Wyoming vs Delaware LLC

[Kathy Reyes]

Does anyone have info on setting up an LLC out of Wyoming or Delaware to maintain anonymity? I live in Illinois and would like any advice on this topic and recommendations of attorneys you may have used to successfully do this. Thank you.

[George Skidis]

Thursday night's meeting of Illinois REIA was on just this subject.

My question is what this weekend only GURU bootcamp did you attend and how much did they want to charge you for a Wyoming LLC? The going rate seems to be about $6,000 each.

Wyoming in 1977 was the birthplace of the LLC. They asked the IRS how to tax an LLC. 20 years later the IRS responded, "We don't care, Just Pick One." That opens up Sole proprietor, Partnership, S Corp and C-Corp.

Wyoming is one set of expenses where you are a Domestic Business Entity. However, you must notify Illinois that you are a foreign entity doing business in Illinois. That is a second set of expenses.

Two Resident Agents WY $50 to $250 per year plus Illinois another $50 to $$250 per year.

Two State Franchise Fees WY $100 each year and Illinois $200 per year.

Your CPA has to file tax returns in every state that assesses income tax against your business. That is another $50 to $100 each year for each state.

You must have a physical address not a PO Box in every state where you do business. If you make a mistake and tell just one state on an obscure document your anonymity is toast. The reason for a physical address and not a PO Box is Service of Process.

So, your strategy is going to cost you up to $1,000 a year to maintain it. Before you make a dime. You start showing millions in assets it may be worth considering. Until then it is a waste of effort.

If your business gets sued in Illinois, IL law prevails since that is where you are doing business.

My suggestion is to obtain an LLC, in the state where you do business.

GET TONS OF LIABILITY INSURANCE! 1 million Singe limit liability on each property minimum. Then get an umbrella policy as well. Using a trust or business entity to avoid liability and then skimping on protecting others is a sign of bad faith and will make the judge mad at you.

Run your business properly and ethically.

Own nothing in your own name. Your personal residence in IL should be in a Land Trust. Your vehicles in personal property trusts. Never place your vehicles in the company name. Running out to get yogurt at 2 in the morning because your wife has a craving. Well officer yes this is a company vehicle, no officer I was not on company business, No your Honor I didn't know a 2 AM fender bender with a company vehicle could cost me all of my rental properties. 

One final warning. Once you get a Tax ID for your business a tax return is due on the VERY Next March 15th. Doesn't matter if you haven't really got anything going on. You told the IRS you were a business. The late filing penalty is $195.00 per month per member/partner.  4 members 18 months late the penalty is $14,040.00

When your only tool is a hammer, everything looks like a nail. Have a full toolbox of attorneys, insurance, land trusts, Family trusts, property maintenance, legal tenant screening and a network of experienced investors. Join your local REIA for a regular education. In the Chicago area Join The Chicago Creative Investors Association run by Jane Garvey. They meet in Lombard in the evening of the third Sunday of the month.