How to Start an S Corp in Wyoming
Wyoming’s strong, growing economy makes it a great place to start a business. Entrepreneurs often choose Wyoming for the incentives and benefits available to small businesses in addition to the state’s low cost of doing business and attractive tax climate.
Starting a small business is an exciting venture, and most business owners seek ways to save money wherever possible. By structuring your business as an S corporation (S corp) in Wyoming, you can potentially save a lot on your taxes because the S corp tax designation can benefit many types of businesses in just about any industry.
This guide will walk you through the steps required to form a Wyoming S corp and provide tips to help you keep your business in good standing.
Not in Wyoming? Check out our other How to Start an S Corp guides to learn more.
We recommend using a professional formation service like Northwest to get your S corp up and running in no time.
Factors to Consider Before Starting an S Corp in Wyoming
Before forming an S corp, you have to consider the following factors:
- Is an S corporation the best strategy for your business?
- S corporation restrictions
- Are S corp tax advantages right for you?
Is an S Corporation the Best Strategy for Your Business?
For help with choosing the right structure for your business, visit our Choosing a Business Structure guide.
S Corporation Restrictions
S corps have several restrictions, such as being limited to one class of stock and 100 shareholders. Read our What Is an S Corporation guide for full details.
Are S Corp Tax Advantages Right for You?
An S corporation is a tax designation that can be elected by a limited liability company (LLC) or corporation. With an S corp, business owners are considered employees of the company and must receive a reasonable salary. Since all S corps technically have employees, the s corp must run payroll.
In order to benefit from a Wyoming S corp tax designation, your business needs to make enough money to offset payroll expenses. Furthermore, S corps are beneficial for business owners who take large distributions in addition to their salary.
How to Form a Wyoming S Corp
There are two main ways to start an S corp:
- By forming an LLC and electing S corp tax status from the IRS when you request your employee identification number (EIN)
- By forming a corporation and electing S corp status from the IRS
We recommend forming an LLC because it’s simpler and more cost-effective.
Recommended: If you have an existing LLC, visit our How to Convert an LLC to S Corp guide.
Steps for Forming an LLC and Electing S Corp Status in Wyoming
Starting a Wyoming LLC and electing S corp tax status is easy. You can use our guides to start an LLC with the S corp status yourself, or you can hire a service provider like Northwest to guide you through this process.
There are five basic steps to start an LLC and elect S corp status:
Step 1: Name Your LLC
Step 2: Choose a Registered Agent
Step 3: File the Articles of Organization
Step 4: Create an Operating Agreement
Step 5: Get an EIN and File Form 2553 to Elect S Corp Tax Status
Step 1: Name Your LLC
Choosing a company name is the first and most important step in starting your LLC in Wyoming.
Be sure to choose a name that complies with Wyoming naming requirements and is easily searchable by potential clients.
1. Follow the naming guidelines for a Wyoming LLC:
- Your name must include the phrase “limited liability company” or “limited company” or one of their abbreviations (LLC, L.L.C., LC, L.C.). The word “limited” can be abbreviated as “ltd.,” and the word “company” can be abbreviated as “co.”
- A low profit limited liability company must contain one of the following: L3C, l3c, low profit ltd. liability company, low profit ltd. liability co., or low profit limited liability co.
- Your name cannot imply that the LLC is organized for a purpose other than one outlined in its articles of organization.
- Your name cannot contain a word or phrase that implies the LLC is organized under the Wyoming Business Corporation Act, the Wyoming Statutory Close Corporation Supplement, or the Nonprofit Corporation Act.
- You must have approval from the state Division of Banking to include any of the following words (or words of similar meaning): bank, banker, banc, bancorp, bancorporation, banque, banquers, banco, banca, trust.
- You must have approval from the state Department of Education to include any of the following words: academy, college, educate, education, educational, institute, institution, school, or university.
- The Wyoming Secretary of State requires an additional review of names that begin with the letter “A” followed by a space or punctuation, contain special characters, or are in a language other than English.
- Your name must be distinguishable from any existing business in the state. This includes Wyoming reserved names.
- You can read more information from the How to Choose a Company Name guide on the Wyoming Secretary of State website.
You can also read the Wyoming state statute about LLC naming guidelines for more information.
2. Is the name available in Wyoming? Make sure the name you want is available by doing a business entity search on the Wyoming Secretary of State website.
3. Is the URL available? We recommend checking to see if your business name is available as a web domain. Even if you don't plan to create a business website today, you may want to buy the URL in order to prevent others from acquiring it.
Find a Domain Now
Step 2: Choose Your Wyoming Registered Agent
You must elect a registered agent for your Wyoming LLC.
An LLC registered agent will accept legal documents and tax notices on your LLC's behalf. You will list your registered agent when you file your LLC's Articles of Organization.
Many business owners choose to hire a registered agent service. Many of these services will form your LLC for a small fee and include the first year of registered agent services for free.
Wyoming Registered Agent Consent to Appointment
Registered agents in Wyoming must consent to their appointment using the Consent to Appointment by Registered Agent form.
