Legal Entities: DAO LLC, Wyoming, United States

Overview

Under the Wyoming DAO Supplement to its LLC Chapter, a DAO LLC is an LLC whose articles of organisation contain a statement that the company is a DAO. A DAO, like any other LLC, may form and operate for any lawful purpose, regardless of whether for profit. The legislation passed in Wyoming allows DAOs to officially register as LLCs, providing them with legal status. This means that DAOs can operate with limited liability, similar to corporations, partnerships, and other legal entities.This legislation is significant as it bridges the gap between traditional legal structures and the emergent field of blockchain technology. By recognising DAOs as a type of LLC, Wyoming provides a legal framework for these organisations to operate within. This could potentially lead to greater acceptance and integration of blockchain technologies and smart contracts in the wider economy.Security tokens issued on Ethereum are legal in the state of Wyoming — both in certificated form (ERC-884 standard) and in un-certificated form for corporate shares. It's important to note that being a Wyoming DAO LLC does not exempt the organization from other regulatory requirements. For example, if the DAO engages in activities that involve securities, it would still need to comply with securities laws.

Taxes

By default a DAO LLC is treated as a pass through entity for tax purposes. For federal taxes, single member DAO LLCs are taxed as sole proprietorships by default, while multi-member DAO LLCs are taxed as partnerships. Members report their share of DAO income, deductions, credits and losses on their personal tax returns. The DAO itself does not pay federal income tax. Members must pay self-employment tax on their DAO earnings. For state taxes, Wyoming does not impose an income tax on individuals or businesses, including DAO LLCs. DAO LLCs may need to register in other states where they conduct business activities and pay taxes accordingly. Multi-member DAO LLCs treated as partnerships need to file Form 1065 federal return and provide K-1 schedules to members to report their share.Single member DAO LLCs report business income on Schedule C with the owner's Form 1040 return, no separate DAO return is filed.DAO LLCs have the same tax filing and reporting requirements as traditional LLCs when electing pass-through taxation. Proper record-keeping of income, expenses, assets/liabilities is important.DAO LLCs which elect to be taxed as a C-Corporation must follow the reporting structure applicable to C-Corporations. The process typically involves the following:

• Filing Form 8832: First, the DAO LLC would need to file Form 8832, "Entity Classification Election," to elect to be treated as a C-Corporation for tax purposes. This is a one-time filing done by us, unless the entity's status changes again in the future.
• Filing Form 1120: After electing to be treated as a C-Corp, the DAO LLC would file an annual corporate income tax return using Form 1120, "U.S. Corporation Income Tax Return." The due date for Form 1120 is the 15th day of the fourth month after the end of the corporation's fiscal year. For a calendar year taxpayer, this would be April 15.
• Filing Form 1099-DIV: If the DAO LLC (now taxed as a C-Corporation) pays dividends to shareholders, it must also file Form 1099-DIV, "Dividends and Distributions," and send copies to each recipient shareholder. This form is generally due by January 31st of the year following the distribution.
• Employer's Quarterly Federal Tax Return (Form 941): This must be filed quarterly to report income taxes, Social Security tax, or Medicare tax withheld from employee's paychecks, as well as the employer's portion of Social Security or Medicare tax. The due dates are April 30, July 31, October 31, and January 31 for the 1st, 2nd, 3rd, and 4th quarters, respectively.
• Annual Return of Withheld Federal Income Tax (Form 945): If you withhold income tax from non-payroll payments, you need to file Form 945. The due date is January 31 of the year following the year in which the income tax was withheld.
• Federal Unemployment Tax Act (FUTA) Tax Return (Form 940): This must be filed annually if you paid wages of $1,500 or more in any calendar quarter during the calendar year, or if you had one or more employees for at least some part of a day in any 20 or more different weeks in the calendar year. The due date is January 31 of the year following the year in which wages were paid.
• Wyoming Sales and Use Tax: If applicable, your business might need to file a sales tax return. The frequency of these filings (monthly, quarterly, annually) depends on the volume of sales.

At the time of writing, there is no income tax, no sales tax and no property tax for digital assets in the state of Wyoming.

Services

Information about features and services for this company via the company spec sheet which can be found here : Wyoming DAO LLC v1.2​​