Durrelliott - News Source For Teenagers
close


The benefits of starting a business in Wyoming
have attracted entrepreneurs to form their LLCs and incorporate their companies
in the state. Currently, there is no state income tax for individuals or
corporations, and managers, directors, and elected officers can maintain
privacy because the state doesn’t require that information for its public
records. Also, filing fees to register a business in Wyoming are quite
affordable.

If you’ve been thinking about forming a
business in Wyoming to take advantage of the entrepreneurial-friendly benefits,
then you’ve come to the right place. In this article, I’ll step you through
many of the things business owners should know and address when starting a
business in Wyoming.

A quick disclaimer before we begin: The
information in this article is not meant to be nor is a substitute for
professional legal, accounting, or tax advice. Seek the advice of licensed and
credentialed experts who can give you direction on those matters.

Critical Steps for Starting a Business in Wyoming

1. Fine-tune your business idea.

Before spending time and money on starting a
business in Wyoming, entrepreneurs should do their due diligence to ensure
their business concept has the potential to succeed. Doing a feasibility study
can help reach an informed “go” or “no go” decision. Also consider bouncing
your idea by trusted advisors like SCORE mentors, business consultants,
accountants, and attorneys who can help you identify red flags.

2. Choose a business entity type.

Some of the business structure types in
Wyoming include:

  • Sole Proprietorship
  • General Partnership
  • Limited Liability Company
  • Limited Partnership
  • Profit Corporation (C Corporation)

Other examples of business entities in Wyoming
include the Close Corporation, Nonprofit Corporation, Statutory Trust,
Registered Limited Liability Partnership.

Which entity type will work best for your
business? You’ll need to consider a variety of factors including:

  • Desire for personal liability
    protection
  • Tax ramifications
  • Ownership and management
    flexibility
  • Business compliance requirements

Let’s take a look at a few of the business
entities and their characteristics:

Sole
Proprietorship

In a Wyoming Sole Proprietorship, the business
and its owner are considered the same entity. Therefore the assets and
liabilities of the business are those of the owner, as well. While this creates
simplicity operationally and from a tax perspective, it can be a disadvantage,
as well. If someone sues the business or the business can’t pay its bills, the
owner risks losing their personal money and property. Another potential
disadvantage of a Sole Proprietorship is that if the owner dies, the business
can only be transferred to the owner’s heirs to be continued, restructured, or
dissolved. Also, Sole Proprietorships have limited funding options—often,
investors are hesitant to finance businesses that not formally registered as a
statutory entity.

Sole Proprietors report their business income
and losses on their individual federal tax returns. Because the business owner
doesn’t receive a company paycheck that withholds federal income tax and Social
Security and Medicare taxes, they must submit quarterly estimated federal
income tax payments, which include 15.3 percent in self-employment taxes
(similar to FICA taxes on employees’ paychecks). In some situations, that
self-employment tax burden can become lofty and prompt a sole proprietor to
look at business structures that can minimize those costs. 

General
Partnership

A General Partnership is a non-registered business
co-owned by two or more “partners.”  Like
Sole Proprietors, General Partners and their business are the same entity for
legal and tax purposes. A General Partnership is a simple and inexpensive way
to form a multi-owner business. There are no state, federal, or local filings
to formally register a partnership, and partners can make decisions with ease
without the meeting formalities required of corporations

A few potential disadvantages include personal
liability risk to the business owners, limited funding possibilities, a heavy
self-employment tax burden, and no continuity of the business’s life if a
partner leaves (unless the partnership agreement has provisions to remedy
that).

Limited
Liability Company (LLC)

An LLC provides legal and financial separation
between owners (known as “members”) and the business. Therefore, the
structure offers peace of mind to business owners who don’t want to risk having
their personal belongings, bank accounts, retirement savings, etc. from being
used to settle the debts or legal problems of their company. From a tax
perspective, however, the LLC and its members are viewed as single tax-paying
entity. Therefore—unless members elect for S Corporation tax treatment (more on
that below)—the LLC’s profits and losses get reported through its owners’
federal personal tax returns. Single-member LLCs (“disregarded
entities”) get taxed as sole proprietorships, and multi-member LLCs get
taxed as partnerships.

Federal income tax flexibility is one of the
attractive features of the LLC structure. An LLC (if it meets all IRS
eligibility requirements) can elect to be taxed as an S Corporation or a C
Corporation. An LLC that opts for S Corp election retains its underlying legal
structure, so compliance requirements remain minimal. It also maintains
pass-through tax treatment, but unlike with the default LLC taxation, not all
business profits are subject to self-employment taxes. Only an S Corp’s owners’
wages and salaries are subject to Social Security and Medicare taxes; owner income
that comes from company profit distributions are not subject to those taxes.

