How To Start A Business In Wyoming
Wyoming, known for its stunning landscapes and outdoor adventures, is also an entrepreneur’s dream, consistently ranked as one of the most business-friendly states in the United States.
Its appeal lies in a blend of factors crucial to business success. Wyoming boasts a relaxed regulatory environment that reduces bureaucratic hurdles for small businesses. It enjoys economic stability with robust sectors such as mining, agriculture, and tourism. The state offers a dedicated workforce known for its strong work ethic. Perhaps most enticing is that Wyoming has one of the lowest business tax burdens in the country as the state levies neither individual nor corporate income tax. Also, the process for obtaining necessary permits and licenses is more straightforward and streamlined than in many other states. With such a conducive business environment, Wyoming is a favorable destination for entrepreneurs looking to start a new venture.
Wyoming Small Business Stats
- There are 72,081 small businesses in Wyoming, which is 98.9% of all businesses in the state. (2022 SBA Small Business Profile)
- 64.1% of Wyoming employees work for small businesses, which is higher than the national average. (Statistics of US Businesses)
- Exports by small Wyoming companies reached $762 million. (2022 SBA Small Business Profile)
- While Wyoming was only ranked as the 32nd best state for business by CNBC, Wyoming was ranked as the second best state for business friendliness.
- Forbes ranked Wyoming as the 36th best state to start a business, however they ranked highly for low business costs.
- Wyoming is ranked as the best state in the Tax Foundations Business Tax Climate Index.
Steps To Starting A Business In Wyoming
Starting a business in Wyoming in the Cowboy State can be intimidating, but with the right guidance and resources, it doesn’t have to be. Our step-by-step checklist provides entrepreneurs with all the information they need to get their small business up and running.
Step 1: Choose a Business Idea
The first step for starting a business in Wyoming is having a good business idea. Maybe you already have an idea picked out, or maybe you are still deciding on one. Regardless, you can check out our library of business ideas to get detailed industry information, trends, costs to start, tips, and lots more.
Step 2: Write a Business Plan
Once a solid business idea is in place, it’s time to start working on the business plan. A business plan is vital for any entrepreneur who wants to start a business. A business plan is a document that helps to:
Organize your thoughts and ideas: A business plan helps you clarify your vision, mission, and value proposition. It also helps you identify your target market, competitive advantage, and unique selling points. A business plan helps you structure your business idea and make it more coherent and compelling.
Identify potential challenges and opportunities: A business plan helps you analyze the strengths, weaknesses, opportunities, and threats (SWOT) of your business idea. It also helps you assess the market demand, the industry trends, and the customer needs. A business plan helps you anticipate potential problems and find solutions before they become serious.
Obtain funding: A business plan helps attract funding to potential lenders and investors. It shows them that you have done your homework and that you have a viable and profitable business model.
Related: How to write a business plan
Step 3: Select a Business Entity
The next step to starting a business in Wyoming is selecting a business entity. Simply put, a business entity (also called a business structure) refers to the legal structure under which a business is organized and registered. This decision should take into consideration factors such as personal liability protection, ease of management, ownership transfer ability, and more.
There are four primary business entities: sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). A brief description of each is below.
A Sole Proprietorship is an individual that decides to go into business. There are very simple setup requirements and is the least expensive of the four entities. The ease of startup is a big selling point; however, a major downside to the sole proprietorship is that the owner is personally responsible for all debts and actions of the company. If the business is sued, the owner’s personal assets are potentially at risk. Another potential downside is that the owner will pay self-employment tax on all business profits and may be more costly than some other entities.
General Partnerships consist of two or more people conducting a business together. Like the sole proprietorship, there is no formal state filing. Also, like the sole proprietorship, the partnership has unlimited liability. If the partnership were to be sued, the partner’s personal assets are equally at risk. The partnership itself does not pay tax from business income. Instead, profits and losses are passed through to the owner’s personal tax return. This income is subject to self-employment tax.
A Corporation is a business structure that is a separate entity from the individual. While corporations are more expensive and difficult to form than sole proprietorships and partnerships, the major advantage is that the corporation provides personal asset protection for the owners, should the corporation be sued. The downside is the compliance requirements and administrative burdens of having a board of directors, annual meetings for directors and shareholders, filling the annual report, appointing a registered agent, and more.
Related: How to form a Wyoming corporation
The Limited Liability Company (LLC) is a popular business entity choice because it provides the liability protection of a corporation with the sole proprietorship’s ease of operation. The Limited Liability Company does not have as many administrative burdens as the corporation, and has the greatest tax flexibility of the four entities.
Related: How to form an LLC in Wyoming LLC
Choosing the right type of business entity depends on many factors such as size and scope of operations, financial resources available, and desired level of personal liability protection. It is important to consider all options before making a decision as each type has unique characteristics that may be beneficial depending on your specific situation.
Forming a corporation or LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular formation services include:
IncFile - Great service and free registered agent the first year.
