Registering a Wyoming LLC as an S-Corporation
An S-Corp is a tax designation assigned by the Internal Revenue Service (IRS). To be designated an S-Corp, you must apply with the IRS and be approved. An S-Corp designation does not change the entity structure of your LLC. Instead, it alters the way in which your business is taxed on a federal level.
Is Your Wyoming LLC Eligible to Be an S-Corp?
Not all businesses are eligible for S-Corp status. The IRS lays out the following requirements for eligibility:
- Domestic businesses only
- Can have only allowable members
- May be individuals, certain trust, estates and certain exempt organizations
- Cannot be partnerships, corporations or non-resident aliens
- Not be an ineligible business
- Certain financial institutions, insurance companies, and domestic international sales companies
All of these requirements must be maintained throughout the life of your LLC.
The Difference Between an LLC and an S-Corp
Administrative Structure
An LLC is a mostly informal business structure. Members may manage the business, or management may be turned over to a manager or a group of managers. There is no Board of Directors or administrative officers, and there are no requirements for management to meet annually and distribute information to members.
An S-Corp, however, must adopt the management structure of a Corporation. There must be a Board of Directors, as well as Corporate Officers: President, Vice President, Secretary and Treasurer. An S-Corp must hold annual shareholder meetings, publish shareholder reports, maintain meeting minutes, etc.
Salary
LLC members are not required to be paid a salary. Instead, they are entitled to a percentage of the profits of the company, dependent upon their ownership percentage.
An S-Corp, however, must pay each shareholder a reasonable salary (meaning a salary equitable to the standard wage for that position in similar corporations). Profits must be assigned as distributions.
Distributions
An LLC is allowed to distribute profits how it chooses. Distributions may be in proportion to a member’s initial contribution to the company, but this is not a requirement.
With an S-Corp, profit distributions are required to be proportional to the contributions of each shareholder. In other words, if Bill and Joe both contribute $10,000 to the company in return for ownership shares, they cannot be given different profit distributions.
Existence
The length of an LLC’s existence is usually dependent upon all of the members remaining part of the company. If a member parts from the company, an LLC is usually dissolved (unless this is specficially addressed in the company’s operating agreement).
An S-Corp, on the other hand, has a perpetual existence, just like a corporation. Shareholders may leave the company at any time, but the S-Corp continues to exist independent of its owners.
Applying for S-Corp Election with the IRS
To apply for an S-Corp election, you must submit Form 2553 to the IRS. You cannot file this online. It must be mailed or faxed.
When to File:
- No more than two months and 15 days after the beginning of the tax year the election is to take effect; OR
- At any time during the tax year preceding the tax year the election is to take effect
Where to File:
There are different filing offices for separate sections of the country. See the chart below to find out where to send your application.
|
Your State |
IRS Center Address |
| CT, DE, DC, FL, GA, IL, IN, KY, ME, MD, MA, MI, NH, NJ, NY, NC, OH, PA, RI, SC, TN, VT, VA, WV, WI | Dept of the Treasury
IRS Center Cincinnati, OH 45999 |
| AL, AK, AZ, AR, CA, CO, HI, ID, IA, KS, LA, MN, MS, MO, MT, NE, NV, NM, ND, OK, OR, SD, TX, UT, WA, WY | Dept of the Treasury
IRS Center Ogden, UT 84201 |
Processing
After submitting the Form 2553, the IRS will inform you that your application has been either accepted or rejected. Normal processing time is 60 business days.
If your application is accepted, your S-Corp status remains in place until the status is either terminated (by you) or revoked (by the IRS).
Form 2553 Filing Notes
- You cannot file for S-Corp status without an Employer Identification Number. All corporations are legally required to have an EIN.
- The Form 2553 must be signed and dated by an officer/member of your LLC who is authorized to sign the document.
- All members must submit their Social Security Numbers on the application if their consent is required in order to make the election. The issue of who must consent or not should be addressed by your operating agreement.
- Send the application by certified mail. In the event that the form is lost or misfiled, the IRS will accept a certified receipt as proof that the Form 2553 was properly submitted.