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Swyft Filings is committed to providing accurate, reliable information to help you make informed decisions for your business. That's why our content is written and edited by professional editors, writers, and subject matter experts. Learn more about how Swyft Filings works, our editorial team and standards, what our customers think of us, and more on our trust page.
There’s more to an S corporation than simply declaring it the tax classification you want for your business entity. Also known as an S corp, this classification allows business owners to pass their company’s income, losses, deductions, and credits to shareholders for federal tax purposes.[1] It’s an excellent option for small business owners.
S Corporation in Wyoming: Key Points
S corp status is a type of tax classification, not a specific business structure type.
S corporations in Wyoming don’t have to pay a franchise tax. However, they do still have to pay appropriate federal taxes.
Because S corp status is a tax classification, entrepreneurs will likely need to file their business as an actual business structure, such as an LLC, before electing S corp status.
Unlock tax savings and ensure compliance with critical regulations with our assistance.
What Is an S Corporation?
An S corp is not a business structure like an LLC. Instead, it is a type of tax classification. When it comes time to file your annual taxes, any of your S corp’s profits and losses will go through to its shareholders. The Internal Revenue Service (IRS) calls this a pass-through entity.
Typically, businesses need to pay a corporate tax, which is accounted for and filed at the end of every tax year. Instead of filing a separate corporate tax, an S corporation’s taxes pass to its shareholders. Owning members then file the business taxes on their personal tax returns. According to the Tax Foundation, the state of Wyoming does not have an individual or corporate income tax.[2]
Business owners may also be interested in a C corporation or LLC. An LLC, which is short for a limited liability company, is a type of business. You can form an LLC and elect one of the two corporation types – S corp or C corp – to determine how your business will file its taxes. The two different types of corps are tax classifications. An S corp is a pass-through entity, but a C corp is not.
Tax Considerations for an S Corporation in Wyoming
Understanding how electing S corp status affects your business is crucial, as it will determine the tax classifications you must follow. Shareholders are liable for different types of taxes. Also, not only do S corps have their own rules for filing taxes, but Wyoming also has state laws that businesses must follow.
The Wyoming Secretary of State’s website has information on how to start a business. Still, business owners must research how to pay taxes to follow state legal requirements. Luckily, Wyoming’s tax system ranks first on the Tax Foundation’s 2023 State Business Tax Climate Index.[2]
Wyoming Tax Treatment of S Corporations
Since S corps are pass-through entities, shareholders must report the company’s gains and losses on their personal tax returns when they file each year. The benefit is that tax returns are assessed at the individual’s income tax rates.[3] This means that they can avoid being taxed twice on corporate income, making this tax classification very attractive for small business owners.
Even though Wyoming does not have a corporate or personal income tax, business owners must pay federal income taxes. This is typically required quarterly during the tax year, meaning that payments are due on April 15, June 15, September 15, and January 15.[4]
Wyoming Franchise Tax for S Corporations
According to Wyoming law, S corps do not need to pay a franchise tax for doing business in the state.[5] However, if Wyoming-based companies want to operate in other states, they may have to pay a franchise tax or other state taxes, regardless of what is required by Wyoming state law. A franchise tax refers to “a tax paid by certain enterprises that want to do business in some states.”[6]
Entrepreneurs can apply for federal tax-exempt status through the IRS if they choose to form a nonprofit corporation. This would provide them with the 501(c)(3) tax code, meaning they are not required to pay federal taxes.[7] However, the laws for state taxes differ from state to state.
Pass-Through Taxation
As mentioned, Wyoming does not require a franchise tax, meaning there’s no cost to do business there. In addition, Wyoming does not have an individual or corporate income tax either.[8] So what do shareholders need to be aware of?
S corps are pass-through entities. They pass all corporate income, losses, deductions, and credits to their shareholders for federal tax purposes. Then, owners must file business-related taxes on their tax returns.[9] Be sure to distinguish S corps from C corps. C corps are not pass-through entities, meaning owners are taxed separately.[10]
Self-employment taxes can be relevant here since shareholders, especially small business owners, are likelier to own and employ their businesses. Self-employment tax refers to Social Security and Medicare taxes but not any of the other taxes that self-employed people are required to file.[11]
Requirements for Forming an S Corporation in Wyoming
A list of qualifications needs to be fulfilled before a business can elect S corp status. Before choosing it as a tax designation, business owners need to check their entity’s eligibility. To save yourself money and time, consider using Swyft Filing’s online filing service to help make sure you don’t miss any requirements if you want to register your entity as an S corp.