LLCs in Wyoming must submit an annual report
every year on the first day of the anniversary month of their formation.
According to the Wyoming Secretary of State website, “To remain in good
standing each business entity, domestic and foreign (with the exception of
Statutory Trusts), are required to file an annual report and pay a fee based on
its assets located and employed in Wyoming.”

Wyoming is one of only several states to allow
registration of Series LLCs, which is a variation of the LLC structure, that
provides for each series to have its own membership interests, assets, and
operations. In a Series LLC, each series has its own name and operates
independently with its own bank account and financial records.

Limited
Partnership (LP)

A Limited Partnership has “general”
partners and “limited” partners. The general partners are owners that
manage the company. They have the same personal liability risks as in a General
Partnership (because there’s no separation between the individuals and the
business). Limited partners do not manage the company, and their role is to
supply capital to the business. Their personal liability is limited to their
investment in the company. 

Some potential disadvantages to an LP are that
it can get complicated from an accounting standpoint, limited partners have no
real say in how the company is run after they make their investments, and it
can become costly to form and operate.

C
Corporation (Profit Corporation)

Wyoming businesses that operate as C
Corporations offer the highest degree of personal liability protection of their
owners (“shareholders”). The Profit Corporation is a separate entity
legally and for tax purposes. The C Corp reports and pays federal income tax on
its profits on its own tax return. C Corps must appoint a board of directors to
oversee the company’s affairs and ensure the business is managed in tune with
the interests of its shareholders and stakeholders.

C Corporations have more financing options,
too. They can sell stock to raise capital, and investors generally show more
interest and confidence in funding businesses registered as Profit
Corporations.

The “double taxation” on C Corporations
sometimes dissuades entrepreneurs from choosing this entity type. That term
refers to how company profits that get distributed to shareholders as dividends
are taxed twice: 1) to the corporation at the corporate tax rate; and 2) again
to the individual shareholder at the applicable individual tax rate.

Corporations that the IRS’s eligibility
requirements can opt for S Corporation tax treatment to avoid double taxation.
With S Corp election, the Corporation gets pass-through tax treatment, whereby
its profits get taxed at the shareholder level only.

Other potential disadvantages of the C Corp
structure include its higher formation costs and more extensive ongoing
compliance responsibilities (such as submitting annual reports, holding
shareholder and board of directors meetings, and other requirements).

S
Corporation

As I discussed in the LLC and Profit
Corporation overviews, an S Corp is a tax election option rather than an entity
type. LLCs or C Corporations that qualify can file for S
Corporation election by submitting IRS Form 2553
.

3. Name your business.

Besides choosing a business name that will
work well for marketing and branding purposes, it’s also important to make sure
the desired name is available to use in Wyoming. To find out if any other
Wyoming companies are using a name, you can use CorpNet’s free Corporate Name Search tool.
When registering an LLC or corporation in Wyoming, the business name becomes
protected against another similar business from using the name. Registering for a state trademark
can offer additional peace of mind. When forming a legal business entity, a
company must comply with the entity-specific name requirements (e.g., a Limited
Liability Company, must use an acceptable form of “LLC” behind it).

Sole Proprietorships and General Partnerships
do not have to register their companies, but if they use a name that doesn’t
include the legal names of the business owners, they must file a Registration for Application of Trade Name.
When forming a legal business entity, a company must comply with the
entity-specific name requirements (e.g., a Limited Liability Company, must use
an acceptable form of “LLC” behind it).

Keep in mind that registering a business
protects a name only within the state. Therefore, entrepreneurs that have goals
to expand their business or that otherwise want to make sure their business
name is protected in all 50 states can benefit from doing a trademark search. Conducting a trademark search can
help identify if the desired name is available throughout the U.S. Moreover, applying for a trademark on a business name, will, if
granted, ensure no other similar businesses use the name in other states
.

4. Write a business plan.

With so many moving parts involved in starting
a business in Wyoming, a business plan can help you stay focused on your
business objectives and the strategies for achieving them. A business plan is a
document that outlines goals and describes the efforts you will make to
accomplish them. Some business plans need to be very in-depth and detailed
while others can be rather short and sweet. The complexity depends on the
nature of the business and whether the plan will be used to attract outside
investors. Within a formal business plan, you can often find the following
sections:

  • Executive Summary
  • Company Overview
  • Products and Services Descriptions
  • Market Analysis
  • Competitive Analysis
  • Sales and Marketing Plan
  • Management and Operations
    Description
  • Financial Projections

You can find business plan templates online that you can
use as a starting point for creating your own.

