Wyoming Holding Company LLC: Setup, Cost and Real Estate Use

What a holding company does

A holding company owns things rather than operating them: the membership interests of operating LLCs, rental property, brokerage accounts, intellectual property or a mix. The operating companies sign the leases, hire the staff and carry the business risk. The holding company sits above them and receives distributions.

Wyoming has no special holding company statute. You form an ordinary Wyoming LLC under W.S. 17-29 and write its operating agreement for a holding role. The Wyoming features that make it attractive are statutory: charging order protection that applies to a sole member (W.S. 17-29-503(g)), a license tax limited to Wyoming assets (W.S. 17-29-209(a)) and series LLCs (W.S. 17-29-211).

Source: wyoleg.gov

Cost to set up and keep

The state fee to form is $100. Each year the company pays the greater of $60 or $0.0002 of its capital, property and assets located and employed in Wyoming. A holding company whose properties and subsidiaries are all in other states usually pays the $60 minimum, because out-of-state assets are not counted.

With us, Starter is $149 plus the $100 state fee, the registered agent is $199 per year and the annual report service is $129 plus the tax. If you set up a series LLC, the state charges $10 for each series designated or established.

Source: sos.wyo.gov

Using a Wyoming holding company for real estate

Owners often hold each property in its own LLC, or its own series, with a Wyoming holding company owning those entities. If a tenant sues the LLC that owns one property, the other properties sit in other entities. If you are personally sued for something unrelated, your interest in the holding company is subject only to a charging order.

The property's own state still matters. A property LLC formed in Wyoming but owning a building in another state may have to register as a foreign LLC there, and that state may have its own fees, taxes and transfer rules. Wyoming's own rule for foreign companies, for comparison, carries a $5,000 penalty plus fees, taxes and 18 percent interest for transacting business without authority, according to the Secretary of State's FAQ.

Source: sos.wyo.gov

One LLC, a series LLC or parent and subsidiaries

One LLC is simplest but puts everything in one pot. A series LLC keeps one state filing with separate series, each with its own assets and debts, if the operating agreement provides for it, records are kept separately and the articles give notice of the limitation (W.S. 17-29-211). A parent with separate subsidiary LLCs costs more in filings but is easier to explain to lenders and title companies in other states.

Whichever you choose, title each asset in the right entity's exact legal name and open a bank account for each entity that receives money.

Source: wyoleg.gov

Taxes at the holding level

The State of Wyoming says it does not have an individual or corporate income tax. Federal taxes still apply, and how the holding company is taxed federally depends on its election. Talk with your accountant before choosing an S corporation or C corporation election for a holding company.

Source: www.wyo.gov