Northwest - Privacy-Focused: Free registered agent and private business address for 1 year!
ZenBusiness - Easy to use and free registered agent for 1 year!
Step 4: Register the Business Name
Operating a business in Wyoming may require you to obtain certain licenses and permits depending on your type of business, location, and activities. Here is a detailed overview of the specific licenses that are necessary to operate a business in Wyoming along with their application process:
Business Licenses: The state of Wyoming doesn’t have a general business license.
Local licenses and permits: Depending on where the business is located, you may also need to comply with local regulations and ordinances in your city or county. For example, you may need to get a city business license, zoning permit, building permit, and more.
Employer Identification Number (EIN): An EIN is a nine-digit number that identifies your business for tax purposes. You need an EIN if you have employees, operate as a partnership, corporation, or multi-member LLC. You can apply for an EIN at no cost through the IRS.
Sales Tax License: Businesses selling products, admissions, and certain services will need to register for a Sales Tax License with the Wyoming Department of Revenue.
Professional Licensing: Depending on what your business offers, you may need to obtain additional licenses and permits from various state agencies. Some occupations such as athletic trainers, physical therapists, landscapers, and barbers, require licensing in Wyoming.
Step 5: Open a Business Bank Account
It is important to separate business and personal funds in Wyoming for several reasons.
Protect your personal assets: If you mix your business and personal funds, you may lose the limited liability protection that your business entity provides. This means that your personal assets, such as your home, car, or savings, could be at risk if your business faces a lawsuit or a debt. By keeping your business and personal funds separate, you can avoid this risk and protect your personal wealth.
Simplify your accounting and bookkeeping: If you mix your business and personal funds, you will have a hard time tracking your income and expenses, managing your cash flow, and preparing your financial statements. You may also miss out on tax deductions or incur penalties for inaccurate reporting. By keeping your business and personal funds separate, you can simplify your accounting and bookkeeping processes and save time and money.
Legal Separation: If your business is structured as a Limited Liability Company (LLC) or corporation, it’s crucial to maintain a clear boundary between personal and business finances. This separation can protect your personal assets if your business is sued or incurs debts it can’t repay. This is known as maintaining the “corporate veil” and it’s one of the main reasons people incorporate their businesses.
Step 6: Find Financing
Starting and growing a small business requires funding, and fortunately, there are several funding options available to businesses in Wyoming. Here’s a breakdown of various options you might consider:
Personal funds: This is the most common and accessible source of funding for new businesses. You can use your own savings, assets, credit cards, or personal loans to finance your business.
The advantages of using personal funds are that you have full control over your business, you don’t have to share your profits or equity with anyone, and you don’t have to meet any eligibility criteria or repayment terms. The disadvantages are that you may not have enough funds to cover all your expenses, you may risk losing your personal assets if your business fails, and you may limit your ability to obtain other sources of funding in the future.
Conventional bank loans: This is a type of debt financing where you borrow money from a bank or a financial institution and repay it with interest over a period of time. You may need to provide collateral, a business plan, financial statements, and a good credit score to qualify for a bank loan.
The advantages of using bank loans are that you can get a large amount of money at a relatively low interest rate, you don’t have to give up any ownership or control of your business, and you can build your credit history and reputation. The disadvantages are that you may have difficulty getting approved, especially as a new business, you may have to pay high fees and penalties for late or missed payments, and you may have less cash flow and flexibility for your business operations.
SBA loan guarantees: This is a type of debt financing where the Small Business Administration (SBA) guarantees a portion of the loan that you obtain from a participating lender. This reduces the risk for the lender and makes it easier for you to get approved. The SBA offers various loan programs for different purposes and amounts, such as the 7(a) loan program and the 504 loan program.
The advantages of using SBA loan guarantees are that you can get access to capital that you may not otherwise qualify for and longer repayment terms than conventional loans. The disadvantages are that you will still have to provide collateral and personal guarantees and pay additional fees and costs for the SBA guarantee.
Microloan programs. This is a type of debt financing where you borrow small amounts of money from nonprofit organizations or community-based lenders that specialize in serving low-income or underserved entrepreneurs. Microloans typically range from $500 to $50,000 and have shorter repayment terms than conventional loans. In Wyoming, organizations like the Wyoming Women’s Business Center, the Wind River Development Fund, and MoFi offer microloan programs to help small businesses get started.
The advantages of using microloan programs are that you can get access to capital that is tailored to your specific needs and goals, you can benefit from lower interest rates and flexible repayment terms than conventional loans, and you can often get mentoring and training from the microloan providers. The disadvantages are that you may not be able to get enough funds to cover all your expenses, you may have to pay higher fees and costs than conventional loans, and you may have less choice and availability of microloan providers in your area.
Investors: This is a type of equity financing where you sell a portion of your ownership or shares in your business to investors who provide you with capital in exchange for a return on their investment. Investors can be individuals or entities, such as angel investors, venture capitalists, crowdfunding platforms, or Wyoming Venture Capital (WYVC). You may need to pitch your business idea, demonstrate its potential growth and profitability, and negotiate the terms and conditions of the investment deal.