5. Find and appoint a Registered Agent in Wyoming.

Businesses registered in Wyoming must designate a
Registered Agent in the state
. The Registered
Agent must have a physical address in Wyoming and be available to accept
“service of process” (official government documents, legal papers,
etc.) for the business Monday through Friday from 9 a.m. to 5 p.m.

The ramifications are serious if an LLC,
corporation, or other registered business entity fails to maintain a Registered
Agent. According to the Wyoming Secretary of State Office, “All business
entities filed in Wyoming shall have and continuously maintain in this state a
registered agent to accept service of process. Failure to maintain a registered
agent results in the dissolution or revocation of the business entity.”

CorpNet offers Registered Agent services in Wyoming and
everywhere else in the U.S.
, which saves
businesses that may want to expand into other states the trouble of looking for
a Registered Agent in each state.    

6. Register your business entity in Wyoming.

Here’s a run-down of some of the initial
paperwork required when starting a business in Wyoming:

  • Sole proprietorship – To operate as a sole
    proprietor in Wyoming, business owners do not have to file any organization
    documents. Note that a trade name (sometimes called “doing business as” or
    “fictitious name”) filing is a must if the business will go by a name other
    than the owner’s first and last name. Also, just like formally registered
    businesses, sole proprietorships must obtain the required licenses and permits
    to operate legally in the state and local jurisdictions.
  • General Partnership – The state does not
    require general partnerships to register their businesses formally. If using a
    business name that does not reflect the legal names of the business partners,
    the partnership must file a DBA. Also, although not required by state law, partners
    should consider having a written partnership agreement to document all of the
    responsibilities and rights of the business’s partners. General Partnerships
    must obtain whatever licenses and permits are required for them to operate
    legally in the state, county, and local municipality.
  • Limited Partnership Forming a Limited Partnership in Wyoming requires filing
    a Certificate of Limited Partnership
    and paying a filing
    fee of $100. With the Certificate of Limited Partnership form, the entity must
    also file a Consent to Appointment by Registered Agent form signed by its
    registered agent. LPs may elect to (but is not required to) submit a Notice of Entity Election form that
    provides the names and addresses of key individuals (such as managing partners)
    and a communications contact at the LP. As with a General Partnership, a
    partnership agreement isn’t mandated by the state, but it can help ensure all
    partners know their responsibilities and rights.
  • LLC – To form an LLC in Wyoming, Articles of Organization must
    be filed, along with a Consent to Appointment by Registered Agent form
    , which must be signed by the entity’s registered agent. To file
    Articles of Organization in Wyoming, an LLC must pay a filing fee of $100.00.
    Wyoming gives LLCs the option of submitting a Notice of Entity Election form
    that provides the names and addresses of key individuals (such as LLC managers)
    and a communications contact at the LLC; it is not a requirement, though.
    LLC  members should consider creating an
    operating agreement. The state doesn’t mandate an operating agreement, but it
    serves a critical role in defining how the LLC should be run and describing the
    responsibilities of LLC members (and managers). 
  • C Corporation (Profit Corporation) – For a
    business to incorporate in Wyoming, the state requires filing
    Articles of Incorporation
    , along with a Consent to
    Appointment by Registered Agent form, and pay a filing fee of $100. Profit
    Corporations in Wyoming must also appoint a Board of Directors and adopt
    bylaws. Wyoming corporations have the option of submitting a Notice of Entity
    Election form that provides the names and addresses of key individuals (such as
    members of the board of directors) and a communications contact at the
    corporation.

7. Obtain an EIN (Employer Identification Number).

Any business that hires employees must get an
EIN (a 9-digit ID number) from the IRS. Often, a bank will require that a
company have an EIN before the institution will open a business bank account.
Other official paperwork may ask for a business’s EIN, as well. The IRS issues
EINs for free, and
CorpNet can help companies by completing and submitting the application (Form
SS-4) for them
. Note that the IRS recently announced that it has revised its EIN
application process to enhance security
.

