By Maya Shimizu Harris
Via- Wyoming News Exchange
CASPER — The number of new business filings in Wyoming surged dramatically this year compared to last, bringing in a whopping 25% increase in revenue from filings.
The Secretary of State’s Office has processed roughly 590,000 business filings for fiscal year 2023 — more than a 27% increase compared to last year, Colin Crossman, business division director for the Secretary of State’s Office, told lawmakers last week.
“That’s massive,” Crossman said. “That eclipses all of the other years that I tracked here.”
As a result of these filings, the Secretary of State’s Office has also seen an almost 25% boost in revenue from filings this fiscal year compared to last, from roughly $34 million to more than $42 million.
Pretty much all of this growth comes from Limited Liability Companies, or LLCs, Crossman said. LLCs are a popular business structure for small and medium-sized businesses. Crossman estimated that 70-80% of these businesses are filing the minimum $60 fee, which means they have under $300,000 of assets in Wyoming.
There are a number of possible explanations for this growth in Wyoming’s business filings, Crossman explained.
Wyoming’s chief competitor — Nevada — recently raised its filing fees for establishing a business. New startups also surged to record numbers not just in Wyoming but across the nation during the COVID-19 pandemic, according to the Bureau of Labor Statistics.
Crossman said he believes these two factors contributed the “lion’s share” of Wyoming’s business growth.
What’s more, Wyoming ranks among the top states with the friendliest business climates in the country, according to a recent Forbes article that Crossman cited. That ranking is based on state LLC filing and operating fees, state tax climates and the prevalence of small businesses, among other things.
“Assuming that Wyoming continues to have a favorable business climate, I don’t see that growth going away,” Crossman said.
Crossman said business division staff have handled this growth so far. But he added that the seemingly exponential growth has him “concerned” about what will happen down the road.
“Will that mean that we need more staff? Potentially, if that growth continues or we don’t have any other options such as technology or other things that mitigate that growth,” Crossman said. (Secretary of State Chuck Gray said his office isn’t currently asking for funding to cover more positions. The office is looking at a new program for business filings that he believes would be more efficient and decrease the need for more staff in the future, he said.)
Sen. Cale Case, R-Lander, told Crossman that this growth “sounds really great,” but that he was also “kind of suspicious.”
With recent world upheaval and money moving around the globe, Case questioned how many of these new filings are for “shell corporations” — companies set up to move money around rather than to sell goods or services.
Although not always the case, these shell companies are sometimes used for nefarious purposes, and it can be hard to figure out who owns them.
“It’s good to be business friendly,” Case said. “I think there’s a dark side to being too business friendly, and I’m trying to figure out where we are on that continuum.”
Crossman conceded that this does happen in Wyoming and across the country and said he believes that some of this growth stems from shell corporations. But determining how much this happens — and how much such activities account for business growth in Wyoming — is “very, very hard,” he said.
Crossman added that the office is trying to keep harmful shell corporations in check by stepping up enforcement and audits of commercial registered agents — people who represent more than 10 businesses in Wyoming — to make sure they’re keeping the records they’re required to keep under state statute.
Secretary of State Chuck Gray elaborated in an email to the Star-Tribune that enforcement includes checking “proper disclosure of certain contact and ownership information of entities registered with the state to ensure deterrence of such abuses.”
Gray said during the meeting that there have been “a couple” audits that have “identified some problems.”
He added in the email that he remains “concerned and troubled with abuses of corporate filings in Wyoming,” and that audits so far this year have resulted in “an ongoing investigation of one commercial registered agent.”
“I take this issue extremely seriously, and our office will continue to audit commercial registered agents to ensure compliance with Wyoming law,” he said.