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Venturing into creating your very own Limited Liability Company (LLC) in Wisconsin’s scenic state is an exhilarating pursuit that merges enthusiasm with pragmatism.
Within this concise manual, we’ll traverse through the crucial stages, from conceptualizing your company name to completing the required documentation and opening up pathways toward your entrepreneurial aspirations amidst the lively surroundings of Wisconsin, famously known as the Badger State.
Now, let us delve into the core of Wisconsin’s business terrain and establish a solid groundwork for crafting your flourishing LLC narrative.
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How to Set Up an LLC in Wisconsin: Basic Steps
Step 1: Selecting a Name for Your Wisconsin LLC
To start your Wisconsin LLC, the first and most important step is choosing an appropriate business name. Selecting a name that meets Wisconsin’s naming requirements and can be easily found by potential customers is crucial.
Adhere to Naming Guidelines:
- Make sure your selected name includes the phrase “Limited Liability Company” or its abbreviations (LLC or L.L.C.).
- Avoid using terms that might confuse your LLC with a government agency (e.g., FBI, Treasury, State Department).
- Be aware that certain terms (e.g., Bank, Attorney, University) may require additional documentation and the involvement of a licensed individual, such as a doctor or lawyer, in your LLC.
- Confirm that your chosen name is unique and doesn’t match any existing Wisconsin Limited Liability Company (LLC), Corporation, Limited Liability Partnership (LLP), or Limited Partnership (LP).
Ensure the availability of your desired business name in Wisconsin by conducting a thorough search using the State of Wisconsin’s Business Entity Search. This will help confirm that another entity isn’t already using your chosen name.
For a more detailed understanding of searching for a name for your Wisconsin LLC, refer to our comprehensive guide. Use our free LLC name generator to explore different name suggestions.
It’s advisable to check if your chosen business name is available as a web domain. Even if creating a website for your business isn’t an immediate plan, securing the URL in advance can prevent others from acquiring it later on.
Step 2: Designating a Registered Agent
One surprising aspect of establishing an LLC in Wisconsin is the obligation to designate a registered agent for the company, a detail that often catches prospective business owners off guard. This appointed individual or entity acts as the primary contact for official correspondence from the state and legal notifications.
It’s worth emphasizing that the registered agent isn’t obligated to maintain their registered office (official address) at the physical location of the company.
According to Wisconsin state regulations, a registered agent for a WI LLC may be:
- A natural person who is both a resident of Wisconsin and uses their business office as the registered office.
- A Wisconsin-based company with its business office serving as the registered office.
- A non-Wisconsin company authorized to conduct business in the state, using its business office as the registered office.
If you prefer, you can choose to use the expertise of a registered agent service that specializes in fulfilling the role of a registered agent for both LLCs and corporations. These services effectively manage the receipt of any legal documents that are directed towards your company and promptly inform you once they have been received.
Step 3: Submitting Articles of Organization
Establishing an LLC in Wisconsin requires submitting the Articles of Organization – Limited Liability Company to the Wisconsin Department of Financial Institutions.
The Articles of Organization must contain the following information:
- The LLC’s name, email address, and phone number
- The name and mailing address of the registered agent
- The names and addresses of the LLC organizers
- Specification of whether the LLC is member-managed or manager-managed
- Details about the individual who prepared the articles
- Signature of an LLC organizer
Filing can be completed online or by mail, with a filing fee of $130 for online submissions and $170 for mail submissions.
For Foreign LLC Registration
To operate in Wisconsin as a foreign LLC, a company established outside of Wisconsin must register with the Wisconsin Department of Financial Institutions. Follow these steps:
- Ensure compliance with Wisconsin LLC naming regulations and check name availability using the Search Corporate Records Name Availability tool.
- If the original LLC name is unavailable, choose a new name for use in Wisconsin and submit a Name Registration Application-Foreign Corporation or Foreign Limited Liability Company by mail (online filing isn’t an option). The filing fee is $50, and renewal applications must be submitted annually between October 1 and December 31.
- Appoint a Wisconsin registered agent.
- Submit a Foreign Limited Liability Company Certificate of Registration Application online (mail filing isn’t available) to the Wisconsin Department of Financial Institutions, along with a filing fee of $100.
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Step 4: Draft an Operating Agreement
Although not obligatory according to state regulations for establishing an LLC in Wisconsin, it’s strongly recommended that LLC members create an operating agreement prior to initiating official operations. An LLC operating agreement serves various essential functions:
- Articulating financial expectations, encompassing distribution handling
- Recording the managerial framework of the LLC
- Protecting the limited liability status of the company
- Defining ownership interest proportions
- Setting guidelines for buyouts and buy-sell transactions
Even though the state may not enforce this requirement, treating it with significance is crucial to mitigate potential legal, financial, and operational disputes down the line. Consider the operating agreement as a guiding document for your enterprise, addressing both its aspirations and potential hurdles.
Moreover, it should encompass the duties, skills, remuneration, and contributions of key officers, considering financial, operational, and resource dimensions.
Additional components that can be integrated into your operating agreement include:
- Protocols for member gatherings
- Specification of voting privileges
- Procedures for departures and the dissolution procedure
- Mechanisms for resolving disputes
Step 5: Obtain a Wisconsin LLC EIN
Securing an Employer Identification Number (EIN) from the IRS is an essential and complementary step in any business venture. Comparable to an individual’s Social Security number (SSN), the EIN functions as a means of identifying a business entity, allowing for efficient tracking of tax reporting.
