Are Wyoming Holding Companies The Ultimate In Asset Protection?

Wyoming has a long standing as an attractive state for business by Americans and international business folk alike. The taxation in the state is world renowned for favoring businesses, so much so that the state business tax climate index by tax foundation had named Wyoming as the number one state in the United States of America. Setting up an entity in the state allows owners to grow and expand their business with a lot more flexibility than most states allow.

This is why a vast amount of businesses have deemed it fit to set up offices as well as register in the state of Wyoming. The state has an easy online application system that makes registering easy as it can be done from anywhere in the world. The strong protection policies cover business owners well so that there is a separation between the business entity and the owner which protects the business from creditors that may come after the business owner and vice versa.

Companies such as Wyoming Trust & LLC Attorney provide businesses with a wide array of solutions that can help them to take care of the administration and legalities in a way that simplifies the process.

Understanding holding companies

When referring to a holding company, one needs to keep in mind that the legal definition is any type of property that is owned by that of another. Holdings can take a variety of forms such as a business, land, stock, or any other financial assets for that matter.

These are also known as parent or umbrella companies and serve as the broader holding for all under faciets that fall under it. The business entity will usually be a corporation or limited liability company. The general purpose of these companies is to hold the majority or controlling stock in other companies which will fall under their umbrella. Holding companies do not generally produce or sell goods, nor do they offer any services or deal with any other business operations.

Although the holding company controls and owns the assets of the other companies under their name, they often only maintain oversight of operations and do not get directly involved unless otherwise necessary. Wyoming Trust and LLC Attorneys has expert information about holding companies that will help you get a more in depth understanding.

An example of a holding company is Alphabet under which Google falls, it also holds other companies such as X Development, Calico, Nest, Verily, Fiber, Makani, CapitalG, and GV under their umbrella. Whilst each company operates individually from each other, they still fall under the Alphabet parent company that "holds" them all together. Why is Asset protection important?

As the owner of a business the realisation that operating and owning a company is fraught with dangers and pitfalls is not a new epiphany. However, the rewards often trump the risks when the correct precautions are taken. But it is not always about just making a profit because the business needs to be protected from lawsuits and claims against it.

Risks such as:

Mortgage as well as debt obligations to 3rd parties

Product and/or professional liability

Claims for damages as a result of employee negligence or human error

Consumer protection issues

These are just a handful of the countless risks that owners have to prepare for. When dealt with in an incorrect manner, these risks have the ability to the loss of business as well as personal assets. Therefore, it is always important to know and understand the risks that one might face in order to plan for how they can be minimized or avoided all together, in order to give your business a platform to run successfully.

How do holding companies serve as asset protection

Profits held in reserve by the business as Retained Earnings are largely at risk of being claimed by creditors. A holding company is a cost saving way to protect your assets from opportunists without eating into the profit of the business due to running costs. The umbrella company can be accommodated for the security for a loan on the assets of the business. In the case of a pre-existing company that is not under a parent company, a holding company can be subsequently assimilated. The shares of the company that is operating under the umbrella of the holding company will be reassigned to the holding company with a tax roll-over. Consequently, there will be no immediate capital gains with regards to tax concerns.

Utilising a holding company as an asset protection scheme assists greatly in regards to limiting the liability risks that could be faced by your business structure.

Why Wyoming in particular ?

Holding companies have a range of flexibility, especially in regards to where they can be located due to the fact that merely holding and leasing assets do not constitute as transacting business. Therefore, a holding company in Wyoming may very well own a house in Florida without having the need to register as a foreign entity. Which translates to the fact that picking the correct state for the parent company is important as the laws of that state will apply to your holding and thus everything that it keeps.

Wyoming is currently at the top of the list of the best states in which one should open up a holding company as they provide favorable statutes that protect single member LLCs. The state also allows for complete anonymity and provides businesses with an annual report for a relatively low fee that is currently set at 50$. The state dethroned Nirvada who has been consistently raising their fees whilst reducing their allowance of anonymity due to more stringent disclosure requirements.

In the state of Wyoming, limited liability companies with just a single member are eligible to receive all of the exact same benefits as LLCs with multiple members. Which means that businesses can choose whichever structure works best and proves to be the most sensible for their business.

Wyoming has attractive taxation laws in that it does not impose

• corporate state income tax

• personal state income tax

• inventory taxes

• tax of franchises

• occupation taxes

• value-added tax

The state also has one of the strictest asset protection laws in the United States in which creditors are in no way allowed to force the sale of assets. The privacy laws of the state will also ensure that the details of the business are to be listed on the public database of the state. This will mean that business owner, manager and member information can be guaranteed privacy.

Final Thoughts

A holding company structure has multiple benefits that far outway the minimal time and cost that comes with opening up the company. They provide extensive asset protection so that in the event that creditors come to collect they will have a tough time attracting both your personal assets and that of the business. Regardless of the reasoning or motivation for choosing Wyoming, the state provides expert asset protection, complete anonymity, and the attractive taxation laws that favour businesses.

It is imperative to remember that an LLC can work as a holding company and a trust can be owned by an LLC, therefore by linking assets to a trust or holding company under an LLC will keep them safe from being claimed by 3rd parties. However it is always best to consult professionals who have a long standing when it comes to dealing with LLCs and asset protection, Wyoming Trust and LLC Attorney for instance provide expert advice that ensures your dealings are conducted legally and with your best interest in mind.