While this tax classification especially appeals to small businesses and LLCs, only some companies can elect S corp status. S corporation shareholders must take on their entity’s corporate taxes on state and federal levels. For this reason, the corporation must operate in the U.S. In addition, the business and its shareholders must fit specific requirements and follow certain rules.
Businesses must meet the following requirements to be eligible for S corp status:
Be a domestic corporation, i.e., operate in the United States
Have only allowable shareholders
Allowable: individuals, certain trusts, U.S. citizens, or estates
Not allowable: partnerships, corporations, or non-resident aliens
Have no more than 100 shareholders
Have only one class of stock
Not be an ineligible corporation, such as certain financial institutions, insurance companies, or domestic international sales corporations[12]
Filing as an S Corp in Wyoming
From choosing your unique business name, hiring a registered agent, and applying for an Employer Identification Number (EIN), you can use Swyft Filing’s services to ensure your business follows state-specific laws and other federal rules when electing S corp status. Note that the filing process is different from state to state. Be sure to research what’s required because your business needs to follow the rules of the state it is formed in and where it operates. You don’t want to find yourself paying unnecessary filing fees or getting in trouble for missing payments because you looked up the guidelines for the wrong state.
Step 1: Choose a Business Name
There’s more to a business name than just thinking of something creative. Business owners need to take the proper steps to claim their corporate name. Using the same name as another business could confuse customers or, even worse, cause legal trouble. Using the state-owned name search tool, you can check that your name is free to use. Your business name must also follow several other rules to ensure it complies with W.S. 17-16-407 (f)(v).[13] Wyoming has a comprehensive guide on “How to Choose a Company Name.” It explains what makes your name distinguishable and other rules. Also, check if you must indicate what type of entity it is, like putting “Inc.” in the name of an S corp. Once you have reviewed all the requirements to ensure you have a unique business name, file your paperwork.
Step 2: Appoint a Registered Agent
After choosing a name, business owners must find a registered agent. All entities filed in Wyoming must have a registered agent to accept service of process. Wyoming registered agents also accept legal documents, act as the address linked to the business, and more. According to the Secretary of State, “You as an individual might qualify to be the registered agent for your company.”[14]
Registered agents are a massive help with administrative and legal headaches. If the business is sued, the agent receives the legal documents. They’re also required to keep certain information about the companies they represent. Not only is hiring a registered agent useful, but it’s also mandatory. Swyft Filings’ registered agent service can help you find an agent that fits your needs.
All corporations, LLCs, and limited partnerships in Wyoming must have a registered agent with a physical address in the state. Otherwise, they risk not being recognized as a business. The Wyoming Secretary of State offers a guide on finding (or becoming) a registered agent.
Step 3: File Articles of Organization
The Articles of Organization is a document with specific information the state uses to recognize your business entity as fully formed. Business owners must file it with the Wyoming Secretary of State.
Each state is different, but your Wyoming Articles of Organization should contain these critical pieces of information at a minimum:
Your S corp’s registered name and business address
The registered agent’s name, business address, and mailing address (if different)
A statement regarding the registered agent’s consent
Name and mailing address of the person forming the S corp
Whether the business is managed by manager or members
Any other additional information
Once approved, paper filings will receive an email with a certificate of formation and receipt. Online filings get the same documents available for download immediately after payment. Each state has its own set of rules to follow when filing and a filing fee, which varies depending on your business type. Most entities cost $100.00 to file, on top of a $2.00 convenience fee.[14]
Be sure to know which business structure you want for your S corp. Note that because S corp status is a tax classification, it’s likely that business owners will have to file for an LLC before applying for S corporation status. LLCs cost $100.00 to file, profit corporations cost $100.00, and limited partnerships cost $100.00. Nonprofit corporations cost $50.00 to file.
