If you’re planning to become an entrepreneur, the easiest way you can do it is to start a sole proprietorship in Wyoming. It’s known as the simplest structure a business can adopt. But despite how easy it is to start one, you must remember a few important factors.
If you’ve considered becoming a sole proprietor, you’ve come to the right place. This blog will guide you on how to start a sole proprietorship in Wyoming.
What is A Sole Proprietorship?
Before we dive into how you can start a sole proprietorship, let’s briefly discuss what it is again. A sole proprietorship is a one-person business, and it’s a status that most people adopt if they do a lot of independent contractual work.
Many freelancers, consultants, and personal trainers file taxes as sole proprietors. But once they start taking on business partners, their business becomes a general partnership.
Now, what makes sole proprietorships different from limited liability companies (LLCs)? Here are a few examples.
Sole proprietorships don’t have their own legal identity like LLCs do. They share one with their owners, which means they carry full responsibility for their business. All of their taxes and assets are under their name.
People can only sue LLCs, not their owners. But you can’t say the same thing about sole proprietorships. If someone decides to sue your business and you’re the sole proprietor, all liability falls on your shoulders. Basically, you and the sole proprietorship are one and the same.
It’s also worth noting that starting an LLC is much more expensive than becoming a sole proprietor. You can be a sole proprietor for free if you start a business on your own. All you need to pay for is your business name and operating license.
But once you decide to incorporate your business and turn it into an LLC, you’ll have to pay annual filing fees to Wyoming.
Advantages of A Sole Proprietorship
There are plenty of reasons why 27 million sole proprietors exist in the US, including:
Sole proprietorships get the same tax treatments as LLCs; the pass-through status. You’re not required to pay corporate taxes. However, you do have to report your business income and losses on your personal tax returns by completing a Schedule C form and filing it with your 1040 form.
You’ll also have more tax savings since your taxes will stay at an individual rate instead of going higher.
Less Paperwork & Fewer Rules
Wyoming typically requires LLCs and corporations to submit a few documents to their Secretary of State before they start operations. However, sole proprietorships can carry on their business without submitting any paperwork.
It’s also worth noting that they don’t have to follow the same rules and regulations as corporations do. Sole proprietorships are not required to hold annual meetings. All you have to do is pay your taxes on time, and you’re good to go.
Full Management Control
As a sole proprietor, you control all aspects of your startup, from production to hiring personnel. You don’t have shareholders, so you don’t have to base your decisions on anyone else’s opinions. Additionally, you can take your startup in any direction you want.
Having this much freedom is important for new businesses. It provides them with enough room to make mistakes and discover new strategies.
How to Start A Sole Proprietorship in Wyoming
The first thing you need to do when starting a sole proprietorship is to get a Doing Business As (DBA) name. A DBA or fictitious name helps build buyer confidence. Most people trust businesses that use a DBA name instead of their owner’s name, and it can help you open a business bank account in the future.
Before registering your DBA name, check to see if it’s already taken. You can visit the website of Wyoming’s Secretary of State and go through the Registered Entities Search. This will tell you if your chosen name is still available.
If it is, you can now file an Application for Registration of Trade Name in their office and pay a $100 filing fee.
Once you get your DBA name, you can start looking into your tax requirements. If you plan to sell products from a store in Wyoming, you must pay sales taxes. It’s also worth noting that most sole proprietors must pay a self-employment tax from their business profits.
Though you don’t necessarily have to create a new Employer’s Identification Number (EIN), having a new one is a good idea once you hire employees. We also recommend you check the website of Wyoming’s Department of Revenue to check which taxes apply to your business and how you should pay them.
Lastly, you need to obtain certain licenses and permits depending on the nature of your startup. Most sole proprietors don’t need a business license. Still, we suggest you check Wyoming Business Center’s Business Permitting and Licensing Guide to see if there’s any city-specific permit you need to get.
It is also best to look into other local regulations like building permits and zoning clearances if needed.
Become A Sole Proprietor in Wyoming Today
If you want to test the waters of entrepreneurship, becoming a sole proprietor is your next best step. A sole proprietorship will help you start your business on the right foot at a cost-effective price. With NCH, the process will be much easier than you think.
NCH is one of the leading providers of business formation services in Nevada. Our team of business specialists have worked with plenty of sole proprietors nationwide. We’ve helped them start their businesses from the ground up and even guided them in creating business plans that help guarantee success.
Learn more about our services and sole proprietorships in Wyoming by vising our website or calling us at 800-508-1729.