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STARTING AND OPERATING A BUSINESS IN WYOMING Copyright © 2007, Michael D. Jenkins
CONTENTS OF THIS CHAPTER:
I. INTRODUCTION I. INTRODUCTION Wyoming has an exceptionally attractive business climate, in terms of its tax and legal structure. It has one of the lowest per capita tax burdens, in absolute terms, in the United States, and is notable for the fact that it does not impose any of the following types of taxes commonly imposed on businesses or their owners in most other states:
Starting and operating a business in Wyoming is probably a simpler matter than in any other state in the union, in terms of having the lightest state-imposed burden of taxes and red tape to be found anywhere, which probably has a lot to do with Wyoming's vibrant business climate. Like most states, Wyoming imposes a franchise (capital values or license) tax on corporations, a sales and use tax, various excise taxes, with property taxes imposed at the local level. The state has also adopted a limited liability company (LLC) law, and a limited liability partnership (LLP) law, so that businesses operating in Wyoming in LLC or LLP form may obtain the advantages of limited liability, without incorporating or becoming subject to corporate taxation, generally. At present, the state's economy is quite healthy, in terms of the level of unemployment and other economic measures. For example, in October, 2007, the Wyoming unemployment rate was only 2.9%, down from 3.6% a year earlier and one of the lowest rates of unemployment in the nation. This compares favorably to a national unemployment rate of 4.7% for the same month. To view the latest federal Bureau of Labor Statistics unemployment rate data for Wyoming or any other state, visit the BLS website. II. LEGAL ENTITIES -- FILING FEES AND REPORTING REQUIREMENTS. (a) In General. A business that operates in Wyoming can do so as a sole proprietorship, a general or limited partnership, a corporation, or a limited liability company. A corporation may also elect S corporation status for federal income tax purposes, but this will not be relevant for Wyoming tax purposes, since there is no Wyoming individual or corporation income tax. Wyoming law also provides for limited liability partnerships, in which no partner is liable for certain debts of the partnership, somewhat like a corporation or LLC, but with fewer legal formalities than are required for either a corporation or an LLC. Each of the above entities is discussed below, along with the basic requirements for forming such an entity and any general ongoing (non-tax) reporting requirements that are applicable to it. The tax treatment of each form of legal entity is discussed in Section IV below. (b) Sole Proprietorships. In general, sole proprietorships in Wyoming can be formed with no formalities. However, as discussed in Section IV(b), it will generally be necessary to obtain one or more local business licenses from cities or counties in which you operate and, in some cases, state licenses, as well. In addition, if you sell any kind of tangible personal property at retail or provide certain types of services, you may be required to obtain a sales tax license and collect sales tax, as discussed in Section IV(d). No separate tax form filing is required, generally, for a sole proprietorship, under the Wyoming income tax law. Instead, you simply report the net income or loss from your sole proprietorship on Schedule C of your federal Form 1040, individual income tax return. Since the state of Wyoming does not impose any state income tax, you will not need to be concerned with filing state income tax returns with Wyoming or with paying any state income tax on your sole proprietorship earnings in Wyoming. Doing business as a sole proprietor in Wyoming is generally much simpler than operating as any other kind of business legal entity. As a sole proprietor, if you have no employees, you are also not required to pay any unemployment taxes, withhold any federal income tax from wages, nor obtain workers' compensation coverage for yourself. (c) Partnerships. Wyoming's partnership laws allow creation of either a general partnership, in which all partners are liable for the debts of the business, or a limited partnership, in which only the general partners are liable for debts, while the liability of limited partners is limited to the amount they have invested, usually. State law also allows for the creation of a limited liability partnership, in which no partner has personal liability (subject to certain exceptions). As is discussed in Section IV(b), it will generally be necessary to obtain one or more local business licenses from cities or counties in which you operate and, in some cases, state licenses, for any type of partnership, including general or limited partnerships, or limited liability partnerships. In addition, any partnership or other business that has employees will generally have to register for, and pay, state unemployment tax on wages paid, as discussed in Section V(b). There is no personal income tax in Wyoming, so the income of a partnership is not taxed to the individual partners for state income tax purposes. Thus, partnerships are not required to file any income tax returns with the state. However, all limited partnerships and LLP's are subject to the license tax on capital, which is imposed at the same rate as for corporations or limited liability companies. A partnership agreement, for any type of partnership, should spell out in considerable detail such matters as the following:
