in Wyoming might have its own fees and final report requirements.
I don't think it's a mistake if you plan to grow into a multi-state operation. But for a local service business, yeah, it's overkill. What kind of services do you offer?
I do residential cleaning. Mostly in my city and surrounding suburbs. So definitely local. I think I got caught up in the online articles that push Wyoming and Delaware as the only 'real' option for LLCs.
Those articles are usually written by registered agent companies that profit from the ongoing fees. Not saying they're all bad, but they have an incentive to make it sound like you need their service.
Also, if you're doing residential cleaning, you might want to look into local licensing and insurance requirements. Forming in Wyoming doesn't exempt you from those. In fact, having an out-of-state LLC might complicate things if a client asks for proof of local registration ngl.
I'd just dissolve and reform locally. The headache of maintaining two states isn't worth it for a small cleaning business. You might even save on taxes if your state has lower effective rates for small businesses.
Thanks, everyone. I'm leaning toward dissolving and starting fresh in my home state. I'll talk to an accountant first to make sure I don't mess up any tax obligations.
Good call on the accountant. Also check if your state requires a publication requirement for dissolution. Some states make you publish a notice in a newspaper, which can add a few hundred bucks.
One more thing: if you dissolve, make sure you file final tax returns and close any business bank accounts. I've seen people forget and get hit with penalties later.
Will do. Appreciate all the inpput.