LLC vs S-Corp in Wyoming


Steve Goldstein
Steve Goldstein
Business Formation Expert
Steve Goldstein runs LLCBuddy, helping entrepreneurs set up their LLCs easily. He offers clear guides, articles, and FAQs to simplify the process. His team keeps everything accurate and current, focusing on state rules, registered agents, and compliance. Steve’s passion for helping businesses grow makes LLCBuddy a go-to resource for starting and managing an LLC.

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LLC vs. S Corp in Wyoming

Making choices as an entrepreneur is a big challenge, especially when choosing what business structure to form in Wyoming. When it comes to a business structure, you can choose whether to have a C-corporation, S-corporation, Sole Proprietorship or an LLC in Wyoming. Before you start Wyoming LLC filing, you must compare which structure suits you. You might be considering two popular options: a Limited Liability Company (LLC) or an S Corporation (S-Corp). Both of these structures offer distinct advantages and protections, but selecting the right one depends on various factors, including your business goals, tax preferences, and management style.

If you are confused with Wyoming LLC vs. S-Corporation, and thinking which one is better and more suitable for the business that you will form, there are a few things that you should consider. Before we get through this article, you should understand what an LLC and S-Corporation mean in Wyoming.

LLC vs. S-Corp: Definition

While forming an LLC, you must follow some major steps. It is a business structure that protects your personal assets from getting affected by business liabilities. On the other hand, the S Corp is not a conventional business structure, but it is tax status that your can file with the IRS. S Corp does not provide personal asset protection like an LLC. Here are the detailed definitions of the two-

What is an LLC in Wyoming?

A limited liability company (LLC) is a formal business structure that provides personal asset protection. Under this structure, the LLC owner/member can save his/her personal assets in case the business is in debt or is being targeted with a lawsuit. In some special cases, if your company is legally sued, the other party can go after your personal assets. This is called piercing the corporate veil, where you become personally liable for the company’s debt.

Forming an LLC in Wyoming gives you a pass-through tax benefit where you don’t have to pay an income tax based on your business revenue; instead, the income tax will be calculated based on your personal income.

What is an S-Corp in Wyoming?

An S-Corporation (S-corp) is not a type of corporate entity, unlike a limited liability company (LLC) or other business structures. It’s a tax classification that might result in significant financial savings for corporations and LLCs but in different ways. S-Corporation is similar to LLC, except that the IRS treats it as a corporation for tax purposes.

S-corp is a prominent alternative to the LLC. Unlike a conventional C-corp, S-corp is more suitable for small and medium businesses, such as businesses with 100 shareholders.

LLC Vs. S-Corporation: Which is More Preferable in Wyoming?

In Wyoming, forming a business is crucial since you need to be adequate in your decision, especially when you think if Wyoming LLC or an S-Corporation in Wyoming is preferable. An S-Corporation is a tax classification that some small businesses are qualified for, whereas an LLC is a legitimate company form. By submitting a document to the Internal Revenue Sector (IRS), corporations and LLCs can choose S-Corporation taxation. An S-Corporation can be less formal than forming an LLC and doesn’t normally provide the same protection. Also, unlike LLC, S-Corporation in Wyoming doesn’t provide the same protections entrepreneurs seek from an LLC. It’s important to consider your options when launching a business from a legal and tax point of view.

It is better to consult a legal professional before you set up an LLC or S-corp. We shared basic differences and how you can form an LLC and S-corp. But it is always recommended to consult a professional before making any decision.

LLCBuddy Editorial Team

Tax Difference Between Wyoming LLC and S-Corp in Wyoming

There is a difference between LLC and S-Corporation when it comes to paying taxes. Based on Federal and State Tax differences between the two, you can determine if S-Corporation or LLC in Wyoming is suitable for your business.

Federal Taxes: There are a few federal tax factors to consider when selecting whether to operate an LLC or S-Corporation in Wyoming. Tax differs in terms of Pass-Through Taxes and Self-Employment Taxes.

Pass-Through Taxes: LLC and S-Corporation in Wyoming are the same in terms of pass-through taxation at the federal level. LLCs and S-Corporations do not pay federal income taxes as separate legal entities because of pass-through taxation. Only their owners are required to pay federal income taxes on their portions of the business income. The company does not pay twice the tax in this kind of taxation. Unlike LLCs and S-Corporations, C-Corporations in Wyoming are mandated to have double taxation. It means that they must pay federal taxes at the entity level.