As a rule, general partnerships in Wyoming can be formed with no formalities, although it is highly advisable to have a written partnership agreement. However, as discussed in Section IV(b), it will generally be necessary to obtain one or more local business licenses from cities or counties in which you operate and, in some cases, state licenses, as well. There are no specific filing requirements that apply to general partnerships under Wyoming state law. However, a general partnership may file a statement of partnership authority with the secretary of state, designating which partners in the partnership have the authority to enter into specified types of transactions, such as real estate transactions. A $10 filing fee is charged by the Wyoming Secretary of State for filing an (optional) statement of partnership authority. PLANNING POINT: A limited partnership, in which there is at least one general partner (who is liable for partnership debts) and at least one limited partner (who is not liable for partnership debts), may also be formed under Wyoming law. Unlike a general partnership, a limited partnership must generally have a written partnership agreement, and must file a certificate of limited partnership with the secretary of state, together with a $100 filing fee. Foreign limited partnerships must also register before being allowed to do business in Wyoming, and must pay a registration fee that is the same as for a domestic limited partnership. Both domestic and foreign limited partnerships are required to pay an annual license tax which is the same as the corporation license tax: $.0002 per $1.00 of capital employed in Wyoming, or a minimum tax of $50. For information on limited partnership filing requirements, see the contact information for the offices of the Wyoming Secretary of State, listed in Section VI(a). LIMITED LIABILITY PARTNERSHIPS Limited liability partnerships (LLP's) are a relatively new form of partnership permitted under the laws of Wyoming. Like an LLC, an LLP provides limited liability for its owners, while retaining the tax advantages of a partnership for federal income tax purposes. However, unlike an LLC, an LLP typically operates like a regular partnership, and is not required to file articles of organization. Partners in a general partnership can obtain a significant degree of limited liability by simply registering the partnership with the state as an LLP. However, becoming an LLP will not affect the liability of a partner in an LLP for his or her own omissions, negligence, wrongful acts, misconduct or malpractice or that of any person under his or her direct supervision and control. To form an LLP in Wyoming, you must register with and pay a filing fee of $100 to the secretary of state. Foreign LLP's, those created under the laws of another state, must register with the secretary of state and pay a fee of $100. Note that the Wyoming LLP law appears to give somewhat less protection to partners in an LLP than state law grants to stockholders of a corporation, so you should not ordinarily consider an LLP as the complete equivalent of a corporation, with regard to limitation of your liability as an owner. However, an LLP will provide much greater liability protection to its partners than a regular general partnership. Every registered LLP doing business in Wyoming, including both domestic and foreign LLP's, must file an annual renewal and pay an annual fee that is the same as the corporation license tax: $.0002 per $1.00 of capital employed in Wyoming, or a minimum tax of $50. For more information on LLP registration and reporting requirements, see the contact information for the offices of the secretary of state, listed in Section VI(a). Note that one potential drawback of LLP's, if you will do business in other states besides Wyoming, is that you may not enjoy limited liability with regard to creditors of the LLP if you do business in some such states. Some states, like California, Nevada and New York, only recognize certain types of professional partnerships as LLP's. Such other states may simply treat your LLP like an ordinary general partnership, with no limitation of liability. (d) Corporations. To form a corporation in Wyoming, you must file articles of incorporation with the Wyoming Secretary of State and pay a fee of $100. A foreign corporation (one formed under the laws of another state or a foreign country), must obtain a certificate of authority before it may legally conduct business in Wyoming, by filing an application for a certificate of authority and paying a filing fee of $100. Fees are set by the secretary of state. For more information on filing articles of incorporation or applying for a certificate of authority to do business in Wyoming, see the contact information for the offices of the secretary of state, listed in Section VI(a). In addition, once your corporation is formed, it will be required to file annual reports and pay an annual license fee based on its capital each year. Failure to file this report on a timely basis could result in suspension or revocation of your corporation's charter. The license tax is computed based on the value of the corporation's assets located and employed in the state, at a rate of $.0002 per $1 of such assets. There is a minimum annual tax of $50. Formerly, the tax or fee was limited to a maximum of $25,000. However, the annual fee was revised a few years ago, to $.0002 per dollar of capital, and is now imposed on the total of capital, property and assets employed by a corporation in Wyoming, with a minimum annual fee of $50 and with no more maximum fee limitation. While corporations, other than S corporations, must pay federal income taxes on their taxable income, and must also pay an annual Wyoming corporation license tax, there is no state corporation income tax in Wyoming. CAUTION: For forms and more information on corporate license taxes in Wyoming, see the contact information for the offices of the secretary of state, listed in Section VI(a). (e) S Corporations. An S corporation is simply a regular corporation that has elected, for federal or state income tax purposes, or for both, to be taxed somewhat like a partnership, with its income, losses and tax credits flowing through to its owners, who report such income, losses, or credits on their individual tax returns. Since there is no individual or corporate income tax in Wyoming, the existence of a federal S corporation election is not relevant for state income tax purposes in Wyoming. Like any other corporation, an S corporation is subject to the annual Wyoming