Choosing between a Single-Member LLC and a C Corporation in Wyoming can dramatically impact how much you pay in taxes during your first year. Both entity types offer liability protection, but they differ widely in how profits are taxed, how losses are treated, and how compliance plays out at the federal and state level.
In this blog, we’ll break down the real first-year tax costs for founders launching in 2025—and when to pick one over the other.
Relevant IRC Codes & Definitions
- IRC §1361–1371 – Governs S Corporation rules (though not directly used for C-Corps, understanding the alternatives matters).
- IRC §301–385 – Addresses corporate distributions and dividend taxation.
- IRC §162 – Allows deduction of ordinary and necessary business expenses, such as state filing fees and salaries.
- IRC §11 – Establishes the flat federal corporate tax rate of 21% for C Corporations.
Single-Member LLCs are disregarded entities by default, meaning income flows through to the individual’s Form 1040, taxed at personal rates under IRC §1.
IRS & State Form References
Federal Filings:
- Single-Member LLC (disregarded): Report income on Schedule C of Form 1040
- C Corporation: File Form 1120
State Filing in Wyoming:
- No state income tax for either entity
- Both entities must file the Annual Report and License Tax by June 30
- $60 minimum license tax for both structures
Real-World Example: Year-One Tax Impact
Scenario A: Single-Member LLC (SMLLC)
- Revenue: $120,000
- Expenses: $30,000
- Net income: $90,000
- Taxed as self-employed at personal income tax rate (22%–35%)
- Self-employment tax applies: 15.3% on first $160,200
- Total tax: $20,000–$25,000 (estimate including SE tax)
Scenario B: C Corporation
- Revenue: $120,000
- Expenses: $30,000
- Net income: $90,000
- Flat federal tax at 21% = $18,900
- No self-employment tax on corporate income
- If dividends paid: additional tax at 15–23.8% to owner
Key Insight: C Corps may save taxes short-term if profits are reinvested, but trigger double taxation when profits are distributed.
Step-by-Step Comparison for Founders
| Category | Single-Member LLC | C Corporation |
|---|---|---|
| Federal Filing | Form 1040 + Schedule C | Form 1120 |
| Tax Rate | Personal tax + 15.3% SE tax | Flat 21% + dividend tax (if distributed) |
| Deductible Benefits | Limited | Broader (health insurance, 401k, etc.) |
| Self-Employment Tax | Yes | No (if paid reasonable salary) |
| Tax Filing Complexity | Low | High |
| Startup Investment | Simple capital contribution | Stock issuance + corporate setup |
| Salary to Owner | Optional | Required (reasonable compensation) |
| Investor Preference | Moderate | High |
Conclusion
If you’re bootstrapping and plan to take most profits as income, a Single-Member LLC may keep things simple. If you’re seeking venture capital or plan to reinvest profits, a C Corporation offers tax efficiency and better scalability in Year One—despite its higher compliance burden.
Call to Action
Not sure which structure makes the most sense for your AI, SaaS, or consulting business?
Anshul Goyal, CPA EA FCA, is licensed to practice as a Certified Public Accountant in the U.S., is an IRS Enrolled Agent, and a Chartered Accountant from India. He represents founders in tax structuring, compliance, and audit defense.
👉 Schedule a call with Anshul Goyal, CPA. We’ll compare your income strategy, growth plans, and tax goals to recommend the ideal structure.
Disclaimer
This blog is provided for informational and educational purposes only. It is not intended as a substitute for personalized legal, tax, or financial advice. The content herein does not establish a client-accountant relationship and should not be relied upon to make business, tax, or legal decisions without consulting a qualified professional.
FAQs (Top 5 High-Searched)
Q1. Is a Single-Member LLC taxed twice?
A1. No. It’s a pass-through entity, taxed once on the owner’s personal return.
Q2. Do C Corporations pay double taxes?
A2. Yes, if profits are distributed as dividends. Profits are first taxed at the corporate level, then again on the owner’s personal return.
Q3. Which entity is better for reinvestment?
A3. A C Corp is often better if you plan to reinvest profits and delay distributions.
Q4. Can I elect S Corporation status later?
A4. Yes. Both SMLLCs and C Corps can elect S Corporation status using Form 2553 if eligibility criteria are met.
Q5. Which structure do investors prefer?
A5. Most institutional investors and VCs prefer C Corporations for equity and tax reasons.
About Our CPA
Anshul Goyal, CPA EA FCA, is a U.S.-licensed Certified Public Accountant, IRS Enrolled Agent, and Chartered Accountant in India. He has advised 2,000+ U.S. founders, saving over $200 million in taxes. Anshul’s specialties include entity structuring, multi-entity planning, and startup-friendly IRS strategies that scale as you grow.