Freedom to work as much as you want and when you want to is a dream for every aspiring entrepreneur. This becomes possible when you set up your own business and become your own boss. Often you will hear people say it is not an easy task, and that may be so; but this should not stop you from making that decision.
Consider what is important to you, and what you would like to achieve. You would like to work flexible hours, to have more spare time to spend with your family and to start earning significantly larger figures compared to those you are currently earning. This is all achievable if you run your own business. While it is hard work, consider just how many hours you have spent working for someone else, sharpening your skills to deliver better results, with your efforts going unnoticed. Wouldn’t it be better to put these skills to work for you, for a company you are building from scratch and helping grow?
Both your skills and experience can be put to better use if you are running your own business. You have already seen the structure of a company from the inside and know how it functions, you already have knowledge of the market conditions and all this would make it easier to start and run your own business.
While this article will focus on pointing you in the right direction when it comes to starting up a business, specifically in the state of Wyoming, we urge you to consult an attorney or a business advisor to eliminate potential errors in the registration process. You want to complete the process correctly and professional help will come in handy both during the preparation and the legal registration processes.
We mentioned the difficulty of running a business but thorough preparation will solve many issues and doubts. Doubting yourself is normal at this stage, it is what you do to eliminate these doubts that matters. Ask yourself a series of questions, such as: why do you want to start your own business, do you have the skills to do it, and whether the business idea you have is sustainable in the form you envisioned it? We have pretty much already answered the why in the introduction to this article. If you don’t have the skills currently, it doesn’t mean that you have to abandon your plans. Rather, it means you have to acquire the required skills before moving to the next step.
That next step is crucial: answering the question of whether your business is sustainable. This is where the focus turns to setting up your business. This will include a development of a business plan, a sort of an all-encompassing document that will serve as a roadmap and will give you a number of important answers and pointers. Developing a business plan starts with research. This will give you insights into the market conditions and the relation between the supply and demand.
You probably already have a product or a service in mind that you would like to provide. If the research results show that the market is in need of your product or service, you’ve solved half the problem. But, if you find that the market is already oversupplied, it is time to approach the matter from a new angle. You should focus your research on finding niche markets or undersupplied markets to exploit. Such markets are smaller, but they are a safer option for a startup because there is a healthy demand for a product or a service. This product or service is what you should focus on. There is additional value in starting your business in a niche market for you as an owner. You get to sharpen your management skills on a smaller scale, gather experience, build a customer base and a reputation before expanding into a new market.
The next step is to display cost predictions and projected profits and revenue in your business plan. A complete business plan will not only serve as a roadmap for you, it is also a very important factor in procuring external funding, should you need it. Banks and other financial institutions will first request to see your business plan to determine whether your business is worth investing in. This is why it is essential to develop your business plan with attention to detail, and often it is consulting business advisors that provides the best results.
Once you have completed all the necessary steps, you can move on to the next stage: registering your business with the state of Wyoming authorities.
The state of Wyoming requires any aspiring entrepreneur to go through a process that starts with the Secretary of State. When setting up a business, you are presented with a number of choices that start with identifying the requirements of your business, its scale, and its structure. This will dictate the first step you have to go through and that is to select the right legal entity for your business. Every legal structure has its pros and cons and, as noted above, which one you choose depends only on the requirements of your business.
According to the Wyoming Secretary of State document entitled ‘The Choice is Yours’, traditionally the first option is the sole proprietorship. In this legal structure, there is no legal distinction between the owner and the business. This has several advantages, such as no filing requirements, and cheap and easy start-up procedure. It is also the easiest form to operate. But there is another side. The liability of the business is on the shoulders of its owner completely, due to the aforementioned non-existence of legal distinction between the two. Additionally, if the business owner dies, the business ceases to exist. All profits of the business are taxed as personal income.
Next in line would be the general partnership legal structure, which means two or more people join forces to run a business. It is also easy and cheap to set up and all it takes is a verbal agreement of partnership creation since no state, federal or local filings are required. However, the partnership agreement can be filed and verified with the Secretary of State. Like the sole proprietorship, there is no double taxation and all partners share equal profits and management responsibilities. However, each partner is liable for all the debts of the partnership and it ceases to exist if a partner passes away.
Another form of partnership you may look into is the Limited Partnership, which does require filing a certificate of limited partnership with the Secretary of State. The main difference from a general partnership is that general partners share managerial responsibilities and are liable for all the debts of the business. Limited partners, on the other hand, don’t have managerial responsibilities and their liability stretches only to the scale of their investment. Unlike the general partnership, a limited partnership is truly a separate entity and does not have to be dissolved in case a general or a limited partner passes away. On the downside, while the taxes are passed down to the partners, the accounting procedures are complicated, and while protecting limited partners from unlimited liability, this legal structure does not give them any managerial rights. It is also regarded as expensive in terms of operations.