For paper filings, checks or money orders can be made payable to the Wyoming Secretary of State and are processed in the order they were received, taking at most 15 business days. Unfortunately, paper filings cannot be expedited. Online filings can be paid with credit cards or authorized debit cards. The company is active as soon as the online filing process is completed.[14]
Step 4: Create an S Corp Operating Agreement
An S corp operating agreement is a formal record of the members of an LLC (including a sole member if a single individual owns it).[15] The primary purpose of this legal document is to identify and solidify the business owners. This is the only document verifying who owns the company and who should be involved in business matters, but it can contain other details. When drafting your operating agreement, describe the business structure, including the owners, and explain how they will manage the business according to different styles. This document establishes who owns the company and outlines the responsibilities that each owner needs to keep track of to keep the business running.
Step 5: Apply for an Employer Identification Number
Commonly known as an EIN, this is similar to an individual social security number (SSN). The IRS uses an EIN to identify your business when you file your tax return. You must apply for an EIN to do critical tasks, like opening a business bank account, getting a credit card, applying for required licenses, and reporting taxes.
According to the IRS, a sole proprietor without employees who doesn’t file excise or pension plan tax returns does not need an EIN. If your business is a one-owner LLC, you do not employ anyone else, and you do not file several different taxes, you can use your SSN as the business’s federal tax identification number. However, you can still get an EIN if you want.[16]
Step 6: File Form 2553 for S Corporation Election
Business owners must complete Form 2553 (Election by a Small Business Corporation) to officially classify their business as an S corp with pass-through taxation benefits. All shareholders must sign it to be eligible and take full ownership for filing business taxes on their personal returns.
For your S corp status to take effect, make the election at any time during the tax year before the tax year you want it to apply to.[17] This cannot be done any later than two months and 15 days after the tax year starts. Those filing in Wyoming late can contact the Department of the Treasury at the IRS Center in Utah or find more information here.
File your form within 75 days of forming the business. However, note the following caveat: If a business owner has an LLC they want to classify as an S corp and the LLC is already past the deadline, they must file an additional form. Form 8832 (Entity Classification Election) allows the business to be taxed as a corporation and must be completed alongside Form 2553.
Wyoming S Corp vs. Wyoming LLC
After going through all these steps, you might wonder what specific advantages electing S corp status has over filing as an LLC. Remember that an S corporation election is a tax classification with particular tax treatment. There are different pros and cons regarding liability protection, tax purposes, and more.
Advantages of Starting an LLC in Wyoming
An attractive option for small business owners, a Wyoming LLC offers personal liability protection and flexible taxation. LLCs also come with flexibility in ownership and management, as mentioned above. If you’re a business owner looking to start an LLC, using Swyft Filings as an online filing service can help you save time and energy. They are also relatively cheap and easy to form compared to other businesses.
Disadvantages of Starting an LLC in Wyoming
Alternatively, there are some downsides to forming an LLC. As mentioned, the IRS doesn’t recognize LLCs as a tax classification. The default is sole proprietorship taxation if there is only one owner or partnership taxation if there is more than one.
Advantages of forming an S Corporation in Wyoming
Electing to classify your LLC as an S corp can come with significant benefits when filing taxes. Because S corps are pass-through entities, shareholders report the company’s income and losses on their tax returns. Filing on an individual’s returns means paying taxes only on individual income rates and not filing taxes twice.
Disadvantages of forming an S Corporation in Wyoming
Electing S corp status may mean that LLCs face stricter administrative requirements than sole proprietorships or limited partnerships. And while they offer flexibility when it comes to filing taxes and ownership, it may also complicate things when choosing a tax classification and managing members.[18] This is why it’s essential to establish an operating agreement for an S corp.
Ready to File for S Corp Status in Wyoming?
Forming and maintaining an S corp in Wyoming requires time, money, and attention to detail. Each step must be done correctly to ensure your business gets up and running while following legal requirements on both the state and federal levels. If you’re looking for a way to ensure your S corp goes through the process successfully from start to finish, Swyft Filings has you covered. We help folks save time and effort by ensuring everything is done correctly from the start, noting S corp limitations from day one, and guaranteeing efficiency. With fast turnaround times, we provide a quick, easy, and reliable formation service to get you S corp status when needed. Entrepreneurs and small business owners can use our S-corp filing service to let us handle the paperwork.
Maximize Tax Benefits: Experience pass-through taxation with Wyoming S corp status and avoid double taxation.
Access a One-Stop Solution: Establish an LLC or C corporation easily and then transition to S corp status, all within our platform.
Stay Compliant: Our compliance alerts help keep you up-to-date on all the complex compliance requirements of an S corp so you can stay on the government’s good side.