license tax or fee equal to $.0002 per $1 of assets and capital employed in the state, or a $50 minimum tax, if greater. (f) Limited Liability Companies. Wyoming was the first state in the U.S. to adopt a limited liability company (LLC) law, back in 1977, which has led to adoption of similar LLC laws in all 50 states and the District of Columbia over the next 20 years. Thus, in addition to the traditional choices of a sole proprietorship, partnership, or corporation, a business that operates in Wyoming may also choose to operate in the form of an LLC. In most states, including Wyoming, LLC's are very attractive legal entities for many small businesses, in that they offer the same protection as a corporation from creditors for debts of the business, while offering much of the flexibility plus the flow-through tax treatment of a partnership for federal tax purposes. See Section IV(c) for a discussion of the tax treatment of LLC's under Wyoming tax laws. To form an LLC under the laws of Wyoming, one or more persons must file articles of organization with the secretary of state and pay a $100 filing fee. While Wyoming state law generally requires an LLC to have at least two members, the law now allows formation of a "flexible limited liability company," which can exist with only one member if the articles of organization specifically so state and refer to the applicable section of the Wyoming statutes, Section 17-15-107(a)(x). One-owner LLC's now qualify for treatment as sole proprietorships for federal tax purposes. Foreign LLC's, those formed under the laws of another state, must obtain a certificate of authority to do business in Wyoming, by filing an application for a certificate of authority with the secretary of state and paying a filing fee that is the same as for a domestic LLC, as described above. CAUTION: In addition to initial filing fees, any LLC formed in Wyoming or any foreign LLC is also required to pay an annual license fee or tax. Effective since July 1, 2000, the annual LLC fees have been revised: The annual fee is now $.0002 per dollar of capital and is imposed on the total of capital, property and assets employed by an LLC in Wyoming, with a minimum annual fee of $50. Formerly, the maximum annual fee was limited to $25,000, but there is no longer any such limit, since 2000. For more information on filing articles of organization for an LLC, see the contact information for the offices of the secretary of state, listed in Section VI(a). III. BUSINESS ACQUISITIONS (a) In General. When acquiring an existing business, there are a number of state legal and tax issues you or, preferably, your business attorney, should attend to before closing the purchase. These include matters such as doing a title search for any real property that is being acquired, checking for any recorded security interests on personal property items, and thoroughly researching county, state, and federal records for any judgment liens, tax liens, or other liens, before property is acquired. You will also benefit from consulting a tax advisor before the agreement of sale is negotiated, in order to seek a structuring of the agreement so that the purchase price is allocated among the assets in a way that favors you. You may be able to obtain considerable tax savings if the purchase price is allocated in a way that gives you the best possible tax results under federal income tax laws, and under other state tax laws, such as sales/use tax or property tax laws. EXAMPLE: Depending upon the state (or states) in which the seller's assets are located, you may also have to comply with state bulk sale or bulk transfer laws. You should also obtain tax releases from various state taxing agencies, as discussed below. (b) Bulk Sale Laws. Typically bulk sale laws require either publication of legal notices to all creditors in advance of the sale and recording of such notices in some cases, or maintenance of detailed lists of the property to be transferred, for inspection by the public. Wyoming is one of the business-friendly states that has repealed its bulk sale laws, so you no longer have to be concerned with this legal requirement when buying a business in Wyoming. (c) Tax Releases. When you acquire an existing business, you will want to make sure that you do not unwittingly become liable for any unpaid taxes owed by the seller. Typically, to protect yourself, you will need to receive a tax release or releases from various state taxing agencies, for such taxes as sales and use tax, income tax withholding, and state unemployment taxes, in each state in which the seller does business. If you fail to obtain such a release or written statement from the tax agency that the seller is not delinquent on any tax payments, you will be held responsible for such tax if it is not withheld from the purchase price proceeds and paid to the state at the time the sale of the business transpires. In Wyoming, you should obtain tax releases for unemployment taxes of the seller from the Employer Accounts Section of the Wyoming Department of Employment, and for sales and use taxes from the Department of Revenue, before completing the business purchase. You must withhold any sales tax owed the state from the purchase price you pay the seller. (d) Unemployment Tax Rating of Seller. In addition to obtaining tax releases, you may find it advantageous to succeed to the seller's unemployment tax experience rating, if the seller has a tax rate lower than you would otherwise obtain as a new business. In Wyoming, a new employer who acquires an existing employer will automatically succeed to the seller's experience rating as a successor employer. If you, as acquirer, were already an employer, your experience rating will be merged with that of the seller, and a new composite tax rate will be determined by the Department of Employment. For more information on succeeding to a seller's unemployment tax experience rating, contact the Employer Accounts Section of the Department of Employment. PLANNING POINT: EXAMPLE: IV. WYOMING TAXES AND OTHER GENERAL REQUIREMENTS. (a) In General.