The next entity type is the corporation, which is a completely separate entity that provides its owners or shareholders with protection from liabilities. It is, however, subject to double taxation. As a separate entity, its corporate profits are taxed and the dividend paid to its shareholders is again taxed as personal income. One of the advantages is the fact that ownership can be passed from one shareholder to another and the corporation will continue to exist. Disadvantages include the costs of starting up and, while the company is run by a board (centralized), this can also be a problem if the board can’t reach a decision on a managerial issue.
We will end this list with the Wyoming Limited Liability Company, which is described as a hybrid between a corporation and a limited partnership. It takes the liability protection of a corporation and the taxation requirements of a limited partnership. Other advantages include no restriction on the number of investors an LLC may have. Requiring members vote to sell or transfer ownership of interest can be perceived as an issue, and forming and running an LLC comes at a higher cost. For further details on the legal entities go through the above-mentioned document.
When you’ve determined which entity suits you best, it is time to choose a name for your business. As a sole proprietor, you may use your own name, or you may want to file for a business name. You can see the rules regarding how to choose the business name here. When choosing a name, you will have to make sure it is unique. You can check if the name you’d like to use is available here.
With that done, you move on to the next step, which is a bit specific for Wyoming that requires you to have a registered agent. A registered agent is a person within the company that will accept service of process and is the person that accepts documents on behalf of the company as well as keep information about the business, such as key personnel.
Now you move on to filing the required forms with the Wyoming Secretary of State. Luckily, this part of the process is fairly streamlined and the state allows you to complete the filing process online through the Secretary of State’s website. If you prefer the traditional way of filling out forms and filing them personally or via mail, you will find all the necessary forms here. Once filled out you may deliver them to the Secretary of State office’s address provided in the Contact Details section below.
That pretty much sums up the registration process, but there is something we have not touched on in this article so far: the tax requirements. We have touched on this briefly in terms of legal entity tax requirements, but what if you intend on buying wholesale merchandise to resell at flea markets as a sole proprietor, is there a specific permit you might require? Does your business need a sales tax permit? Let’s look for the answer.
According to the Wyoming Department of Revenue, “sales tax is an excise tax or tax on consumption which is applied to retail sales, leases of tangible personal property, admission fees and some services which are subject to taxation per Wyoming law.” The state imposes a 4 percent sales tax rate, but the Department of Revenue says that the state’s 23 counties may impose additional taxes of an additional 3 percent. Additionally, cities may also impose their own 3 percent tax as well as certain resort districts.
Now, to determine whether you need a sales tax permit in the state of Wyoming you have to determine whether you qualify as a vendor, especially if you plan on doing the aforementioned resale of wholesale merchandise. The Department of Revenue says a ‘vendor’ is any person engaged in the business of selling at retail or wholesale tangible personal property, admissions, or services, which are subject to taxation and this also includes online businesses. So if you fall into this definition, you are required to file for a sales tax permit.
Registering for a sales tax permit can be done online through WYIFS – Wyoming Internet Filing System for Businesses. You can also print the Wyoming Sales/Use Tax Application and deliver it to the Wyoming Department of Revenue’s Excise Tax Division address provided below. The application requires you to provide personal identification information such as the social security number (SSN), business identification information as well as information about the products you plan on selling.
This is also a good time to say that each business is required to register for a Federal Employer Identification Number (FEIN), which can be done online through the Internal Revenue Service (IRS).
Wyoming charges a $60 registration fee and the Department of Revenue notes it takes up to 10 business days to issue your permit. And the good thing is that once you receive your sales tax permit, you do not need to renew it.
Once you have your sales tax permit, you can go on about your business, but there are some things that may save you some money. You can actually purchase items tax-free in Wyoming if you provide a certificate of exemption. Now, before we move on to the certificate, it has to be said that some sales are not taxable in the state of Wyoming, like selling to governmental entities, or sales of livestock. This exemption also covers the wholesale sales made to licensed retailers, meaning sales made for resale are not taxable.
To make a tax free purchase, you have to provide a filled out Exemption Certificate or a direct pay permit. The state of Wyoming issues its Sales Tax Exemption Certificate, but you may also use a Streamlined certificate of exemption. The certificate is filled out by the buyer and the information required includes the name of the buyer, the name of the seller, the date of issuance as well as the principal business activity you engage in. The document has to be signed to be valid. Make sure you also check for the required information in case you find yourself on the receiving end of an exemption certificate.
The direct pay permit is similar to a sales tax license and allows large buyers ($5 million or above in the calendar year) to pay their taxes directly to the Department of Revenue. This, however, means the sales tax still has to be paid eventually, but the purchases can be initially made tax free.
In the end, we must again stress that this article is a guide to the process of registering your business and a sales tax permit in the state of Wyoming, but it is not an official document and you should always consult an attorney or a business advisor on issues you find unclear.
2020 Carey Avenue Suite 700
Cheyenne, WY 82002‐0020
Phone: (307) 777‐7311
Excise Tax Division
122 W. 25th Street, Herschler Bldg.
Cheyenne, Wyoming 82002-0110
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