But why exactly is obtaining an EIN so crucial? Here are three key reasons:
1. Opening a dedicated business bank account becomes possible with an EIN.
2. Compliance with federal and state tax obligations requires this unique identification number.
3. Hiring employees for your company necessitates having an EIN.
So, where can you acquire this vital identifier? Business owners can effortlessly obtain their EIN from the IRS at no expense after completing the company formation process. This can be done either online or through traditional mail submission methods.
Mail to:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Fax: (855) 641-6935
Step 6: Annual Filings for Domestic and Foreign LLCs
LLCs, whether they operate within or outside of Wisconsin, must submit annual reports to the Wisconsin Department of Financial Institutions (DFI). Each year, the DFI sends notification forms to the registered agent’s address, indicating the deadline for filing.
Instead of choosing physical filing, you have the choice to complete this process online. The fee for submitting an annual report is $25 for domestic LLCs and $80 for Foreign LLCs. In addition to this fee, there may be other yearly expenses associated with your LLC, such as hiring a business to act as your registered agent.
Rectifying Filing Errors
If you happen to find a mistake after finishing forming your LLC, you should promptly submit Form 53, which is also referred to as the Articles of Correction. Filling out this document requires using black ink and include a $40 check made payable to the DFI.
Secure Business Licenses and Permits
Wisconsin-based LLCs that are involved in business activities may be required to obtain business licenses, permits, or certifications from either state or local authorities. The specific requirements will depend on the nature of their business and its location within the state.
Enlist With the Wisconsin Department of Revenue
To operate legally in Wisconsin, specific Limited Liability Companies (LLCs) must fulfill their registration obligations with the state’s Department of Revenue. This obligation applies to LLCs that have employees and those engaged in collecting sales tax for goods and services.
To complete the registration procedure, you have two options: either use the online platform known as Taxpayer Access Point or submit your application by mail directly to the Department of Revenue.
Step 7: Wisconsin LLC Tax Obligations
To maintain the positive reputation of your business, it’s crucial to stay up-to-date with the tax requirements for your Wisconsin LLC. Depending on your business operations, you may be required to register for different types of taxes.
Wisconsin Sales Tax
To operate a business that sells physical goods in Wisconsin, obtain a seller’s permit from the Wisconsin Department of Revenue website. The state sales tax in Wisconsin is set at 5%, and most counties also impose a 0.50% local sales tax, with certain exceptions, such as Manitowoc, Racine, Waukesha, and Winnebago Counties.
Wisconsin Employer Taxes
To ensure compliance with the regulations in Wisconsin, businesses with employees must go through the registration process for Unemployment Insurance Tax with the Wisconsin Department of Workforce Development. It’s mandatory to enroll in Employee Withholding Tax via the Wisconsin Department of Revenue.
Income Tax
- State: Wisconsin’s individual income tax consists of four graduated brackets, ranging from 3.54% to 7.65%. The rate applicable to your LLC’s income for the tax year determines your tax bracket. State tax returns must be filed annually by April 18. To calculate your tax or ascertain your bracket, you can visit the Wisconsin Department of Revenue website.
- Federal: Reporting federal income tax is mandatory, using either Form 1065 (for multi-member LLCs) or Form 1040 Schedule C (for single-member LLCs).
Hiring Employees
To ensure compliance when hiring employees, make sure to:
- Verify the eligibility of new employees to work in the US.
- Report new hires to the state as required.
- Obtain workers’ compensation insurance for employees.
- Deduct employee taxes as necessary.
- Displaying workplace compliance posters in visible areas of your workspace
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Wisconsin LLC Requirements Checklist
Name Compliance
The name of a Wisconsin LLC must meet the following criteria:
- It must be distinct from the names of existing business entities registered with the Wisconsin Department of Financial Institutions.
- It should include one of the specified phrases or abbreviations: “Limited Liability Company,” “Limited Company,” “LLC,” or “L.L.C.”
Formation Documents and Fees
- Optional but recommended: Name Reservation Application: $15 filing fee.
- Articles of Organization – Limited Liability Company: $130 online filing fee, $170 mail filing fee.
- For foreign LLCs only: Foreign Limited Liability Company Certificate of Registration Application: $100 filing fee.
Registration Process
Establishing an LLC in Wisconsin requires submitting the Articles of Organization, Limited Liability Company to the Wisconsin Department of Financial Institutions.
Additional Legal Responsibilities
- Annual Reports: Mandatory for all active LLCs in Wisconsin.
- Business Licenses and Permits: Required for specific LLCs in Wisconsin based on their business type and location.
- Registration with the Wisconsin Department of Revenue: It’s necessary for certain active LLCs in Wisconsin, depending on their business type.
How to Start an LLC in Wisconsin – Buyer’s Guide
What Is an LLC?
An LLC, short for Limited Liability Company, is a type of business structure where the members have both ownership and control. Unlike corporations that require a board of directors to oversee operations, an LLC allows its members to independently manage the company.
In an LLC, there are managing members who actively participate in making operational decisions and non-managing members who hold ownership interests but don’t directly engage in day-to-day decision-making.
In Wisconsin, LLCs are classified into two main types:
- