SHERIDAN — It started slowly — a phone call here and there in which the caller sought help reaching a business supposedly located in Sheridan. The staff at the Sheridan County Chamber of Commerce, though, hadn’t heard of most of the businesses to which callers referred.
That was four or five years ago. Now, staff members at the Chamber receive multiple calls each week from customers seeking answers from businesses they believe operate in Sheridan.
“The reason we’re getting the calls is because customers who have done business with these companies were unhappy and dissatisfied and hadn’t been able to reach anyone,” said Dixie Johnson, Sheridan County Chamber of Commerce CEO, adding that rarely were any of the calls about the same business. “Once they realized the business was here, they would call the Chamber in hopes we could help.”
Often, though, Chamber staff could do very little. Because the businesses weren’t known in the community, employees at the Chamber would also have to do research to find a phone number or contact information for each business. Often, what they found was only the name of a registered agent.
Making a business of forming businesses
Commercial registered agents are registered agents who represent more than 10 businesses in Wyoming. In basic terms, a registered agent represents a business formed in Wyoming, must have a physical address in the state, must be at their office address during normal business hours and can be served legal documents in the event a business the agent represents gets sued.
“The primary purpose of a registered agent is to make sure there is somebody physically in Wyoming, so that if the business is sued, the sheriff has somebody to hand the paperwork to,” said Greg Von Krosigk, a Sheridan-based attorney with Pence and MacMillan, LLC.
Von Krosigk and other attorneys commonly serve as registered agents for clients seeking to form businesses in Wyoming. He said of the approximately 25 formations he does each year, about half are Wyoming residents.
For example, Von Krosigk said, one client who planned to buy a rental property in Wyoming but lived elsewhere wanted to protect personal assets by buying the property through an LLC based in Wyoming. That client asked Von Krosigk to help form the company and serve as the registered agent.
“Typically it’s an ancillary thing I do when I form a company,” Von Krosigk said of serving as a commercial registered agent.
But, for other businesses, that is their sole purpose.
According to the Wyoming Secretary of State website, there are approximately 450 commercial registered agents in Wyoming, the largest of which has offices in Sheridan.
Registered Agents, Inc., located at 30 N. Gould St. in downtown Sheridan, represents an estimated 53,267 businesses, according to the Secretary of State Office.
Registered Agents, Inc., though, is just one commercial registered agent listed at that address. According to a roster on the Secretary of State website, a total of 21 commercial registered agents have offices at 30 N. Gould St.
For example, Northwest Registered Agent Service, Inc. represents approximately 5,872 businesses, Registered Agent Service LLC represents 194 businesses and Wyoming Registered Office LLC represents 99.
Attempts to call Registered Agents Inc. were unsuccessful, as the number listed on the company’s website and in the roster of commercial registered agents on the Secretary of State website for the Sheridan office was not a working number.
Monique Meese, communications and policy director with the Secretary of State Office, said such businesses are not uncommon in Wyoming or in states across the country, especially those with favorable business policies like Wyoming.
Wyoming has no corporate income tax or individual income tax, plus its sales and use tax rate is lower than many other states.
In addition, Meese said, the fee to file business formation paperwork is just $100 and the paperwork itself is limited.
As for why Sheridan has become one of the biggest homes for registered agents in the state, Meese couldn’t say. Sheridan isn’t the largest community, the wealthiest or the most populated, but registered agents such as those at North Gould Street and other addresses in the community have grown quickly.
Commercial registered agents do have certain duties required by the state. For example, they must maintain the name and address of directors, officers, limited liability company managers or members or others serving in similar capacities. They also must serve as the communication contact for the businesses they represent.
Outside of that, though, registered agents have few legal responsibilities. The businesses they represent do not actually have to do business in or have a footprint in Wyoming. If formed here, the business simply needs a certificate of authority from the states in which it does conduct business.
Von Krosigk noted attorneys used to charge between $1,000 and $2,000 to help form a business, taking into account the unique needs of each and, in a way, vetting their legitimacy. After all, if an attorney is going to serve as a registered agent for a business, that means their name is attached to the company publicly, while other members' names — for LLCs in particular — are not as readily available.
Most law offices have since lowered their rates in an effort to compete with businesses that provide registered agent services annually for closer to $200. It’s unclear whether some of the large commercial registered agents in Wyoming offer personalized services or how regulated such services are.
Meese said her office has no independent investigative power. If somebody calls the Secretary of State Office to complain about a business, those calls are referred to the Attorney General’s Office. In addition, Meese said her staff can help answer questions or provide information to law enforcement. But, they are not empowered to give out all information about a company — such as an LLC’s members — to the general public, she said.
“It’s all in the name of checks and balances,” Meese said. “We’re the people who hold all the documentation for the businesses in the state, so we’re not also the entity that investigates them.”
Business community’s reputation
The consistent phone calls to the Sheridan County Chamber of Commerce seeking recourse for a scam or simply seeking customer service have caused concern for some in the local business community.
Johnson brought her concerns and questions to local legislators and state officials, primarily seeking information about the business formation process and the legality of what some commercial registered agents are doing. Elected officials noted that Wyoming is, in fact, a good place to do business, but many seemed unaware of just how many businesses had registered agents in the state and in Sheridan in particular.
“Of course it’s a good place to do business,” Johnson said. “But one of the reasons it’s bothering me is that it doesn’t put Sheridan in a good light with these customers, many of whom are dissatisfied and cannot get resolution with the company.
“It’s very frustrating for me and my staff because we want our community — we have the best community in the world — to be seen in a positive light,” she continued. “And this is kind of a black eye for us.”
Johnson said she doesn’t necessarily fault the businesses acting as commercial registered agents. They found a business niche, a service they can provide based on state laws, and have developed a successful business out of it.
While many of the companies represented by the commercial registered agents may be legitimate, others, Johnson feared, are simply taking advantage of low taxes and the anonymity provided by Wyoming law.
“We have a strong focus on outreach and marketing,” Johnson said of her office’s mission. “The more people doing business with these companies and having disappointing experiences, the more people we’ll have talking about Wyoming, about Sheridan, and saying don’t go there, don’t start businesses there.”
In addition to possible damage to Sheridan's and Wyoming’s business reputations, some companies with registered agents listed in Sheridan County have utilized funds from state business relief programs made possible by the Coronavirus Aid, Relief and Economic Security Act.
For example, according to information available on the state auditor’s website, Paradise in AZ LLC utilizes Registered Agents Inc. as its registered agent. But, a quick search revealed no additional information about the company. Paradise in AZ received a $72,644 Coronavirus Relief Stipend from the state. In total, at least four companies with addresses listed at 30 N. Gould St. received state CARES Act assistance totaling $577,271. That means companies who may have no footprint in the state may have received funding from Wyoming Business Council administered programs meant to assist businesses within Wyoming survive through the COVID-19 pandemic.
In addition, 24 companies with addresses listed at 30 N. Gould St. — some of which overlap with those receiving state CARES Act funding — received a total of between $8 million and $20.5 million in Paycheck Protection Program loans through the CARES Act.
“I don’t know what the solution is,” Johnson said. “But hopefully we can talk about what this means for Wyoming and for Sheridan. Their success does not necessarily bode well for the community.”