How To Start an LLC in Wisconsin? (In Simple Steps)
The State of Wisconsin has specific requirements for the formation of an LLC. To complete the registration process, you will need to file several documents before your business can be recognized as a limited liability company (LLC).
With over a decade of practice as a business consultant for limited liability companies, I’ll provide information about what it takes to create an LLC in Wisconsin and how you can go about doing it successfully.
The article is backed with in-depth research and legal advice from our panel of lawyers to provide you with all the information you need.
Plus, if you prefer entrusting your LLC setup to a professional, we recommend you check out these Wisconsin LLC formation services.
- To start an LLC in Wisconsin, the process involves applying for a business name, appointing a registered agent, creating an operating agreement, and submitting the necessary documents.
- Wisconsin's specific requirements for LLC formation mandate filing several documents for the business to be officially recognized as a limited liability company.
- In Wisconsin, as per U.S. Small Administration statistics, 456,884 small businesses constitute 99.4% of all companies, highlighting a robust and supportive environment for new LLCs.
- I believe that the structured and straightforward process of forming an LLC in Wisconsin makes it an attractive option for entrepreneurs seeking legal and financial safeguards.
How to Form an LLC in Wisconsin?
To form an LLC in Wisconsin, you must apply for a business name, appoint a registered agent, file the Articles of Organization, and draft an operating agreement.
LLC's formation documents are extremely important, so make sure you do everything by the books before submitting them to the Financial Institutions Department.
1. Choose the Type of Your Wisconsin LLC (Mandatory)
In Wisconsin, when choosing your LLC type, consider the following options and their pros and cons:
- Single-Member LLC: Ideal for solo entrepreneurs, offering simplicity in management and tax filing. However, it may be limited in raising capital and perceived credibility.
- Multi-Member LLC: Suitable for partnerships, offering shared resources and collaborative decision-making. The downside includes potential conflicts and complex management structures.
- Professional LLC: Designed for licensed professionals, providing liability protection specific to professional services. Requires adherence to additional regulatory standards.
Each structure balances ease of management, tax implications, and liability protection differently, fitting various business needs and scales.
2. Choose a Name for Your Wisconsin LLC (Mandatory)
As a business consultant, I always emphasize to my clients the importance of selecting the right business name. It’s a step you can't skip in Wisconsin.
Apply through the Department of Financial Institutions Division of Corporate & Consumer Services, and remember, a unique and compliant name sets the tone for your business identity.
You can look up an LLC in Wisconsin by checking the business name on the Wisconsin Secretary of State Business Search . If it is available, you can file a reservation with the Department of Financial Institutions.
You may reserve a business name for 120 days at a $15 filing fee payable to the Financial Institutions Department.
Expedited processing is also available for an additional $25 filing fee. Keep in mind that you can only make name reservations by mail.
You need to follow certain guidelines for your name to be approved and registered:
- Your LLC name has to end with "Limited Liability Company" or the abbreviations "L.L.C." or "LLC."
- Your business name should be distinguishable from other registered companies .
- You cannot include words that are associated with any government agency.
- If the name contains professional services restricted by law, additional licenses may be required.
3. Select a Registered Agent (Mandatory)
An LLC registered agent, or registered agent service, represents a Wisconsin LLC.
The registered agent in Wisconsin maintains a physical address to conduct service of process on behalf of the LLC.
The individual must be available during business hours to ensure receipt of official paperwork, legal documents, and filing of annual reports.
Keep in mind that these filings are legally binding contracts once accepted by your company's representative on record. Any official paperwork can be received and presented according to statutory deadlines, such as the operating agreement.
It is essential to have a reliable registered agent with a physical address within the state to meet legal requirements.
Foreign and domestic LLCs must have a registered agent within the state.
4. File Wisconsin Articles of Organization (Mandatory)
Drawing from my experience in filing LLC Articles of Organization for various clients in Wisconsin, this step is where your LLC starts to take legal shape.
Remember to include every detail required by the Wisconsin Department of Financial Institutions. Getting this right sets a solid legal foundation for your business.
Your articles must include:
- Your name and address (physical)
- The street number and entity name where you will be conducting business
- A description and purpose of the business need to match the type on file with the county clerk's office in Wisconsin.
- Names and addresses of all members
The online filing fee for Wisconsin Articles of Organization is $130. If you choose to mail your Articles of Organization, the fee is $170.
You may speed up the processing of your Articles of Organization for an additional $25 expedited service fee.
