Can you imagine opening a business, where each person establishes their own rules and makes decisions autonomously, all encoded on a blockchain? This has become possible, thanks to the DAO business structure that is powered by blockchain technology. Blockchain has changed the world of finance and is now changing the world of business, too. In fact, since Wyoming DAO LLCs were introduced, it has been a huge hit for many entrepreneurs. This guide will help you understand all you need to know about Wyoming DAO LLC.
Wyoming DAO LLC
Blockchain is a digital platform where people can share and exchange data securely, where no one organization or country is in control of the platform. A huge example that uses blockchain technology is cryptocurrency, which has no centralized bank that controls it. Aside from cryptocurrency, blockchain is being used in other industries as well-mainly because it helps secure information, and eliminates controlled, centralized activities.
Recently, the idea was incorporated into business structures so that it could become much more effective. That is where DAOs were introduced. In April 2021, the governor of Wyoming signed Bill 38, permitting Wyoming to recognize DAOs as LLCs. This bill came into effect in July 2021, and since then, it has changed the way businesses have been operating in Wyoming.
What is a DAO?
A decentralized autonomous organization (DAO) is a new type of legal business structure that has no central governing body. In other words, a DAO is a unique business structure that is governed by specific rules. All the rules of the company are embedded within a decentralized company program and no one has control over this program.
Once the rules are embedded into the computerized system, they are enforced automatically. In short, no one can question it or disregard any rule set in the system, regardless of who set it or where it came from. The rules can apply to anything, including scheduled payments, and so on. Because it is a decentralized organization, the main rules of the company cannot be overridden. And if any changes are to be made to the structure of the company, it can only be done via voting, which includes every member’s vote.
What is Wyoming DAO LLC?
A DAO LLC is a new kind of business structure that is supported by many. It is different from the traditional DAO and traditional LLC. It is a combination of both of these structures; just that there is no CEO or governing person who controls everything in a DAO LLC. In addition to this, the DAO LLC has the same benefits as an LLC, which is the limited liability protection. This protects all the members from any unfortunate situations that can arise against the organization.
Wyoming is one of the first states in the USA to permit the formation of a Wyoming DAO LLC. A bill was passed and came into effect in July 2021. According to the law, a company is considered a DAO LLC when its Articles of Organization have a statement that claims it is a decentralized autonomous organization. Wyoming introduced this business structure to prove and show that it supports digital asset innovation.
And it has been a great decision since then, as many entrepreneurs have been opting for the DAO LLC structure a lot more. Once you start a Wyoming DAO LLC, you can hire employees to eventually scale and grow the company. It offers the freedom to use the world as your playground and grow accordingly.
What are the benefits of starting DAO LLC in Wyoming?
The Wyoming DAO LLC is a combination of two great business structures, and both of these structures have a lot of benefits. When they come together, the benefits merge, making it a much more potent structure. Here are some of the advantages of forming a Wyoming DAO LLC:
- Easy documentation – Setting up the DAO LLC is quite simple. The process is almost the same as when you register an LLC. In fact, it starts with the creation of the Articles of Organization, but with the DAO clause in it. You need to pick out a name, get a registered agent, get your tax information, and so on. In short, the rest of the process remains simple and mostly the same.
- Secure your assets – With an LLC comes limited liability, which is a benefit that is sought after by almost every entrepreneur. A DAO LLC offers the same benefit, making it even more appealing. This is because it is a company that has no owners and is operated by its members. The limited liability protects every member from losing their personal assets to troubles the organization might get into. Each member in the organization gets equal control and protection, making it the best choice for everyone.
- Avoid double taxation – The taxes of a DAO LLC will be managed in the same way an LLC’s taxes are managed. Unlike every other organization, an LLC is able to avoid the double taxation issue where the owners and the company aren’t taxed separately. Wyoming DAO LLCs will follow the same process. It is a great thing since traditional DAOs are still in a gray area regarding how they are taxed.
- Complete transparency – The inner workings of a regular LLC are known only by the owners. But when it comes to a DAO LLC, all the members know what is happening and how it is happening in the organization. And since you will be doing business with people on the internet you do not know, 100% transparency is what can help build the company and trust among members. The Wyoming DAO LLC structure’s code is fully verifiable, transparent, and trustworthy to all members. A change in the code can be done only through voting.
- Every member has a voice – Each member in the organization has a voice. This means that every member can vote if they want to make a change in the company, which is different from the traditional LLC and corporation structure where the board of directors or owners make all the decisions.
How does a traditional LLC differ from a DAO LLC?
The main difference between a traditional LLC and the Wyoming DAO LLC is that the latter has no leading or controlling member in the organization. In a traditional LLC, there are members who make all the decisions for the company.