8. Open a business bank account.

Keeping a business entity’s financial accounts
and records separate from those of the business’s owners is imperative for
accurate bookkeeping and legal reasons. Setting up bank accounts, credit card
accounts, etc. exclusively for company use helps ensure that separation exists.
If an LLC, LP, corporation, or other registered company commingles personal and
business expenses and income, the owners jeopardize their personal liability
protection, and other penalties could occur, as well.

9. Understand Wyoming business taxes.

While Wyoming does not levy income taxes at
the time of this writing, proposed state legislation exists that might change that
for large corporations and individuals and some companies with income over
$200,000
.

Other taxes that businesses avoid in Wyoming
include gross receipts tax and inventory tax.

What
taxes and fees do businesses need to remit in Wyoming? Below is a list of
several that may apply:

  • Annual License Tax – When an LLC, LP, or
    corporation submits its annual report, it must also pay an “annual license tax”
    on the business assets of registered entities in the state. The amount that a
    business pays depends on the value of those assets.
  • State Sales Tax –Wyoming’s state sales tax
    rate is 4 percent.
  • County General Purpose Tax – This tax is
    levied for general funding in most counties within Wyoming. It can range
    between .5 percent and 2 percent.
  • County Specific Purpose Tax – This tax is
    levied in certain counties to fund specific county government projects. It can
    range from .5 percent to 2 percent.
  • County Economic Development Tax – Currently,
    this tax (in increments of .25 percent, not to exceed a total of 1 percent) is
    only levied in Goshen County (at the time of this writing). It is collected to
    provide for economic development within the county.
  • Unemployment Insurance Tax – Businesses with
    employees pay this tax, which funds a state account that compensates eligible
    workers for a portion of wages lost if they lose their jobs due to no fault of
    their own.
  • Workers’ Compensation Insurance – All
    businesses with employees must pay this tax to provide benefits to workers who
    become injured or ill on the job.
  • Employer Income Withholding Taxes – Businesses
    with employees must register with the Wyoming Department of Revenue to withhold
    federal, state, and local income tax and Social Security and Medicare taxes
    from their workers’ wages and salaries.
  • Lodging Tax – This tax is applied by most
    local governments in Wyoming to fund local travel and tourism promotion.
    Hotels, motels, and other lodging businesses are required to pay the tax when
    renting out rooms or property. It is applied in 1 percent increments, with a
    maximum possible tax of 4 percent.

The Wyoming Department of Revenue can
advise business owners on which taxes they must pay and how to go about paying
them. An accountant or tax advisor is also a helpful resource for identifying
tax obligations.

10. Get the necessary licenses and permits you need to operate a business
in Wyoming.

Depending on their industry, businesses may
need to have licenses, permits, or other authorizations from the federal, state
or local governments.

The Wyoming Business Council has created a comprehensive
guide to business permitting and licensing
.
It’s a helpful resource to help you understand the various requirements that
might apply to your business.

You can also turn to CorpNet to help you identify and apply for the necessary
licenses and permits required in the area where you will operate your business
.

11. Research what other business essentials you’ll need to get your
business off the ground.

For example, businesses physically located in
Wyoming must comply with local municipality’s zoning regulations. Also, look
into what types of insurance you might either be required or
want to have to protect your business
in the event of unforeseen
and unfortunate circumstances. Another consideration is funding needs for your
business. Will you need to apply for loans, seek investors, or get additional
money some other way to launch your business?

And remember, there are many human resource-related responsibilities to
tackle and regulations to follow if your business will hire employees
.

12. Stay in compliance with all ongoing requirements after starting a
business in Wyoming.

To stay in good standing and to operate
legally in the state of Wyoming, businesses must stay up to date on their
report and tax filing requirements. Business owners should ask their attorneys
and tax professionals if they are unsure of the obligations they need to
fulfill to maintain corporate compliance. One convenient way to keep track of
future filings by using CorpNet’s
B.I.Z. (Business Information Zone)
. The free online
portal makes it easy to track deadlines for license renewals, annual reports,
and more.

13. Keep a resource list handy.

When starting and running a business, you
don’t have to go it alone. Keep a list nearby of resources you can reach out to
for information and insight along the way. A few that I believe you’ll find
helpful include:

Last but not least, CorpNet is here to help
you with all of your business registration and compliance filings after you’ve
consulted with legal and accounting experts to determine what you need to do.
We’ll save you time and legal costs while ensuring your filings are done
accurately and on time. Ready to get started? Contact us today!





Source link

Tags : businessEntrepreneurshipGuideStartingstepTeenWyoming
DE TEAM

The author DE TEAM

Leave a Response

Durrelliott - News Source For Teenagers