Steps to Take After Forming an LLC in Wisconsin
When you form a Wisconsin LLC, you need to make sure it stays compliant with the state by opening an LLC business bank account, obtaining an EIN, and acquiring the necessary licenses.
5. Create a Wisconsin LLC Operating Agreement (Optional, but Recommended)
Based on my years of consulting, an LLC operating agreement is more than just paperwork. It's the blueprint for your business's internal structure and decision-making process.
Drafting this document with care and precision, often with legal assistance, can prevent future disputes and confusion among LLC members.
More specifically, the operating agreement includes the following (but is not limited to):
- Management of the company
- Members and their contributions
- Voting rights, responsibilities, and ownership percentages
- Profit and liability distribution
- Procedures for incoming and outgoing members
- Purpose and duration
- Articles of organization
- Dissolution clause
Seek professional assistance from a Wisconsin business attorney or legal specialist for drafting the agreement.
While not required by law, having an operating agreement is highly recommended to provide rules and procedures that all LLC managers and members have to abide by.
You can also read our article for more information on how to renegotiate a Wisconsin LLC operating agreement.
6. Apply for an Employer Identification Number (EIN) (Optional, but Recommended)
In my time assisting new LLCs, obtaining an EIN has been a crucial step. It's a straightforward process through the federal government but vital for tax purposes.
The paperwork needed to set up an LLC is done with your Secretary of State, but that federal ID number can be used across state lines for things like opening a business bank account and filing taxes in other states.
Every business must have a Federal Employer Identification Number (EIN) if it has employees or operates as a corporation, partnership, or trust.
An LLC can get an EIN the moment it files its Articles of Organization with the Secretary of State.
You can obtain an EIN online or by mail through the IRS website. There is no cost to using this service.
7. Open an LLC Bank Account (Optional, but Recommended)
If you're opening a limited liability company in Wisconsin, make sure the business bank account is separate from your assets to maintain limited liability protection.
A separate account allows you to keep track of all cash flow within the company.
LLCs must obtain an Employer Identification Number (EIN) from the Internal Revenue Service before establishing accounts under their company name with banks.
If you operate several distinct LLCs under the same LLC umbrella, make sure each has its own EIN rather than using a single number for all of your companies.
8. File your Wisconsin LLC Annual Report (Mandatory)
In Wisconsin, it's mandatory for LLCs to file an Annual Report with the Department of Financial Institutions. This report is due annually by the end of the quarter in which your LLC was formed.
It's crucial to verify specific requirements and deadlines directly with the Wisconsin Secretary of State, as regulations can vary and change. Filing the Annual Report maintains your LLC’s legal status and ensures compliance with state regulations.
This report typically includes updates on the LLC’s address, registered agent, and any changes in management structure. Failure to file on time can result in penalties, including late fees or even administrative dissolution of your LLC.
Always check the latest guidelines from the Wisconsin Secretary of State to stay compliant.
9. Obtain business licenses and permits
A business license is generally required to operate a firm on federal, state, and local levels.
"Numerous entrepreneurs discover permit requirements only after investing resources in their businesses, and such unexpected revelations can be quite burdensome."
- Jon Morgan, Co-Editor & Co-Founder of Venture Smarter
The type of industry and nature of the business determine the licensing needs.
A general commercial permit will allow most businesses to operate legally, but licenses are required to provide professional services in Wisconsin, such as general contracting, general law, medical care, or legal advice.
Businesses must obtain local licenses from their city or county of operations if the locality requires one.
For federal licensing requirements, you may learn more about licensing regulations by visiting the Small Business Administration's website or calling the Department of Safety and Professional Services to inquire about state business licenses.
10. Wisconsin Licensing and Compliance (Mandatory)
After forming an LLC in Wisconsin, there are specific requirements to ensure your business is fully compliant and operational:
- Sales Tax Registration: If your LLC sells goods or certain services in Wisconsin, you'll need a Wisconsin Seller’s Permit, requiring registration for business tax.
- Securing Appropriate Business Insurance: Types of insurance like General Liability, Professional Liability, and Workers’ Compensation may be necessary, depending on your business activities and whether you have employees.
- Building a Business Website: In the digital age, having a website is vital for credibility and customer engagement.
Each of these steps is crucial in finalizing your LLC formation in Wisconsin, ensuring legal compliance and effective business operations.
11. Choosing your tax structure
Selecting the right tax structure is a crucial decision that comes with distinct pros and cons.
Pass-Through Taxation (Sole Proprietorships, Partnerships, S Corps):
- Pros: For Wisconsin-based small to medium-sized businesses, the benefit of having profits taxed only once at the personal level is significant. It simplifies tax reporting and can be more efficient.
