Wyoming Corporation
Advantages and Disadvantages

Wyoming Corporation:

Should I form an Wyoming Corporation?

A corporation, chartered by the state in which it is headquartered, is considered by law to be a unique entity, separate and apart from those who own it. A corporation can be taxed; it can be sued; it can enter into contractual agreements. The owners of a corporation are its shareholders.

The shareholders elect a board of directors to oversee the major policies and decisions. The corporation has a life of its own and does not dissolve when ownership changes.

Wyoming Corporation: Advantages and Disadvantages

Advantages of a Corporation

  • Shareholders have limited liability for the corporation's debts or judgments against the corporations.
  • Generally, shareholders can only be held accountable for their investment in stock of the company. (Note however, that officers can be held personally liable for their actions, such as the failure to withhold and pay employment taxes.)
  • Corporations can raise additional funds through the sale of stock.
  • A corporation may deduct the cost of benefits it provides to officers and employees.
  • Can elect S Corporation status if certain requirements are met. This election enables company to be taxed similar to a partnership.
  • A corporation pays 15% federal income tax on taxable income up to $50,000; 25% tax on income from $50,001 - $75,000; 34% tax on income from $75,001 - $100,000; 39% tax on income from $100,001 - $335,000; and 34% tax on income over $335,000.
  • A sole proprietor who filed a federal income tax return under the status of married, filing jointly, would pay 15% federal income tax on taxable income up to $35,800; 28% tax on income from $35,801 to 86,500; and 31% tax on income over $86,501.

Disadvantages of a Corporation

  • The process of incorporation requires more time and money than other forms of organization.
  • Corporations are monitored by federal, state and some local agencies, and as a result may have more paperwork to comply with regulations.
  • Incorporating may result in higher overall taxes. Dividends paid to shareholders are not deductible form business income, thus this income can be taxed twice.

Federal Tax Forms for Regular or "C" Corporations

  • Form 1120 or 1120-A: Corporation Income Tax Return
  • Form 1120-W Estimated Tax for Corporation
  • Form 8109-B Deposit Coupon
  • Form 4625 Depreciation

The Facts on Wyoming's Tax Climate

Here are some basic facts on Wyoming's tax system and how it compares to other states:

Tax Freedom Day Arrives on April 13 in Wyoming

Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2011, Wyoming taxpayers work until April 13 to pay their total tax bill, ranking it 11th highest in the nation. This is 1 day after the national Tax Freedom Day (April 12). The Tax Freedom Days of neighboring states are: Montana, April 5 (ranked 31st nationally); South Dakota, March 30 (ranked 46th nationally); Nebraska, April 12 (ranked 15th nationally); Colorado, April 8 (ranked 24th nationally); Utah, April 10 (ranked 19th nationally); and Idaho, April 3 (ranked 36th nationally).

Wyoming's 2008 Business Tax Climate Ranks 1st

Wyoming ranks 1st in the nation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: Montana (6th), South Dakota (2nd), Nebraska (43rd), Colorado (13th), Utah (17th), and Idaho (31st).

Wyoming Levies No Personal Income Taxes

Wyoming levies no individual income taxes, joining six other states with the same policy. This makes the tax environment in Wyoming very competitive compared to other states.

Wyoming Levies No Corporate Income Taxes

Wyoming, in addition to collecting no personal income taxes, collects no corporate income taxes. Only four other states (Nevada, Texas, South Dakota and Washington) join Wyoming in levying neither income tax.

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