Self-Employment Taxes: Most LLC owners choose S-corporation taxation in Wyoming to reduce their self-employment taxes. This is because if you own an S-corporation, you are not required to be self-employed. Instead, you can join the company as an employee and receive regular salary benefits. On the other hand, an LLC member must include their guaranteed payments and a portion of the LLC’s earnings in calculating their self-employment tax. Distribution of shares defines S-Corporation shareholders in terms of their corporate incomes.

Consider the scenario where you are the only owner of an LLC in Wyoming with a $150,000 annual profit. And let’s say that $100,000 is a fair wage in your location for someone doing the same job as you. Under the default LLC taxation, you must pay self-employment taxes on the entire $150,000 profit. But, if your company is taxed as a Wyoming S-Corp, you will only be responsible for paying payroll taxes on the standard wage of $100,000. Income tax will still apply to the remaining $50,000.

Wyoming State Taxes: At the state level, there aren’t any significant tax differences between regular LLCs and S Corporation LLCs. In terms of the annual LLC fee in Wyoming, it costs $50+ (Up to $500) that can be paid to the WY Secretary of State. Of course, before forming the whole LLC, you must pay the initial fee of $100 (by mail and $102 online) .

On the other hand, you also need to pay taxes if you form an S-Corporation in Wyoming; besides, you must pay the S-Corp filing fee and an annual report fee after a year of establishing your S-Corp. You must also go to the WY Secretary of State to pay this.

How do Wyoming LLCs and S-Corporations Handle Liability Protection?

In Wyoming, you have no personal responsibility for the financial and legal liabilities of an LLC you will form. An S-Corporation does not provide liability protection because it is a tax designation rather than a distinct business entity. Whatever liability defense an S-Corporation provides is provided by the underlying business entity that chose the tax status. You will have the liability protection the LLC offers if it chooses S-Corporation status for tax purposes.

LLC Vs. S Corporation Ownership Requirements Comparison

Strict ownership requirements exist for LLCs and S-Corporations in Wyoming. LLC ownership regulations are strict because a new member can only be accepted with the approval of all existing members. On the other hand, S-Corporation ownership regulations are also strict because only specific people are permitted to become shareholders. Also, an S-Corporation can’t have more than 100 shareholders and needs one class of stock.

The following are the reasons why some cannot be shareholders in the S-Corporation in Wyoming.

  • Insurance business
  • Domestic and International sales corporations
  • Partnerships
  • Corporations
  • Unauthorized Immigrants
  • Certain financial institutions

Although you know most of the reasons regarding the ownership requirements of both LLC and S-Corporation, you should still seek legal advice in preparation for your business and it is best to visit LLCBuddy for your Wyoming LLC or Wyoming S-Corp.

Which is Easier to File in Wyoming: LLCs or S-Corporations?

Filing an LLC or S-Corporation in Wyoming takes time and preparation. Even though it is not as easy as it seems, something manageable still makes it not difficult. LLC and S-Corporation can be filed by Wyoming Registered Agent. However, in order to establish an LLC in Wyoming, you must submit a Articles of Organization to the Wyoming Secretary of State. Your Articles of Organization must contain information for your LLC, along with payment of the associated filing fee.

In addition, you need to submit more papers to make the Wyoming S-Corporation election. File a Form 8832 to inform the Internal Revenue Sector (IRS) that you prefer to tax your LLC as a corporation rather than a partnership. Then you will then submit Form 2553 to choose S-Corporation status.

Do not forget that you must submit annual tax returns and reports after creating your LLC in order to maintain legal compliance.

Important Information

Who Pays More Taxes, an LLC or S-Corporation?

Taxes differ for LLC and S-Corporation in Wyoming because it depends on the tax purposes and how much profit will be generated. Usually, LLCs are frequently taxed at personal rates and LLC owners can elect to be treated as a separate company with its own federal tax identification number.

On the other hand, owners of S-Corporations must receive a salary that includes Social Security and Medicare taxes. The owner, however, can get dividend income or some of the leftover profits, but not as an employee; thus, they won’t be subject to Social Security and Medicare taxes on that money.

Should I Convert an LLC to S-Corporation?

Since your business assets are separated from your personal assets if you’re a sole proprietor, it may be advisable to form an LLC. You are not restricted to modifying the structure of your LLC to an S-Corporation. Although an S-corporation must have a board of directors, a maximum of 100 shareholders, and adhere to more regulations, it would be ideal for more companies with more shareholders.

How to Structure an LLC to S-Corporation?

To structure an LLC to S-Corporation in Wyoming, you must submit Form 2553, Election by a Small Business Corporation, to the IRS in order to choose S-corp taxation. Filing a form 2553 should be done 75 days after the formation of your S-Corp, or not more than 75 days after the beginning of the tax year in which the election is to take effect.