Wyoming has some of the least intrusive business regulations
of any state, which makes it a very attractive place to start
or operate a business. It is one of only four states (along
with Nevada, South Dakota and Washington) that has neither an
individual nor a corporate income tax. It also has no property
tax on intangible assets or business inventories and is one
of the few states without a transfer tax on real estate
conveyances or recordation of deeds.
It was, until 2001, also notable for having the lowest
minimum wage rate ($1.60 an hour) of any state that has a
minimum wage law; workers' compensation is optional, except
for "extra-hazardous industries"; and Wyoming also has a
right-to-work law.
However, the Massachusetts Taxpayers Foundation study of
state taxes in 2004 (based on 2002 data) found that Wyoming
had the third-highest state taxes in the nation, of $121.97
per $1,000 of residents' income. New York had the highest
state taxes, at $130.79, and Tennessee the lowest, at just
under $84 per $1,000 of income. Wyoming's poor showing in
this study, despite its generally low (or non-existent) tax
rates in the main tax categories, is apparently due to the
relatively low cost of living and low per capita incomes in
Wyoming, rather than on account of high absolute amounts of
taxes paid per capita, plus the fact that almost 30% of total
revenues of state and local governments in Wyoming derive
from severance taxes and royalty payments or from sales and
property taxes paid by mineral production companies. Since
nearly all of those tax and royalty payments are, effectively,
paid by out-of-state consumers of oil, gas and other minerals
produced in Wyoming, the actual tax burden on Wyoming residents
is much lower than the Massachusetts study would indicate.
(b) State and Local Licensing.
Nearly any business, operated anywhere in the United States, will
have to have at least one government license of some kind. In
most cases, this will be a local license, issued by your city or
county. Before you open your business, contact your local city or
county hall and find out if your particular business needs one or
more local licenses. Most kinds of local business licenses are
granted upon payment of a fee, with no further requirements,
except possibly for annual or other periodic renewal fees.
However, if you are engaging in any kind of food business,
you will usually need to also obtain a health department
permit and show that you are in compliance with health
department food-handling requirements. Secondly, be sure
to check with an attorney or local government zoning or
planning department officials to determine if your business
will be in compliance with all local zoning and planning
restrictions. If you own or rent any type of facility, you
will generally need fire department permits, showing that
you meet fire safety codes and, of course, any construction
or improvements to an existing structure will almost always
require a building permit. Even if you intend to simply
operate your business from your home, you may be in
violation of local zoning requirements, but this is less
likely to be a concern if you don't have clients, customers,
suppliers, or employees coming to your house on business,
on a regular basis.
State governments have traditionally required special
licenses for many kinds of professionals, such as physicians,
dentists, lawyers, and accountants. To further protect
consumers, Wyoming has expanded the list of occupations
that must be licensed by the state to include many other
occupations. Most state licenses not only require payment
of fees, but are only issued for a given profession or
occupation upon showing that you have completed certain
educational or experience requirements, or passed certain
tests, or some combination of the foregoing.
Some of the businesses, professions, and occupations
that require state licenses in Wyoming include those in
the following partial list:
Employers subject to the Wyoming unemployment tax are
required to register with the Employment Tax Division of the
Wyoming Department of Employment on Form WY-1C-1-WC,
Wyoming Joint Business Registration Form. This form
also will serve as your registration for workers' compensation
insurance. For more information on state unemployment tax,
see Section V(b) and for more on Wyoming
workers' compensation requirements for employers, see
Section V(c).
For assistance with state licensing and business registration
requirements in Wyoming, see the contact information for the offices
of the Wyoming Business Council, listed in Section VI(a).
The Wyoming "No-Call" law's requirements include the following:
For more information on the Wyoming telemarketing laws,
contact the office of the Wyoming Attorney General, at the
address listed in Section VI(a).
(c) Income and Franchise Taxes.
Wyoming is one of only four states that does not have either a
corporate or individual income tax. However, corporations and
other limited liability entities are subject to an annual franchise
(license) tax based on capital employed in the state, which is
equal to $.0002 (.02 of one cent) per $1 of such capital, with a
minimum annual tax of $50.
TAXATION OF SOLE PROPRIETORS AND PARTNERSHIPS
Because there is no state income tax in Wyoming, the
income of a sole proprietorship or partnership is not subject
to state income taxes in Wyoming, at either the entity level
or the partner level. However, limited partnerships and limited
liability partnerships are subject to the same annual license
tax that applies to corporations and LLC's, of $.0002 per $1 of
capital employed in Wyoming, or $50, whichever is greater.
