Choice of entity refers to choosing the legal form for operating your business. A business may be operated as (1) a corporation; (2) a general partnership or limited partnership; (3) a limited liability company (LLC); or (4) a sole proprietorship. Each state has its own laws for the formation, operation, and maintenance of these business entities.

The primary considerations in choosing the best form for operating your business are (1) protecting your personal assets from the liabilities of the company; (2) tax strategies designed to deduct early losses, avoid double taxation, and convert ordinary income into long term capital gain at a lower tax rate; (3) an entity that will be attractive to potential investors and lenders; (4) an entity that allows you to offer equity incentives to employees (stock options); and (5) the cost of forming the entity and properly maintaining it—including filing the required documents with state agencies.

In Wyoming, the choice of entity for operating a business is an important decision that affects personal asset protection, taxation, investment attractiveness, employee incentives, and administrative requirements. Wyoming law allows for the formation of corporations, general partnerships, limited partnerships, limited liability companies (LLCs), and sole proprietorships. Corporations offer limited liability protection but may be subject to double taxation, whereas LLCs provide limited liability without double taxation, as they can be taxed as a pass-through entity. General partnerships do not offer personal liability protection, while limited partnerships protect limited partners but not general partners. Sole proprietorships are the simplest form but offer no personal liability protection. Wyoming is known for its business-friendly environment, including no state income tax, which can be advantageous for tax strategies. The state requires entities to maintain good standing through regular filings, such as annual reports. When choosing an entity, it's important to consider the ease of attracting investors and lenders, the ability to offer stock options or other equity incentives to employees, and the costs associated with forming and maintaining the entity. Consulting with an attorney can help tailor the choice to the specific needs and goals of the business.