At least on paper, Wyoming is now home to hundreds of thousands of business entities — and that number is growing rapidly.
In just the first three months of the year, over 40,000 new limited liability companies and other entities were formed in the state. It represented a 33% jump from the same time period in 2022 and a nearly eight-fold increase from a decade ago.
“The remarkable pace of growth is still there and is going to continue to be there, as Wyoming is a very attractive place for new LLCs,” Colin Crossman, the new director of the Wyoming Secretary of State’s Business Division, told lawmakers last month.
Although Wyoming charges only $100 to form an LLC — plus an annual fee of generally $60 — it adds up when the state is handling roughly 245,000 new and amended filings and 257,000 annual reports every year. The Business Division collects over $36 million annually, and some lawmakers on the Legislature’s Joint Corporations, Elections and Political Subdivisions Committee see the potential for even more revenue.
“The growth is tremendous, and the amount of fillings that we have is phenomenal,” said Rep. Jared Olsen (R-Cheyenne), who co-chairs the panel, “but it’s always been a question in my mind that, if we marketed ourselves to the world, how much more could we have?”
Secretary of State Chuck Gray, who took office in January, said he and his staff have “kicked around a lot of ideas” about marketing Wyoming as a place to incorporate a business.
“It’s one of those things that probably will cost some money,” Gray said at the May 30 meeting, but he expects the effort “would pay for at least itself and more.”
However, there was some hesitation from committee co-chair Sen. Cale Case (R-Lander), who noted many of the LLCs formed in Wyoming don’t have a physical presence in the state.
“I’m always a little scared of the side of, what’s our reputation?” Case said.
He referenced recent scrutiny of a Wyoming-based, asset-shielding strategy known as the “Cowboy Cocktail.” Drawing from a trove of leaked documents, the Washington Post reported in late 2021 that a Russian oligarch, an aide to a Dominican Republic dictator and others were among those who used the strategy — made up of “a Wyoming trust and layers of private companies with concealed ownership” — to shelter their assets in “extraordinary secrecy.”
It wasn’t the first time that Wyoming has come under fire for its privacy-friendly business laws. In 2011, for instance, a Reuters investigation suggested that Wyoming rivaled Cyprus and the Cayman Islands as a secretive haven for businesses.
“Fourteen thousand [new monthly] companies that are paying $60 fees, that doesn’t seem like the best business model to me if we don’t know anything about how reputable those companies are, what they’re doing,” said Case, who made an unsuccessful push in last winter’s session for more disclosure. “So I’m just a little less excited than most people to try to ramp it up and get 50,000 companies a month. I’d like a little bit more requirements about who these companies are and what they're doing.”
Trying to sort out exactly how many of the entities are operating in Wyoming is effectively impossible, because the state doesn’t gather that data, and the entities have a host of potential uses. Many of the LLCs are formed by small businesses that are “looking for a corporate form that gives them protection,” Crossman said, but the vast majority “are not bringing specific business into Wyoming.”
Many companies, small staff
Part of the recent surge in filings can be attributed to the COVID-19 pandemic, he said, as people created more businesses while staying at home. Additionally, “a lot” of entities have been moving from Nevada to Wyoming in the face of higher fees, Crossman said.
Delaware remains the most popular place to incorporate, but he believes Wyoming is pulling ahead of Nevada for second place. The Business Division is now handling over 500,000 filings a year with a staff of 11 people.
“We provide the highest level of customer service compared to pretty much every other state,” Crossman said.
The division’s job doesn’t end after an entity is created, either. For instance, the division issues reminders to submit annual reports and fees, then dissolves entities that fail to do so. Staffers administratively dissolved nearly 16,200 entities in the first quarter of this year — a new high, according to data from the division.
In the face of the rising workload, the office has been looking for ways to become more efficient. Crossman, who has experience with blockchain technology, recently devised an algorithm that helps determine whether the name of a new entity is too similar to an existing one; as a result, a job that was taking four to six hours a day now takes less than a minute.
Gray hopes those kinds of improvements can avoid the need for additional staff. Meanwhile, revenue from the business filings continues to grow, rising by nearly $4.8 million, or 20%, in the first nine months of the fiscal year.
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