There is no corporate income tax in Wyoming. However,
corporations (including S corporations) are subject to an
annual franchise (license) tax based on capital employed in
the state, which is equal to $.0002 (.02 of one cent) per
$1 of such capital, with a minimum annual tax of $50.
TAXATION OF LIMITED LIABILITY COMPANIES
Since there is no state income tax in Wyoming, the income
of an LLC is not taxable at either the LLC level or to the
LLC members, for Wyoming tax purposes. However, LLC's and all
other limited liability entities are subject to an annual franchise
(license) tax based on capital employed in the state, which is
equal to $.0002 (.02 of one cent) per $1 of such capital, with a
minimum annual tax of $50.
(d) Sales and Use Tax.
Wyoming imposes a general sales tax on retail sales of tangible
personal property and certain types of services at the statewide
rate of 4%. The tax rate can be lowered to 3.5% for any fiscal
year in which the Governor certifies that statutory funding
amounts have been exceed by specified amounts. Sales tax only
applies to a few specified types of services, such as transient
lodging, admissions to amusement or sporting events, and
services performed for the repair, alteration, or improvement
of tangible personal property.
An additional 4% tax applies to auto rentals for periods of
29 days or less.
In addition to the state sales tax, county governments are allowed
to adopt local sales taxes, at varying tax rates, generally 1% or
2%, and most counties do so. A number of localities also impose
additional lodging industry taxes, at rates of up to 4%. The state
Department of Revenue collects and administers both the state and
local sales and use taxes.
Sellers are required to obtain a sales tax license and
to collect and pay over the state and local sales and use
taxes to the Department of Revenue. Apply for a sales
tax license on Form ETS 001, Sales/Use Tax License
Application. There is a $60 license application
fee, which is non-refundable.
There are numerous exemptions from the sales tax, the
most important of which is the resale exemption. If you are
a wholesaler or retailer who purchases goods that you will
resell, your purchase of such goods may qualify as an exempt
sale for resale. Similarly, if you sell goods to wholesalers
or retailers for resale by them, your sale may also qualify
as an exempt sale for resale. In any such transaction, the
exemption is ordinarily available only if the purchaser gives
the seller a valid resale certificate, certifying that the
items are being purchased for resale, and not for use or
consumption by the buyer.
In addition, effective July 1, 2004, a new sales tax exemption
was enacted, effective until December 31, 2010, for the purchase
or lease of machinery and machine tools used in manufacturing. The
exemption applies only to a manufacturer classified by the Department
of Revenue under the NAICS code manufacturing sector 31 - 33. (NAICS
is the North American Industry Classification System, which was
developed jointly by the U.S., Canada, and Mexico to provide new
comparability in statistics about business activity across North America.)
A shadow tax, the use tax, is also imposed at the same rate
as the sales tax. It is primarily intended to tax property
that is acquired from sources outside of the state, in
transactions not subject to sales tax, when such property
is used or consumed within Wyoming. Use tax may also apply
to items purchased on an exempt basis, such as for resale,
if such items end up being used or consumed, instead of
being resold.
For more information on Wyoming sales and use tax
registration and compliance, see contact information
for the offices of the Department of Revenue in
Section VI(a).
(e) Real and Personal Property Taxes.
In Wyoming, as in every other state, any business real estate
you own will be subject to real property taxes. In general,
there is little that you must do, unless you wish to challenge
your assessed valuation, since the assessor will bill you for
each year's property taxes as they come due.
Wyoming localities also impose personal property taxes on
tangible personal property. ("Personal property" is any kind
of property that is not real estate.) However, certain types
of business personal property, such as business inventories,
are exempt from personal property tax in Wyoming.
While Wyoming generally taxes tangible personal property,
it does not impose a property tax on intangible personal
property, such as stocks, bonds, promissory notes, and other
such paper assets, except on water rights and reservoir rights.
(f) Other Business Taxes.
Wyoming imposes a number of excise and other taxes on
businesses, some of which may affect you. These include:
Wyoming is one of only a few states that does not
impose a tax on real estate mortgages or conveyances.
(g) Trade Names.
A trade name, also known
as a fictitious or assumed name, is any name used in the course
of business that does not include the actual legal names of
all the owners of the business. Thus, if your business goes
by any name other than your own real name, it is operating
under a trade name. The same is true of a corporation,
if it operates under a name other than its legal name. A
trade name might also be one that suggests the existence
of additional owners, by using such words as "company,"
"associates," or "group."
In most states where you do business, it will be necessary
to register a trade, fictitious, or assumed name, so that
people who do business with you can find out who the actual
owners of your business are. You may also want to register
any such trade name, as a means of protecting against other
companies usurping that particular trade name.
