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Out-of-the-box thinkers need out-of-the-box business vehicles. So, if you want to reduce your business’s tax obligations, a Wyoming S Corp could be the solution you need. If you’re intrigued with this idea, then let’s talk about what an S Corporation is and how you set it up in the Cowboy State.
An S Corporation is simply a tax election under the Internal Revenue Code and is not a formal entity in and of itself like a C corporation (C Corp) or limited liability company (LLC). Rather, it attaches onto a foundational entity, allowing that entity to pass its income through to its shareholders to be taxed at their personal income tax rate. On our S Corporation information page, we get into more of the nitty-gritty of S Corps, which can be very helpful as you consider your options.
That said, below we discuss the benefits of a Wyoming S Corp and the steps to form one. As mentioned above, an S Corporation isn’t a stand-alone business entity. Therefore, the first thing you need to know about starting a Wyoming S Corporation is how to start a Wyoming business in general.
When choosing a business name, keep it professional and simple. Wyoming also has certain rules that you abide by when naming your company, like including some version of LLC for a limited liability company, and some for of “Inc” for a corporation.
Wyoming law requires business entities within the state to appoint and maintain a registered agent. This agent receives official papers on behalf of your business such as service of process.
Now you need to appoint the initial people to run your business. You’ll appoint directors for corporations or managers for LLCs. Traditionally, you appoint these individuals through a written company resolution. Initial company resolutions (i.e., those made while setting up your company) can come from the founders.
Next, you must file either Articles of Incorporation for a corporation or Articles of Organization for an LLC with the SOS. We can handle this step for you with our formation services.
Arguably, this is the most important step to your Wyoming S corp filing requirements. You need to file Form 2553 with the Internal Revenue Service, which turns your C Corp or LLC into a Wyoming S Corporation. If you’re using an LLC, make sure you first make a tax election with the IRS and the Wyoming Department of Revenue to treat it as a corporation.
Remember to first obtain an employee identification number (EIN). We can handle this step for you, as well.
S Corporations are designed to be straightforward small business entities. That said, the Internal Revenue Service requires you to fulfill certain requirements before you qualify to form an S Corp in Wyoming. A Wyoming S Corp must:
Keep in mind that these restrictions will prevent an S Corp from easily generating capital from a wide shareholder pool. Therefore, we encourage you to check with your legal and financial professionals about your best business options when thinking about forming an S Corp in Wyoming.
S Corps, by their nature as IRS tax elections, are highly specific in their use. Because of that, we thought it helpful to list below some pros and cons to assist you in weighing your decision.
Running an S Corp can be beneficial in many ways, such as:
If tax liability is driving your decision on what type of business entity to use, then an S Corp might be the right selection for you.
Of course, there can also be drawbacks to an S Corp, such as:
Above we touch on the most common pros and cons, but that doesn’t mean there aren’t more. Consult with your legal or tax professional if you feel you need more information.
An S Corp designation isn’t for every business owner. Thus, at the outset, one of the first things to know about starting a business is that it’s a C Corp or LLC by default until you file the right paperwork and qualify to make it an S Corporation. But that said, let’s dig into a few more details about S Corps below.
Distilled down, S Corporations are designed to be small businesses that are usually governed as corporations but allow pass-through taxation.
C Corps can issue more shares and classes of stock than an S Corp. That said, for many people, the biggest draw is how S Corps normally pay income taxes.
C Corporations suffer from the concept of double tax on their income because the business pays corporate income taxes and then each shareholder pays taxes on their dividends. On the other hand, S Corps have the benefit of pass-through taxation. This means only the corporation shareholders have to pay taxes on their share of the corporate income.
To form an S Corp in Wyoming, you first have to form a foundational business, such as a C Corp or LLC. Then you have to file Form 2553 with the IRS.
Absolutely! An LLC can elect to be an S Corp. By choosing to tax your LLC as an S Corporation, you can further reduce your tax liabilities. Learn more about LLCs and tax issues on our Tax Information for Limited Liability Companies page.
Maybe you need time to think about starting a new S Corp, or maybe you’re ready to get it done now. If you’re ready to start a new venture, we have your back with our S Corporation Formation Service. Our many services can help you with the formation, maintenance, and compliance needs of your business. Starting a new business can be exhilarating and demanding, but you don’t have to be overwhelmed when you use our business support services.
Fortunately, we make starting a business easy with our Wyoming LLC Formation Service and our Wyoming Corporation Formation Service, either of which will get the foundation of your Wyoming S Corporation established. After that’s all set up, we offer future business support with our various business development and maintenance services.
Disclaimer: The content on this page is for information purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
With a Wyoming S corporation, you have the limited liability benefits of a C Corp while also getting pass-through advantages for your income taxes.
Find a name that you like and works for your business. Then search your state’s corporation website to ensure that the name hasn’t already been taken.
Provided that you’re following the Wyoming naming requirements regarding the use of “Inc,” “LLC,” or “limited liability company,” there’s no need to identify your LLC as an S Corp.
Taxes are calculated at your personal income tax level rather than the corporate level. We encourage you to review the specific requirements with both the IRS and the Wyoming Department of Revenue. Also, we advise you to consult your tax professional since tax filing is highly specialized.