Frequently Asked Questions
What is an S Corporation in Wyoming?
An S corp in Wyoming is a business that passes any of its income, losses, deductions, or credits through to its shareholders. It is especially attractive to small business owners for federal tax purposes. Shareholders file business taxes on their tax returns using their tax rates because S corps are a pass-through entity.
Does Wyoming recognize S corporations?
Yes, Wyoming recognizes S corps once they are filed successfully with the IRS. Business owners can file a Wyoming LLC, profit, or nonprofit, and then elect S corp status as their tax designation with the IRS.[19] [20]
What is the turnaround time for filing for S corp status with the IRS?
On average, business owners will be notified of their business entity’s S corp status within 60 days after filing Form 2553.[21]
What is the difference between an S corp and an LLC?
The main difference is that an S corp is a type of tax classification, not a business structure. This election goes through the IRS. An LLC is a business that needs to elect a tax status. Filing for an LLC can be done with the Wyoming Secretary of State.
What are the requirements for an S corporation in Wyoming?
The IRS states that business entities must fit specific requirements to qualify for S corp status, such as:
Operate domestically
Appoint only allowable shareholders (individuals, certain trusts, or estates)
Have no more than 100 shareholders
Have only one class of stock
Not be an ineligible corporation
Are taxes for LLCs and S corps the same?
No, the way LLCs are taxed depends on the type of tax classification they choose — S corp, C corp, Partnership, or Sole Proprietorship. It’s important to note that some of these are pass-through entities, while others are not. Each tax classification serves a different purpose and comes with pros and cons.
What is the S corp tax rate?
Wyoming does not have a corporate income tax. Instead, it has a 4% state sales tax, a max local sales tax rate of 2%, and an average combined state and local sales tax rate of 5.36%.[22]
How do I dissolve an S corporation in Wyoming?
If you have elected S corp status for your Wyoming LLC, you can file an Articles of Dissolution form with the Wyoming Secretary of State. This is a simple online form that requires a $60.00 filing fee. Once submitted, business owners can expect to see their entity dissolved within the 15-day processing period.[23]
Bibliography
Internal Revenue Service. “S Corporations.” Accessed March 13, 2023.
Tax Foundation. “Taxes in Wyoming.” Accessed March 13, 2023.
Internal Revenue Service. “S Corporations.” Accessed March 13, 2023.
Small Business Guidance. “Run Your Business.” Accessed March 13, 2023.
Wyoming Secretary of State. “Comprehensive State-by-State Fee Comparison 2018.” Accessed March 13, 2023.
Investopedia. “Franchise Tax Definition, Rates, Exemptions, and Example.” Accessed March 13, 2023.
Wyoming Secretary of State. “The Choice is Yours.” Accessed March 13, 2023.
Tax Foundation. “Taxes in Wyoming.” Accessed March 13, 2023.
Internal Revenue Service. “S Corporations.” Accessed March 13, 2023.
Investopedia. “What is a C Corp?” Accessed March 13, 2023.
Internal Revenue Service. “Self-Employment Tax (Social Security and Medicare Taxes).” Accessed March 13, 2023.
Internal Revenue Service. “S Corporations.” Accessed March 13, 2023.
Wyoming Secretary of State. “Instructions to Form or Register a New Business.” Accessed March 13, 2023.
Wyoming Secretary of State. “How to Create a Wyoming Company.” Accessed March 13, 2023.
Wyoming Secretary of State. “Chapter 29 - Wyoming Limited Liability Company Act.” Accessed March 13, 2023.
Internal Revenue Service. “Frequently Asked Questions.” Accessed March 13, 2023.
Internal Revenue Service. “Instructions for Form 2553 (12/2020).” Accessed March 13, 2023.
Upcounsel. “Disadvantages of an LLC: Everything You Need to Know.” Accessed March 13, 2023.
Wyoming Secretary of State. “Start a Business.” Accessed March 13, 2023.
Internal Revenue Service. “Form 2553.” Accessed March 13, 2023.
Internal Revenue Service. “Instructions for Form 2553 (12/2020).” Accessed March 13, 2023.
Tax Foundation. “Taxes in Wyoming.” Accessed March 13, 2023.
Wyoming Secretary of State. “Limited Liability Company: Articles of Dissolution.” Accessed March 13, 2023.
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