Wyoming law does not require you to register your trade
name, but you may wish to protect your exclusive use of
the trade name by registering it with the Wyoming Secretary
of State's office.
V. EMPLOYER REQUIREMENTS IF YOU HAVE EMPLOYEES (a) Employer Registration and Withholding. Once you hire the first employee in your business, you must comply with many more Federal and state laws. One of the first things you will need to be concerned about as a new employer is withholding personal income taxes from the wages of your employees. As an employer, you are responsible for withholding the taxes and paying them over to the government on behalf of the employee. If you have any employees, you will have to withhold federal income tax and FICA taxes from their wages. However, since Wyoming has no state income tax, you will not need to be concerned with any obligation to withhold state income tax from wages paid. However, if you pay more than a minimal amount of wages, you will most likely be required to pay state unemployment tax, and will have to register with the state as an employer for unemployment tax purposes, as described in Section V(b). (b) Unemployment and Other State Payroll Taxes. If your business has one or more employees, except for certain small agricultural employers or employers of domestic servants, you, as an employer, will be required to pay state unemployment tax based on the amount of such wages paid. Employers subject to the Wyoming unemployment tax are required to register with the Employment Tax Division of the Wyoming Department of Employment on Form WY-1C-1-WC, Wyoming Business Registration Form. This form also will serve as your registration for workers' compensation insurance. New employers are required to pay tax at a rate that varies by industry in 2007 on the first $18,100 of wages paid to each employee. After you have had employees for a while, you will develop an unemployment tax experience rating. This rating is based on the number of employees you terminate who then claim unemployment benefits and the amount of such benefits paid to those former employees, under complex formulas. The state will inform you when they have assigned you an individual tax rate based on your firm's experience rating. That rate may be higher or, if you have had relatively few benefit claims charged to your account, lower than the standard new employer tax rate you initially were paying. All state unemployment taxes are imposed upon you as the employer, and, under Wyoming law, cannot be charged to your employees or withheld from their wages. Employers are required to display posters in the workplace, notifying workers of their rights to unemployment benefits. For more information on your Wyoming unemployment tax obligations as an employer, see the contact information for the offices of the Employer Services, Employment Tax Division, of the Wyoming Department of Employment, listed in Section VI(a). (c) Workers' Compensation. In Wyoming, only businesses involved in "extra-hazardous employment" with one or more employees are required by law to have workers' compensation insurance. The definition of "extra-hazardous" applies to a wide range of businesses, however, including not only industries such as mining, manufacturing, utilities, and transportation, but also many types of industries that you might not consider to be very hazardous, such as many types of wholesale and retail businesses, hotels, restaurants, bakeries, and many types of service businesses. Thus, as a practical matter, most kinds of businesses, with relatively few exceptions, are subject to the Wyoming workers' compensation law requirements. Most employers are required to establish a Workers' Compensation account before hiring employees in Wyoming. Those employers who are not required to be covered may choose to cover their employees, but must opt to cover all of their workers, if choosing to cover any. Account applications may be obtained from any office of the Workers' Safety and Compensation Division (WSCD) of the Wyoming Department of Employment. Register on Form WY-1C-1-WC, Wyoming Business Registration Form. This form also will serve as your registration for unemployment compensation insurance. Note that a sole proprietor, a partner in a partnership, or a member (owner) of a limited liability company is generally not considered an employee. An employee of a corporation who is a corporate officer is not required to be covered, but may elect coverage under the workers' compensation law. As an employer, you will make monthly payments to the WSCD on forms they provide. Payroll reports and payments must be made on or before the 15th day of the month for the preceding payroll month. Workers' compensation provides wage loss and medical benefits to employees injured on the job and it protects you, as an employer, from legal action for damages for injuries or job-related illnesses suffered by your employees. \In effect, it is a "no-fault" insurance system for work-related injuries or illnesses. CAUTION: As an employer, you must notify injured employees of their benefits and display in the workplace a workers' compensation poster, Important Notice to Employees, which you can obtain from the WSCD. For more detailed information regarding your obligations as an employer under the Wyoming workers' compensation laws, see the contact information for the offices of the Wyoming Department of Employment, Workers' Safety and Compensation Division, listed in Section VI(a). (d) State Wage and Hour Laws. Some employees of certain small firms not engaged in interstate commerce are not covered by the federal minimum wage and overtime laws. However, even if few or none of your employees are covered by the federal wage-hour laws, if, for example, because your firm does less than $500,000 a year in gross sales and the employees in question are not deemed to "...engage in (interstate) commerce...," they will still generally be subject to the Wyoming wage-hour laws, which provide for a state minimum hourly wage that is currently $5.15 