The advantages of using investors are that you can get access to large amounts of money without having to repay it or provide collateral, you can benefit from the expertise and network of the investors who can help you grow your business, and you can increase your credibility and visibility in the market. The disadvantages are that you may have to give up some control and decision-making power over your business, you may have to share your profits or equity
Step 7: Hire Employees
As a new small business owner in Wyoming looking to hire your first employee, there are several key steps to prepare for. There are multiple agencies to register with, such as the Internal Revenue Service, Wyoming Department of Workforce Services, and others.
Business owners need to be familiar with Wyoming’s labor laws and the federal Fair Labor Standards Act (FLSA), which set minimum wage, overtime pay, recordkeeping, and youth employment standards. Also, be aware of anti-discrimination laws to ensure your hiring process is fair and equitable.
Employers are responsible for reporting new hires, verifying employees are eligible to work in the U.S., income tax withholding, unemployment insurance, unemployment taxes, and payroll withholding taxes, including Social Security and Medicare.
Step 8: Obtain Business Insurance
Business insurance is never at the top of anyone’s list of things they want to get when starting their business; however, business insurance can protect your business from various hazards and liabilities that may arise from your business operations, such as property damage, lawsuits, injuries, theft, natural disasters, and more.
Most types of business insurance are optional, except for workers’ compensation insurance, which is required for all Wyoming employers.
Step 9: Start Tracking Income and Expenses
There are a number of reasons why it’s important to accurately keep track of income and expenses for a business:
Monitor business performance: Keeping track of your income and expenses helps you measure how well your business is doing financially. You can see how much revenue you are generating, how much profit you are making, and how much cash flow you have. You can also identify any trends, patterns, or issues that affect your business performance, such as seasonal fluctuations, customer preferences, or cost drivers. By monitoring your business performance, you can make informed decisions and take appropriate actions to improve your business operations and profitability.
To prepare taxes: Detailed records are critical when it comes to preparing your tax returns. By accurately tracking your income and expenses, you can ensure that you’re paying the correct amount of taxes to the IRS and Wyoming Department of Revenue and taking advantage of any deductions to which you’re entitled. In Wyoming, while there is no state income tax, but businesses are subject to other forms of taxation like sales tax, property tax, and potentially federal income tax.
By complying with tax laws, you can avoid any penalties, interest, or audits that may result from underreporting or misreporting your income and expenses.
Related: Setting up accounting for a business
This material is property of StartingYourBusiness.com
Common questions when starting a business in Wyoming
Is Wyoming a good start to start a business?
Wyoming has consistently been ranked as one of the most business-friendly states in the United States, making it an attractive destination for entrepreneurs. Let’s dive into some critical areas that could impact your decision.
Regulatory Environment: Wyoming has a relaxed regulatory environment conducive to small businesses. The state government has taken proactive steps to reduce red tape and make it easier for businesses to operate.
Business Support: Wyoming provides various business support resources to help businesses start, grow, and succeed in the state. These resources include:
– Wyoming Business Council: A state economic development agency that helps businesses with recruitment, expansion, retention, and innovation by assisting with resources such as site selection, financing, incentives, workforce development, supply chain development, and more.
– Wyoming Small Business Development Center (SBDC) Network: A network of advisors and experts who provide no-cost, full-service one-on-one small business advising, training, and education.
– Impact 307: A statewide innovation-driven incubator system that focuses on technology-oriented high-growth companies and startups.
Economic Stability: Wyoming has a stable, diversified economy, with strong sectors in mining, agriculture, and tourism. The state’s economic health can provide a solid foundation for a new business.
Asset protection and privacy: Wyoming is considered as having the strongest asset protection laws that shield LLC and corporation owner’s personal assets from creditors and lawsuits. Also, Wyoming protects the privacy of owners better than many states.
Workforce: Wyoming has a reliable and dedicated workforce. While the state’s population is small, the labor force is known for its strong work ethic. However, depending on the industry, finding specialized skills may be a challenge, so businesses in certain sectors might need to invest in training or look outside the state for certain positions.
Taxes: One of the biggest advantages of starting a business in Wyoming is the tax benefits. The state does not levy corporate or individual income taxes. Wyoming also has one of the lowest business tax burdens in the country. This means you can keep more of your profits and reinvest them in your business.
What are the steps to starting an LLC in Wyoming?
There are three main steps to starting an LLC in Wyoming. These include:
There are a few more details to learn about, so be sure to check out how to start an LLC in Wyoming.
How much does it cost to start an LLC in Wyoming?
The Wyoming Secretary of State LLC filing fee in Wyoming is $100.
What licenses do I need to start a business in Wyoming?
There isn’t a general business license required by the state, however, there are potentially several different licenses and permits a business will need to obtain before starting.