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How Your LLC Will Be Taxed
In this guide, we’ll cover the main business taxes required in Wyoming, including state sales tax, and self-employment, payroll and federal taxes. An LLC's profits aren’t taxed at the business level like C Corporations. Instead, taxes are as follows:
- Owners pay self-employment tax on business profits.
- Owners pay federal income tax on any profits, less allowances and deductions.
- Some LLCs pay Wyoming sales tax on products or services.
- Employers pay payroll tax on wages paid to employees.
- Employees pay federal income tax on their earnings.
Items 1 and 2 fall under pass-through taxation for any LLC owners, managers or members who receive profits from the business. Profits are reported on federal income tax returns.
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State Taxes for LLCs
There is one state tax you must pay to the Wyoming Department of Revenue: sales tax.
Wyoming Income Tax
Wyoming is one of the nine states that do not have income taxes.
Wyoming Sales Tax
If you sell physical products or certain types of services, you may need to collect sales tax and then pay it to the state's Department of Revenue. Sales tax is collected at the point of purchase and varies depending on the region, county or city where your business is located.
You’ll typically need to collect Wyoming sales tax on:
- Tangible, personal property and goods that you sell like furniture, cars, electronics, appliances, books, raw materials, etc.
- Certain services your business may provide
Most states don’t levy sales tax on goods that are considered necessities, such as food, medications, clothing or gas. Use our sales tax calculator to see what you'll need to pay. We also highly recommend you check with your accountant and the Department of Revenue to confirm whether your business is required to collect Wyoming sales tax, and to ensure you're paying the correct amount.
Federal Taxes for LLCs
As the owner of an LLC, you must pay self-employment tax and federal income tax, both of which are levied as “pass-through taxation."
Federal taxes can be complicated, so speak to your accountant or professional tax preparer to ensure that your Wyoming LLC pays the correct amount.
Federal Self-Employment Tax
All members or managers who take profits out of the LLC must pay self-employment tax. This tax is administered by the Federal Insurance Contributions Act (FICA), which covers Social Security and Medicare and other benefits. It applies to all the earnings you withdraw from your business.
The current self-employment tax rate is 15.3 percent.You’ll be able to deduct some of your business expenses from your income when calculating how much self-employment tax you owe.
Here are some examples of how much self-employment tax you may need to pay, depending on your earnings:
- On profits of $10,000, you would pay self-employment tax of $1,530.
- On profits of $20,000, you would pay self-employment tax of $3,060.
- On profits of $60,000, you would pay self-employment tax of $9,180.
- On profits of $100,000, you would pay self-employment tax of $15,300.
Pay Less Self-Employment Tax by Treating Your LLC as an S Corporation
The Internal Revenue Service allows an LLC to be treated as an S Corporation for tax purposes, provided your business meets certain requirements. This can help you reduce the amount of self-employment tax you pay by allowing you to declare some of your income as salary and other income as distributions or withdrawals.
You do this by filing Form 2553, also known as an S Corp Election form, with the IRS. Bizee can also file the form for you. Use our S Corp Tax Calculator to get an idea of how much money you could save with this election. Consult with your accountant or tax advisor for more information on reducing your LLC self-employment tax through an S Corporation tax election.
Treating Your LLC as an S Corp Can Help You Save Money.
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Federal Income Tax
You are also required to pay regular federal income tax on any earnings you take out of your LLC. The amount of income tax you pay depends on factors such as your earnings, current income tax bracket, deductions and filing status.
You only pay federal income tax on profits you take out of the business, less certain deductions and allowances. This includes your tax-free amount, plus business expenses and other deductions for areas such as healthcare and some retirement plans.
Speak to your accountant for more information.
Employee and Employer Taxes
If you pay employees, there are some slightly different tax implications. Speak to your accountant to get clear guidance for your unique situation.
Employer Payroll Tax Withholding
All employers must withhold federal taxes from their employees’ wages. You’ll withhold 7.65 percent of their taxable wages, and your employees will also be responsible for 7.65 percent, totaling the current federal withholding rate of 15.3 percent.
Speak to your accountant for more information.
Employees May Need to File Tax Returns
Regardless of whether you withhold federal and Wyoming state income tax, your employees may need to file their own tax returns.
Employee Insurance and Other Requirements
You may also need to pay insurance for any employees, such as employee compensation insurance or unemployment tax.
Other Taxes and Duties for Your LLC
Depending on your industry, you may be liable for certain other taxes and duties. For example, if you sell gasoline, you may need to pay a tax on the fuel you sell. Likewise, if you import or export goods, you may need to pay certain duties.
Speak to your accountant about any other taxes or duties you may need to pay.
Most LLCs must pay estimated taxes throughout the year, depending on the amount of income and profit you expect to make. The most common types of estimated tax are:
- Federal self-employment tax
- Federal income tax
Most LLCs will pay estimated taxes four times a year. Learn more on the IRS website, and speak to your accountant for more information.
FAQs on Wyoming Business Taxes
Does Wyoming Have a Sales Tax?
Yes. Wyoming does have a sales tax, which may vary among cities and counties. You can find more information above.
Does Wyoming Have a Franchise Tax?
No. Wyoming doesn’t have a franchise tax.
Does Wyoming Have an Income Tax?
No. Wyoming doesn’t have a state income tax.
Do I Need to Pay Estimated Taxes?
Yes. In most cases, you must pay estimated taxes to the federal government. Find more information above.