However, in a DAO LLC, everything is handled autonomously. The organization will operate on smart contracts set in the system, which, in turn, operate without any human interaction. This means that the organization will operate without a traditional business structure and members have equal control of the company.
Steps to Start a Wyoming DAO LLC
To register a Wyoming DAO LLC, you need to file for the Articles of Organization. There are two ways to form a DAO LLC in Wyoming:
- Online – by visiting the secretary of state’s website and filling out the online form.
- Offline – by filling the paper form and mailing it to the Secretary of State’s office. You can get the mailing address at the end of the form, or from the Secretary of State’s website.
With this said, here are the steps to start a Wyoming DAO LLC:
Step 1: Select the LLC Type
The first step is to select the business structure under the Form a New Business page (if you are filing online). On this page, choose the “Limited Liability Company (Domestic)” option from the dropdown menu. While you do this, you will also have to confirm that you understand that every piece of information you enter will be public for anyone to find (both offline and online).
Step 2: Choose a Wyoming DAO LLC business name
Select a business name that is unique and add it to the form. Once you have added the name of your business, move to the “Additional Designation” field. From here, choose “Decentralized Autonomous Organization” from the dropdown list, and click Next.
Key points to note:
- Since you are filing for a Wyoming DAO LLC, make sure that the name has “DAO LLC” at the end since it’s a requirement of the state. It will not be considered if the business name does not include DAO LLC at the end.
- The name of your business has to be unique. Use the business name checker on the Wyoming Secretary of State’s website to see if it is unique or not, before adding it here.
After adding your business name, fill out the detail page. Select “perpetual” under “period of duration”, which means that the DAO LLC will exist forever, unless and until the members decide to shut it down.
If you want the company to run for a specific time, you can select the option “expires” and mention the date on which the company will shut down.
Step 3: Appoint a Registered Agent
As per the laws in Wyoming, you will need a registered agent for registering your Wyoming DAO LLC. The registered agent you choose needs to have a street address that is in the state. IncParadise is a registered agent in Wyoming and can assist you with this service. Look for the name in the “Organization” box and skip filling out the person’s information.
NOTE: IncParadise can help you with the registration process as well, and handle all these processes for you. You will not have to worry about filling the form then.
From here, fill out the other DAO LLC details like the email address, phone number, office address, and mailing address. You can also opt for a virtual office address and a mail forwarding address to add it as the company’s details. In fact, IncParadise offers these services as well.
Step 4: Choose the DAO Organizer
The person who is submitting the Articles of Organization or has organized the process to open the Wyoming DAO LLC is the DAO Organizer but they don’t necessarily have to be a member of the DAO LLC.
Add the details (including name and address) of the said person and click on Add.
Step 5: File the WY Articles of Organization
Since you are opening a Wyoming DAO LLC, this step is a bit different than when opening a traditional LLC. For this, you need to include three different statements in your submission:
- A statement claiming that your LLC is a DAO.
- A public identifier of a smart contract that you are using to operate or manage the DAO. This can be a URL.
- A note or statement on the restrictions on transfers and duties. This will be included in the operating agreement.
Confirm everything, sign it, and submit the payment of $100 to form your DAO LLC in Wyoming. With this, your Wyoming DAO LLC gets registered. You will be redirected to the page where you can now download all the necessary registration documents.
Step 6: Create a DAO LLC operating agreement
Once your Wyoming DAO LLC has been formed, you need a properly drafted DAO LLC operating agreement with all the major roles and duties listed in it. Get the operating agreement prepared to keep things smooth and on track.
Step 7: Get the EIN
You will also need an EIN, which is the tax identification number for your business. This number will help in filing taxes with the legal authorities. Not sure how to get it? Get your EIN through IncParadise!
After all these steps are completed, you will be set to begin the operations of your business.
How much does it cost to form a DAO LLC in Wyoming?
The cost to form a DAO LLC in Wyoming is the same as the cost to form a simple LLC. Wyoming is known for having the most business-friendly climate, thanks to its low start-up costs and amazing tax climate. All these benefits apply to the DAO LLCs as well. In fact, the filing fee for a Wyoming DAO LLC is just $100. This is a one-time fee that is used to register the company and get your Articles of Organization. Once this is done, you will have to spend about $60 every year on the annual reporting.
Want to register a Wyoming DAO LLC?
If you think opening a Wyoming DAO LLC is a good choice for your business idea, then IncParadise can help you. In fact, you can also have your current LLC restructured into a DAO with minimum documentation and charges. Whatever you choose, remember that you need a Wyoming DAO LLC registered agent. And IncParadise is a registered agent that is trusted by many business owners around the country, especially in Wyoming.
From mail forwarding services and company registration services to annual report submissions and EIN generation, IncParadise can assist you at every step. We won’t just help you set up your business, but also help maintain it along the way. Contact us to register your Wyoming DAO LLC today, and check out our additional services as well!