Should You Use a Wyoming LLC to Own Your Texas Business? Pros, Cons & Common Misunderstandings
At Mike Massey Law, we regularly hear from clients who’ve read online that they should set up a Wyoming LLC to hold ownership of their Texas LLC. The pitch sounds appealing: you get “anonymity,” “ironclad asset protection,” and “privacy from lawsuits.”
But here’s something to consider:
Almost every strategy in life has pros and cons. What works for one person may not make sense for another. So instead of blindly following internet advice, we encourage you to get educated, ask good questions, and consult a knowledgeable attorney before deciding whether a Wyoming-Texas LLC structure is right for you.
Disclaimer: This blog is for informational purposes only and should not be taken as legal advice. We’re not suggesting that advanced planning techniques like out-of-state entities are inherently bad or inappropriate. They can be useful in the right situation. But like any tool, they’re not right for everyone.
✅ What’s the Wyoming LLC Strategy?
In a nutshell, the idea is to:
Form a Wyoming LLC, which is known for its privacy protections and strong asset protection laws.
Have that Wyoming LLC own your Texas LLC, which operates your business in Texas.
This structure is intended to give you:
Anonymity (your name doesn’t show up in Wyoming’s public records)
Extra asset protection through Wyoming’s strong “charging order” laws
A potential deterrent effect against lawsuit-happy attorneys
It’s often marketed as a simple way to protect yourself — but there’s more to the story.
⚖️ The Pros (Yes, There Are Some)
Wyoming is often viewed as one of the best states for LLC formation because of:
✅ Strong charging order protection, even for single-member LLCs
✅ Anonymity — Wyoming doesn’t require owners or managers to be listed in public filings
✅ No state income tax or franchise tax (unlike Texas which has a franchise tax)
✅ Low annual fees (as low as $60/year)
✅ Use of nominee organizers and managers to keep your name out of public view
This can be attractive to real estate investors, e-commerce sellers, or professionals who want to separate identity from business ownership in public databases.
❌ But… There Are Cons (Often Ignored)
While the advantages sound great on paper, there are several important drawbacks that you may not hear about from blogs, videos and filing companies:
1. 💼 Increased Cost and Complexity
When you add Wyoming to the mix, you’re now operating in two states, not one. That means:
Two LLCs to maintain
Two registered agents (and you’re probably paying for 2 registered agents, one in each state, to help with anonymity)
Two sets of annual reports or filings
Two sets of legal and accounting documentation
More legal work up front — and higher attorney fees to get it all structured properly
2. 📄 You Still Have to Register in Texas
If your business is operating in Texas — meaning it has clients, property, or employees here — then your Wyoming LLC must register as a foreign entity in Texas, or alternatively if your Wyoming LLC is the member of your Texas LLC, then your Wyoming LLC may not be operating in Texas, but your Texas LLC will be operating in Texas.
If your Wyoming LLC is operating in Texas, then that’s probably a roughly $750 filing fee for a foreign LLC operating in Texas, plus Annual Franchise Tax Reports in both Wyoming (which appears to be roughly $60 minimum or so annually) and Texas, plus paying for registered agents in each state each year, plus Public Information Reports, plus Ongoing compliance with the laws of each state.
If your Wyoming LLC is just the member of your Texas LLC and not actually operating in Texas, then you should be able to probably avoid the $750 foreign entity filing fee if structured properly.
Translation? You’re not avoiding Texas tax or regulation — you’re just adding another layer.
3. 🕵️ Anonymity Isn’t Bulletproof
Yes, Wyoming doesn’t list your name on the state website. But that doesn’t mean no one can find you.
A determined attorney or creditor may be able to:
Subpoena your bank (where your name is tied to the LLC)
Access IRS records (which show ownership)
Compel disclosure in a lawsuit
Pierce the veil if you misuse the LLC (commingling funds, lack of documentation, etc.)
Anonymity works as an additional privacy layer, but it may not guarantee they won’t find out who you are or what all you own. Especially if you owned property in your name and then deeded that property to some trust or LLC because any person with a computer can trace your name on the original deed to know exactly where you deeded that property and then can seek to get records for that trust or LLC through various court methods such as subpoenas, disclosures and depositions.
Anonymity may keep you out of Google searches, but it may not keep you out of a deposition.
4. ⚖️ Texas Already Offers Solid Asset Protection
As of 2023, Texas now provides charging order protection for single-member LLCs, thanks to Senate Bill 2314. This means:
A judgment creditor cannot take over your Texas LLC.
They’re limited to a charging order — essentially a lien on future distributions.
That’s already very strong protection — so adding a Wyoming layer often brings diminishing returns.
5. ❗ Litigation Risks Still Exist
Even if you’ve gone through all the steps to build a Wyoming + Texas LLC structure:
A plaintiff’s attorney can still sue you.
You’ll still have to respond to discovery.
Courts can still reach your assets if you don’t follow corporate formalities or if they prove fraud or alter ego liability.
In other words, fancy structures may not help you if you don’t operate them properly, and even then a determined plaintiff’s attorney may still learn everything about you that you went out of your way with cost and complexity to avoid.
🧠 Real Talk: When It Might Make Sense
We’re not saying Wyoming is never a good idea. In fact, here are a few situations where it could make sense:
You want a holding company to own your various Texas businesses and real estate holdings.
You’re part of a multi-state business operation and want uniform asset protection across jurisdictions.
You want to add a deterrent layer of privacy, particularly for high-risk professions or public figures.
You’re working with a CPA and attorney who can help you maintain everything properly.
But for the average Texas business owner who just wants protection from lawsuits?
A well-formed and properly run Texas LLC may be enough but each person should make their own decision based on weighing the pros and cons, higher costs vs lower costs, and simplicity vs complexity.
🏁 Final Word: Make a Smart, Informed Decision
There’s a lot of buzz online about out-of-state LLCs, asset protection hacks, and privacy layers. Some of it’s valid. Some of it’s marketing hype. The truth is this:
Every legal structure has pros and cons. What matters most is what fits you.
At Mike Massey Law, we’re not trying to sell you on one-size-fits-all strategies. We’re here to help you weigh your options, understand the risks, and make an informed decision that fits your values, business goals, and risk tolerance.
📞 Want to create an estate plan that gets your money to the right people at the right time? Want to add some creditor protection while your alive? Want to add some creditor protection for your beneficiaries after you die?
We can help with trust and estate planning, and how to protect your family and assets the smart way — right here in Texas.
Book a consultation: bit.ly/consultalawyer
Mike Massey Law PLLC | Serving Texans with estate planning and personal injury needs.
Offices in Austin, Houston.
This article is for informational purposes only and is not legal advice. Consult an attorney licensed in your state for advice tailored to your specific situation. Wyoming LLCs and other state LLCs and structures may be helpful for you, or they may not be, and this article does not seek to tell you one way or another. Life is about weighting choices based on pros and cons, so do your homework.