If your LLS-Corp has passed the deadline of 75 days, you must also file Form 8832, Entity Classification Election, in order to opt to be taxed as a corporation. Then you would send Form 2553 and Form 8832 jointly by certified mail from the USPS. In Wyoming, you can file your form 2553 in the Department of the Treasury Internal Revenue Service Center – Ogden, UT 84201 Fax: 855-214-7520 .

FAQs

What are the filing requirements for an LLC in Wyoming?
In Wyoming, LLCs must file articles of organization with the Wyoming Secretary of State, pay the applicable filing fee, and designate a registered agent in the state.
What are the tax benefits of an LLC in Wyoming?
Wyoming LLCs do not have to pay income taxes on their business profits. Additionally, Wyoming LLCs will not be subject to the double taxation that affects C-Corporations.
What are the requirements for forming an S-Corp in Wyoming?
In Wyoming, S-Corps must file articles of incorporation with the Wyoming Secretary of State, pay the applicable filing fee, issue stock to shareholders, and designate a registered agent in the state.
What are the tax benefits of an S-Corp in Wyoming?
Wyoming S-Corps are not subject to double taxation, although owners must pay income taxes on their distributions. However, the corporation’s profits are not subject to taxes at the company level.
What are the legal requirements for an LLC in Wyoming?
Wyoming LLCs must file articles of organization with the Wyoming Secretary of State, pay the applicable filing fee, and designate a registered agent in the state. Additionally, LLCs must observe all applicable business regulations, including those related to business licensing and taxation.
What is the difference between an LLC and an S-Corp in Wyoming?
An LLC in Wyoming is a limited liability company that provides its owners with limited liability protection. An S-Corp is a type of corporation that is taxed as a pass-through entity, meaning the profits and losses are passed through to the owners. Both LLCs and S-Corps provide limited liability protection for their owners in Wyoming.
What are the advantages of forming an LLC in Wyoming?
The advantages of forming an LLC in Wyoming include limited liability protection, tax flexibility, ease of formation, and privacy. Wyoming also has fewer reporting requirements and no state income tax, making it a desirable location for businesses.
What are the steps for forming an LLC in Wyoming?
The steps for forming an LLC in Wyoming are choosing a name, filing the Articles of Organization, obtaining an EIN, creating an operating agreement, obtaining any required permits or licenses, and registering with the Wyoming Secretary of State.
How much does it cost to form an LLC or S-Corp in Wyoming?
The cost to form an LLC or S-Corp in Wyoming varies depending on the type of entity. Filing the Articles of Organization for an LLC typically costs between $50 and $100, while filing the Articles of Incorporation for an S-Corp typically costs between $100 and $150.
What are the legal requirements for an LLC or S-Corp in Wyoming?
The legal requirements for an LLC or S-Corp in Wyoming include filing the Articles of Organization or Articles of Incorporation, creating the bylaws, obtaining an EIN, obtaining any required permits or licenses, issuing stock certificates (if applicable), and registering with the Wyoming Secretary of State.
What is the filing fee for forming an LLC or S-Corp in Wyoming?
The filing fee for forming an LLC or S-Corp in Wyoming varies depending on the type of entity. Filing the Articles of Organization for an LLC typically costs between $50 and $100, while filing the Articles of Incorporation for an S-Corp typically costs between $100 and $150.
Does Wyoming have an annual filing requirement for LLCs and S-Corps?
Yes, Wyoming has an annual filing requirement for LLCs and S-Corps. LLCs must file an Annual Report with the Wyoming Secretary of State, while S-Corps must file a Biennial Report with the Wyoming Secretary of State.
What tax rate does Wyoming have for LLCs and S-Corps?
Wyoming does not have a state income tax, so LLCs and S-Corps are not subject to a state income tax. However, LLCs may be subject to federal income taxes and S-Corps may be subject to federal and state payroll taxes.
Are LLCs and S-Corps in Wyoming required to have a registered agent?
Yes, LLCs and S-Corps in Wyoming are required to have a registered agent. The registered agent must be a resident of Wyoming, or a business entity authorized to do business in Wyoming.
What types of businesses are eligible to form an LLC or S-Corp in Wyoming?
All types of businesses are eligible to form an LLC or S-Corp in Wyoming, including professional services businesses, retail businesses, manufacturing businesses, and more.
What is the filing process for creating an LLC or S-Corp in Wyoming?
To create an LLC or S-Corp in Wyoming, you must file the applicable Articles of Organization or Articles of Incorporation with the Wyoming Secretary of State.
Is a Wyoming LLC or S-Corp taxed differently than other states?
Yes, Wyoming does not have a state income tax, so LLCs and S-Corps formed in Wyoming are not subject to Wyoming state taxes.
How long does it take to form an LLC or S-Corp in Wyoming?
It typically takes 1-2 weeks to form an LLC or S-Corp in Wyoming.
Does Wyoming require annual or biennial filings for LLCs or S-Corps?
Yes, Wyoming requires LLCs and S-Corps to file an annual report with the Wyoming Secretary of State.
Is there a minimum amount of registered capital required to form an LLC or S-Corp in Wyoming?
No, there is no minimum amount of registered capital required to form an LLC or S-Corp in Wyoming.
Are there any other requirements for LLCs or S-Corps in Wyoming?
Yes, Wyoming LLCs and S-Corps must also maintain a registered agent and a registered office address in the state.
Are Wyoming LLCs and S-Corps subject to any other taxes?
Yes, Wyoming LLCs and S-Corps are subject to federal taxes, as well as local taxes, depending on the county.
Can Wyoming LLCs and S-Corps be publicly traded?
Yes, Wyoming LLCs and S-Corps can be publicly traded.
Are there any restrictions on the ownership of LLCs or S-Corps in Wyoming?
There are no restrictions on the ownership of LLCs or S-Corps in Wyoming.
What type of documentation is required to form an LLC or S-Corp in Wyoming?
To form an LLC or S-Corp in Wyoming, you must file the applicable Articles of Organization or Articles of Incorporation with the Wyoming Secretary of State.
Do LLCs or S-Corps in Wyoming need to have a business bank account?
Yes, all LLCs and S-Corps in Wyoming must have a separate business bank account.
Are there any restrictions on the types of businesses that can be formed as LLCs or S-Corps in Wyoming?
No, there are no restrictions on the types of businesses that can be formed as LLCs or S-Corps in Wyoming.
Can I manage a Wyoming LLC or S-Corp from another state?
Yes, you can manage a Wyoming LLC or S-Corp from another state.
Are there any special requirements for foreign LLCs or S-Corps in Wyoming?
Yes, foreign LLCs and S-Corps in Wyoming must file a Certificate of Authority with the Wyoming Secretary of State.
What are the fees for annual filings for LLCs and S-Corps in Wyoming?
The filing fee for the annual report for LLCs and S-Corps in Wyoming is $50.