- Cons: The drawback is the self-employment taxes on all business income, which, in Wisconsin, can accumulate significantly as your business grows.
Separate Entity Taxation (C Corps):
- Pros: For larger businesses in Wisconsin, reinvesting profits at the lower corporate tax rate can be advantageous, especially for those planning substantial growth.
- Cons: However, the double taxation on profits—at the corporate level and then as dividends to shareholders—can be a major downside.
For many Wisconsin small businesses, pass-through taxation often works better due to its simplicity and tax efficiency. Conversely, larger, expansion-focused entities might find the C Corp structure more beneficial.
In Wisconsin, changing your tax structure requires adherence to specific IRS guidelines and deadlines. For instance, transitioning to an S Corp involves filing Form 2553 within two months and 15 days after the beginning of the tax year in which the election is to take effect.
It’s always wise to consult with a tax professional for tailored advice and an understanding of all pertinent deadlines and requirements specific to Wisconsin.
Benefits and Drawbacks of an LLC in Wisconsin
- Limited Personal Liability: Operating under a Wisconsin LLC structure minimizes personal liability risks. You can add or remove business partners without affecting the personal assets of other LLC members, providing flexibility for business growth.
- Tax Flexibility: Wisconsin LLCs benefit from pass-through taxation, where profits and losses are reported on individual members' tax returns, avoiding corporate taxation. It's crucial to understand Wisconsin's tax requirements; for example, LLCs considering C-corporation status should note the 7.9% corporate franchise tax rate, due annually by April 15th, for effective financial planning and compliance, as noted in the Wisconsin Department of Revenue .
- Cost-Effective: Incorporating in Wisconsin is financially advantageous due to the low startup costs for forming an LLC in the state, making it an attractive option for new businesses.
With 457,769 small businesses making up 99.4% of all companies in Wisconsin, as stated in the U.S. Small Business Administration, the state's entrepreneurial environment is both supportive and vibrant, offering substantial opportunities for new LLCs .
- Self-Employment Taxes: Members of an LLC in Wisconsin are subject to self-employment taxes on their share of the profits. This can be higher compared to taxes on wages paid by an employer.
- Limited Growth Potential: LLCs in Wisconsin may face challenges in raising capital since they can’t issue stock like corporations. This could limit the growth potential of some businesses.
- Limited Duration: In some cases, LLCs in Wisconsin have a limited life span, meaning they might not continue perpetually in the absence of specific provisions in the LLC agreement.
DIY vs. professional LLC formation
When forming an LLC, you can choose between the DIY route or hiring a professional service. Here's a breakdown of both options to help you make an informed decision.
DIY LLC Formation:
- Cost-Effective: Typically less expensive as you avoid professional fees.
- Control and Learning: Handling the process yourself offers a deeper understanding of your business’s legal structure.
- Time-Consuming: Requires more of your time to research and understand state-specific regulations.
- Risk of Errors: Without professional guidance, there's a higher chance of mistakes in filing or missing crucial steps.
- Limited Legal Knowledge: Might lack the nuanced legal expertise a professional service can provide, potentially affecting compliance.
Professional LLC Formation Services:
- Expertise: Professionals are knowledgeable about state-specific rules and can navigate complex legal requirements.
- Time-Saving: Outsourcing the process saves you time, allowing you to focus on other aspects of your business.
- Peace of Mind: Reduces the risk of errors and ensures compliance with state laws.
- Cost: More expensive than the DIY approach due to service fees.
- Less Hands-On Involvement: You might not learn the intricacies of the formation process.
DIY formation is more cost-effective but lacks the expertise and time-saving benefits of professional services. While DIY demands more time, professionals streamline the process with their legal knowledge and compliance skills.
Your choice between DIY and professional LLC formation should align with your needs, resources, and expertise. If cost-saving and hands-on involvement are priorities, choose DIY; for expert guidance and convenience, opt for professional services.
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Can I Form a Foreign LLC in Wisconsin?
You can form a foreign LLC in Wisconsin by filing a Wisconsin Certificate of Registration Application with the Department of Financial Institutions online, in person, or by mail.
How Do I Add a DBA to an LLC in Wisconsin?
You can add a DBA to an LLC in Wisconsin by filling out a DBA application form, notarizing it, and submitting it to the Wisconsin Department of Financial Institutions along with the filing fee.
Does Wisconsin Allow LLC Domestication?
Wisconsin allows LLC domestication if you file a Certificate of Conversion with the Wisconsin Department of Financial Institutions.