an hour, or $4.25 an hour for employees under age 20 during their first 90 consecutive days of employment. Private employers are not generally required to pay overtime premium pay under Wyoming state law, but must do so at a rate of time-and-a-half, for hours worked in excess of 40 hours a week, if subject to the federal wage-hour laws. Wyoming does not require employers to post any kind of notices regarding wage, wage-hour, or family leave requirements. However, if your business is subject to any such federal labor law provisions, you must still post the required federal posters. Note that, as under federal wage-hour laws, certain classes of executive, administrative, and professional employees are exempted from the Wyoming wage-hour rules, as are outside salespersons who are paid solely on a commission basis. In addition to wage-hour laws, most businesses are subject to federal child labor laws, which put numerous restrictions on the working hours and kinds of work in which minors under the age of 18 may engage. Your business must also be cognizant of similar state child labor laws, in Wyoming. While the Wyoming child labor laws may apply when federal laws do not, the Wyoming child labor rules are generally less strict than the federal laws and regulations. For example Wyoming state child labor laws do not impose any limits on the hours that children 16 years of age or older may work, unlike federal laws. Children of age 14 or 15 may be employed, but not in heavy construction, any kind of work involving explosives, or in other occupations declared hazardous by the Wyoming Department of Employment. Children who are 14 or 15 years old may work but only if they meet the following requirements:
Children under the age of 14 are generally prohibited from being employed, except for farm, domestic, or lawn and yard service. However, a child under 14 may work in a non-hazardous business for a parent, grandparent, or legal guardian, or for a business owned by a parent, grandparent, or legal guardian. For more on Wyoming wage-hour and child labor laws, contact the Labor Standards Division of the Wyoming Department of Employment at the address listed for that agency in Section VI(a). (e) State Occupational Safety and Health Laws. Approximately half of the states have their own OSHA-like agency, charged with administering the state's own occupational safety and health laws. The remaining states have no such enforcement agency, and thus rely instead on the federal Occupational Safety and Health Administration (OSHA) to administer the federal job safety rules within such states. Wyoming is one of the states that has its own OSHA-type agency. To determine if your workplace is in compliance with federal and Wyoming job safety requirements, you may wish to contact the Workers' Safety and Compensation Division (WSCD) of the Wyoming Department of Employment and request a free on-site safety consultation. You will not be cited for any violations detected, provided that you promptly correct the unsafe conditions. This differs from the rules for consultations by federal OSHA inspectors, who are required to cite you for any violations they find. For information on your job safety and health obligations as an employer, required posters, and possible on-site safety consultations, see the contact information for the Cheyenne offices of the WSCD, listed in Section VI(a). (f) Other Miscellaneous State Labor Laws. Other Wyoming labor laws you need to be aware of, as an employer, include the following: (1) Wage payments to terminated employees. Unlike other states, Wyoming state law does not generally dictate how often or when wages must be paid to employees, except that semi-monthly wage payments are required to be made in certain industries, such as railroads and mining, or to workers at factories, mills, or workshops. However, Wyoming law does require that the final paycheck must be provided within 5 days after an employee resigns, retires, or is discharged from employment. An employee who has to sue for unpaid wages is entitled to 18% interest on the amount owed, plus attorney's fees and costs of the lawsuit. (2) Right-to-work laws. About half the states have enacted "right-to-work" laws, which guarantee that no person may be denied employment for refusing to join a union or for not paying union dues, thus banning either "union shop" or "agency shop" agreements, or both. In a union shop, an employee not belonging to a union may be hired but then must join the union, usually within 30 days. In an agency shop, an employee need not join the union but, to remain employed, must pay union dues. Wyoming has a right-to-work law, which makes it an attractive place to do business for many employers. This law makes it illegal to refuse to hire or to terminate the employment of any persons on account of their membership (or non-membership) in a labor union. (3) State anti-discrimination laws. In addition to complying with federal anti-discrimination laws, employers must also be aware of and comply with state civil rights laws in Wyoming, and display a poster informing employees of their rights. You can obtain this poster from the Cheyenne office of the Division of Labor Standards of the Wyoming Department of Employment, at the address listed in Section VI(a). Wyoming state law prohibits discrimination in employment practices against any qualified disabled person or any person otherwise qualified, because of age, sex, race, creed, color, national origin, ancestry, or pregnancy. (4) Reporting new hires. Under federal welfare reform laws, employers in every state are now required to report newly-hired (or rehired) employees to an appropriate state agency (the Wyoming New Hire Reporting Center for Wyoming employers) within 20 days after the date of hire. Reports may be filed on IRS Form W-4, the Wyoming New Hire Report Form, or on a form you create that contains all the information required by the state's reporting form. Employers who submit reports magnetically or electronically must submit the reports in two