The statement of consent should include:
- The registered agent’s name
- The registered office address
- The LLC’s name
- The registered agent’s signature
- The effective date
The consent statement should be filed along with your LLC’s formation documents if filing by mail. If filing electronically, you will need to check a box confirming that your registered agent has signed the form.
Step 3: File the Wyoming LLC Articles of Organization
The Wyoming Articles of Organization is used to officially register an LLC.
File Your Wyoming Articles of Organization
OPTION 1: File Online With the Wyoming Secretary of StateFile Online
- OR -
OPTION 2: File by MailDownload Form
State Filing Cost: $102 online and $100 by mail, payable to the Secretary of State (Nonrefundable)
Wyoming Secretary of State
2020 Carey Ave., Suite 700
Cheyenne, WY 82002
Step 4: Create an LLC Operating Agreement
An LLC operating agreement is a legal document that outlines the ownership and member duties of your LLC.
For more information, read our Wyoming LLC Operating Agreement guide.
Our operating agreement tool is a free resource for business owners.
Step 5: Get an EIN and Complete Form 2553 on the IRS Website
An EIN is a number that is used by the US Internal Revenue Service (IRS) to identify and tax businesses. It is essentially a Social Security number for a business.
EINs are free when you apply directly with the IRS.
Elect S Corp Tax Status
During the online EIN application, the IRS will provide a link to Form 2553, the Election By a Small Business form.
Visit our Form 2553 Instructions guide for detailed help with completing the form.
This is the form to elect S corp tax status for your LLC:
Keep Your Wyoming S Corp Compliant
Once you elect S corp status for your Wyoming business, you’ll need to focus on ensuring it remains in good standing. You must follow all state laws and regulations, keep up to date with your taxes, and file an annual report for your business each year.
Wyoming S Corp Annual Report
Wyoming requires all corporations and LLCs to file an annual report with the Secretary of State. Although you elected S corp status, your business must follow all guidelines in place for an LLC. Your annual report is due on the anniversary of your business’s formation.
Visit our Wyoming Annual Report guide for a step-by-step overview of the filing process.
Wyoming S Corp Taxes
S corporations benefit from pass-through taxation, meaning the business’s profits pass-through to S corp owners’ individual tax returns. S corp owners make money from their reasonable salary and distributions, and Wyoming S corp owners can expect to pay the following taxes:
Federal Self-Employment Taxes
Self-employment taxes cover social security and medicare. The self-employment tax rate is 15.3%, and money you take as salary will be subjected to the self-employment tax. However, distributions are not subjected to this tax.
Federal Income Taxes
Your federal income taxes will depend on your tax bracket, and the cutoffs for individual tax brackets as well as the percent owed will change each year. Both your salary and distributions are subjected to federal income tax.
Wyoming Income Taxes
Wyoming is one of only nine states that doesn’t levy a state income tax. This reduces the tax burden on many small businesses and their owners, allowing you to keep more of your income. With more savings, you’ll have the ability to reinvest your income back into your business to boost growth and encourage a healthy business environment.
Wyoming Sales and Use Tax
The state sales and use tax in Wyoming is set at 4%. The state’s cities may impose additional sales taxes if approved through a vote of their citizens. To learn more, visit the Wyoming Department of Revenue website.
Additional State Taxes
Your business also may need to pay some additional taxes. The Wyoming Department of Revenue provides details on a number of state-specific taxes. Some examples of taxes this state may require small businesses to pay include:
- Mineral Tax
- Cigarette and Tobacco Tax
- Alcoholic Beverages Tax
- Wind Electricity Tax
- Rented or Leased Mobile Machinery Tax
Visit the Wyoming Department of Revenue website for more information.
Wyoming Local Taxes
Every local municipality — from Cheyenne and Jackson to any of Wyoming’s smaller cities — may have its own taxes for which you’ll need to file and pay. Check the local government’s website to ensure your business is in good standing with local laws.
Start a Wyoming S Corp FAQ
No. The default taxes for an LLC and taxes for an S corp are not the same.
With an S corp, owners pay personal income tax and self-employment tax on a predetermined salary. They may then withdraw any remaining profits from the business as a “distribution,” which isn’t subject to self-employment tax.
With an LLC, all company profits pass through to the owners’ personal tax returns, and then the owners must pay personal income tax and self-employment tax on the entire amount.
S corp owners are required to earn a “reasonable” salary, which basically means a fair market rate based on the individual’s qualifications as well as their duties and responsibilities at the company. The purpose of this requirement is to prevent S corp owners from paying themselves an artificially low salary in order to pay less self-employment tax.
A distribution is a dividend that a shareholder/owner can take from the business profits that remain after a company pays all of its employee salaries. Shareholders must pay personal income tax on distributions, but distributions aren’t subject to self-employment tax.
While the most significant industries in Wyoming include agriculture, mining, and manufacturing, you can set up a business in just about any industry. Whether you want to start a cleaning service, open a small restaurant, or create another type of small business within the state, you can elect S corp status for your new venture. Your business only has to meet the requirements set by the IRS.
With Wyoming’s 0% income tax, affordable cost of living, and low cost of doing business, it’s one of the most business-friendly states in which you can run an S corp.