PRIMO, INC.

Delaware Corporations or Wyoming Corporations?

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DELAWARE CORPORATION VS. WYOMING CORPORATION

Delaware Corporation or Wyoming Corporation? Delaware Corporation or LLC?

HOW IS A CORPORATION FORMED? CORPORATION FORMED?
The Articles of Incorporation are filed with the Secretary of State. The Articles spell out the name of the company, the registered agent and the address, the type of business of the company, shares, etc. Anyone may retrieve a copy of the Articles of Incorporation.

WHAT IS A REGISTERED AGENT?

The registered agent is the contact for anyone who seeks to serve papers on the company. The registered agent is the contact "agent." If someone seeks to serve notice on the company, such as for an audit or lawsuit, you deliver notice to the registered agent. If you live where the company is filed, then you can be your own registered agent. For example, you can be the registered agent of a company if the company was filed in Wyoming and you live in Wyoming. If you don't live in Wyoming, then you'll need to hire a registered agent for the Wyoming company. Respectively, the same applies to Delaware corporation and Delaware LLC's. You may serve as registered agent for a Delaware corporation or Delaware LLC if that's where you live.

WHAT IS A REGISTERED AGENT?

The registered agent is the contact for anyone who seeks to serve papers on the company. The registered agent is the contact "agent." If someone seeks to serve notice on the company, such as for an audit or lawsuit, you deliver notice to the registered agent. If you live where the company is filed, then you can be your own registered agent. For example, you can be the registered agent of a company if the company was filed in Wyoming and you live in Wyoming. If you don't live in Wyoming, then you'll need to hire a registered agent for the Wyoming company. Respectively, the same applies to Delaware corporation and Delaware LLC's. You may serve as registered agent for a Delaware corporation or Delaware LLC if that's where you live.
WHY IS DELAWARE SO POPULAR?

DOES WYOMING MEASURE UP?

Delaware has a strong marketing engine and they cater to big business. Delaware is the best place to incorporate if you run a large corporation.

We believe that the small business person deserves more protection than what is offered in Delaware. Yes, we all aspire to make it big. But it’s better to have a small business. Although you may not have a business jet; you may have your family, health or love. Running a large corporation often requires sacrifice of family, health or love; or all three. We believe it’s better to be a small business owner. Wyoming best serves small business. Delaware serves big business. And lately, many of the values of big business are anti-American. Big business exports jobs overseas. Big business brings in foreign oil, Chinese products, poison drywall, poison toys, genetic food and other problems that adversely impact Americans. And these big businesses are served by Delaware.

Small businesses think local, they think American, they focus on the American consumer, and they hire Americans. Wyoming understands this and rewards all small businesses that do business in Wyoming. Wyoming offers a 0% income tax, pro-business environment, strong limited liability and respect for privacy. When it comes to serving the small business owner, Delaware can’t compete with Wyoming.

Even now, Delaware sells many more companies than Wyoming. But this is no popularity contest. This is about your goals, your dreams and choosing the best corporation, or LLC, to meet your objectives. If your business is small business, then Wyoming is your best choice. The herd mentality will lead to Delaware because that’s where everyone else is doing.

WHAT'S SO GREAT ABOUT A WYOMING LLC? WYOMING LLC?

IS IT BETTER THAN DELAWARE?

A Delaware LLC or Wyoming LLC properly arranged for the charging order protection is uncommon. Most people have a false sense of security about their LLC because of misuse. We are going to start at the beginning. The charging order protection with a Delaware LLC or Wyoming LLC is comparable. But the Wyoming LLC will cost less because of the difference in filing fees. Let’s start at the beginning…
LLC = Taxation As Partnership + Limited Liability Taxation As Partnership + Limited Liability

LLC Taxation As Partnership

Pass-Through

Partnerships are “pass-through” entities for tax purposes. This means that partnership income, deductions and other items passes through the partnership directly to the partners. Accordingly, each partner takes into account his or her share of partnership income, deductions and other items in determining the partner’s individual tax liability.

Pass-Through

Partnerships are “pass-through” entities for tax purposes. This means that partnership income, deductions and other items passes through the partnership directly to the partners. Accordingly, each partner takes into account his or her share of partnership income, deductions and other items in determining the partner’s individual tax liability.

Partnerships

Partnerships have partners.
Limited liability companies (LLC) have members. The ownership in the LLC is called the “member interest.”

Partnerships

Partnerships have partners.
Limited liability companies (LLC) have members. The ownership in the LLC is called the “member interest.”

Charging Order

If a judgment is awarded against the LLC itself, it may be levied, and LLC’s property seized or sold in payment. If, however, a judgment is awarded against a member, to the extent that the operating agreement so states, distribution usually cannot be compelled to satisfy a member’s judgment debt. Creditors have to satisfy themselves with a “charging order.” This gives them the rights to any distributions made by the LLC to that particular member, but little else.

Charging Order

If a judgment is awarded against the LLC itself, it may be levied, and LLC’s property seized or sold in payment. If, however, a judgment is awarded against a member, to the extent that the operating agreement so states, distribution usually cannot be compelled to satisfy a member’s judgment debt. Creditors have to satisfy themselves with a “charging order.” This gives them the rights to any distributions made by the LLC to that particular member, but little else.
LLC's are taxed as a corporation or as a partnership. Taxation as a partnership is the default. Taxation as a partnership is the default.

The Limited Liability Of A Corporation

When a hostile creditor sues the corporation, normally, it can only take the assets of the corporation. The stockholders are generally not liable for the debts, liabilities and acts of the corporation. This is called “limited liability.” This is very different from a partnership, where all partners are liable jointly and severally for everything chargeable to the partnership.
  • Corporations have stockholders.
  • Limited liability companies have members.
  • The LLC has the limited liability of a corporation.
The Limited Liability Company (LLC) Is A Hybrid Entity

The LLC offers the pass-through taxation of a partnership and the limited liability of a corporation.

CORPORATION

Directors and Officers

A Corporation can have one or more Directors and Officers.

hostile creditor

The hostile creditor can take your stock, if he can prove that you own it.

LIMITED LIABILITY COMPANY

Managers

An LLC can have one or more Managers.

charging order

The hostile creditor can ONLY go after a member’s economic interest in the LLC through the courts. This is called obtaining a “charging order.”

Once the charging order is obtained, the hostile creditor is now first line for any future distributions that are usually paid out to the member(s).

Wyoming Statute 17‑15‑145. Rights of creditor. Rights of creditor.
“…The charging order is the exclusive remedy by which a judgment creditor of the member or transferee may satisfy a judgment against the member’s interest in a limited liability company.”

The Assets Are Made Unattractive To The Creditor

The manager of the LLC can refuse to distribute the earnings. (If the operating agreement so allows.) What is the advantage of withholding the distribution from the hostile creditor?

This means that the creditor is now liable for income taxes on those LLC earnings, whether or not they’re distributed. The hostile creditor is now liable for taxes on earnings not yet received or for what is typically referred to as “phantom income.” This places the member in a stronger position to negotiate a favorable settlement. Hostile creditors don’t want to pay taxes on earned income that’s out of reach.

For this charging order protection to be most effective, the LLC must

  • Have at least two (2) members [Important!]
  • Managers can be people or another business.
  • Be taxed as a partnership
  • Be managed by a manager, not the members. [Important!]

Contact Us For Details

Aged shelf corporations and LLC’s offer no tax advantages. We’re not attorneys. We’re not tax advisors. Aged shelf corporations are not an advantage if you intend to do business with the government.

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