monthly transmissions not more than 16 days nor less than 12 days apart. See Section VI(a) for contact information and on where to file new hire reports. VI. STATE SOURCES OF HELP AND INFORMATION (a) Key State Agencies Contact Information. When starting or relocating a business in Wyoming, you will need to contact the various agencies that are mentioned in this book or listed below on an individual basis, to obtain needed forms, official posters, information and other assistance from each such agency. However, Wyoming now has a single agency to whom you can go for assistance in handling all your licensing and permitting requirements for your business under the laws of Wyoming -- the Business Permitting Assistance Office. Contact that office, which is part of the Wyoming Business Council, at the address listed below. Addresses and other contact information for other key state and federal government agencies in Wyoming, mentioned in preceding sections of this book, are listed below for your convenience. BUSINESS STARTUP INFORMATION. A key agency that can provide helpful information on getting your business up and running in Wyoming is the Wyoming Business Council. Contact the WBC at: Wyoming Business Council SECRETARY OF STATE. Contact the Corporations Division of the office of the secretary of state for information on:
Secretary of State TAXES. Obtain state sales and use tax, and various other miscellaneous business tax forms, instructions and information from the Wyoming Department of Revenue, which is the main tax collection agency in Wyoming. Department of Revenue STATE LABOR LAWS. Contact the following agency about your obligations as an employer under various state labor laws, including:
Department of Employment STATE LICENSES. Contact the Wyoming Business Council for information on Wyoming licensing requirements, at the address listed above for that state agency. STATE SALES TAX. Obtain your sales and use tax license or permit and information on the Wyoming sales and use tax law, from the Department of Revenue, at the address listed above for that agency. EMPLOYER WITHHOLDING. Wyoming does not have an income tax. Accordingly, no withholding of state income tax from wages of employees is required in Wyoming. STATE UNEMPLOYMENT TAX. Contact the following state agency to determine whether you are an employer subject to payment of state unemployment taxes, and for registration as an employer if you are subject. Department of Employment NEW HIRE REPORTING. File new hire reports with the Wyoming New Hire Reporting Center no later than 20 days after hiring or rehiring any employee, either by mailing or faxing the reports to the following address. Employers who submit new hire reports magnetically or electronically must submit the reports in two monthly transmissions not more than 16 nor less than 12 days apart. Wyoming New Hire Reporting Center WORKERS' COMPENSATION INSURANCE. If you employ workers for whom you must supply workers' compensation coverage, contact the following agency for further information: Department of Employment STATE OSHA PROGRAM. For information on both federal and state occupational safety and health laws that affect you as an employer in Wyoming, contact the Workers' Safety and Compensation Division of the Department of Employment at the address listed above for that agency. STATE ANTI-DISCRIMINATION LAWS. Contact the Wyoming Department of Employment, Labor Standards Division, for more detailed information on Wyoming civil rights laws that may apply to your business, at the address listed above for that state agency. STATE TELEMARKETING LAWS. The Attorney General of Wyoming administers the Wyoming statutory provisions that regulate telemarketers in the state. To obtain the telemarketers' registration form, the Notice of Intent to Engage in Telephone Solicitation and Designation of Agent for Service of Process, contact the state Attorney General at: Wyoming Attorney General's Office (b) Small Business Development Centers. A number of Small Business Development Centers (SBDCs) are located throughout Wyoming to assist you. These centers, usually located on college campuses, provide a wealth of start-up information and sponsor frequent business-oriented seminars. Contact the lead office below for information, or for the location of other SBDCs nearer to you. Wyoming Small Business Development Center (c) Internet Sites. For anyone with access to the Internet, there is a wealth of state and even local business information provided by state and local governments. All states now have a state government Web page, and most major Wyoming state agencies also have sites on the Internet where you can obtain useful small business information on matters such as state taxes, financing sources, or the addresses and the phone numbers (or e-mail addresses) of various state and federal agencies' offices in Wyoming. Since new sites are appearing frequently, you might also want to search for other Wyoming government Web sites by using one of the popular Internet search engines, such as Excite! or Yahoo. To start your Internet search for Wyoming government information, you may want to begin with the following Internet sites: State of Wyoming home page (with links to state agencies): Department of Revenue (sales tax and other tax forms and information): Secretary of State of Wyoming (corporate, LLC, partnership filing fees and forms): Wyoming Department of Employment (wage and hour laws, workers' compensation, new hire reporting, anti-discrimination laws, and state unemployment tax): Wyoming Business Council (business assistance and resources): (d) Financing Sources. For information and help on locating financing for your small business, contact the U.S. Small Business Administration office in Wyoming, or contact the Wyoming Business Council at the address listed in Section VI(a) for that state agency. The address of the SBA District Office in Wyoming is: U.S. Small Business Administration |
Copyright © 2007 Michael D. Jenkins
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