Also Read

Why Wyoming LLC Vs S Corp is So Important

One of the key reasons why this choice is so important is the flexibility that each structure provides. An LLC, or limited liability company, offers a more relaxed structure that allows for greater flexibility in ownership, management, and taxation. With an LLC, owners, known as members, have the ability to customize the company’s operating agreement to meet their specific needs and preferences. This can be particularly beneficial for entrepreneurs who want to retain autonomy and control over their business operations.

On the other hand, an S Corp, or S Corporation, provides certain tax advantages that may appeal to small businesses looking to minimize their tax liability. With an S Corp, companies can pass the majority of their profits directly to shareholders, avoiding the double taxation that often occurs with traditional corporations. This can result in significant tax savings for owners, making it an attractive option for businesses with high revenues and profits.

Another critical factor to consider when choosing between a Wyoming LLC and an S Corp is liability protection. Both structures offer limited liability protection, meaning that owners are not personally liable for the debts and obligations of the company. However, an LLC typically provides more solid protection against legal claims and lawsuits, as it shields personal assets from potential creditors. This can be especially beneficial for business owners in high-risk industries or those with significant personal assets to protect.

Furthermore, the cost and complexity of establishing and maintaining each structure should be carefully considered. Forming an LLC in Wyoming is typically simpler and less expensive than forming an S Corp, making it a more attractive option for small businesses with limited resources. Additionally, LLCs have fewer ongoing compliance requirements, such as annual meetings and extensive record-keeping, making them easier to manage for busy entrepreneurs.

Ultimately, the choice between a Wyoming LLC and an S Corp will depend on a variety of factors, including your business goals, tax considerations, and risk tolerance. Taking the time to thoroughly evaluate these factors and seek guidance from legal and financial professionals can help ensure that you select the right structure for your company.

In conclusion, the decision between a Wyoming LLC and an S Corp is a critical one that can have a significant impact on the success and longevity of your business. By carefully considering the advantages and disadvantages of each structure, as well as your specific needs and goals, you can make an informed choice that will set your company up for long-term success.

Conclusion

Even though you can choose a different corporate structure, consider whether it will primarily assist your organization. Striking the perfect balance between corporate benefits and legal protection that suits your particular needs is important. In forming an LLC or S-Corp in Wyoming, you must be aware that every detail is well-formed so that starting your business will be successful. And, if you would like us to help you form a Wyoming LLC and S-Corp in Wyoming, read our other business guides.

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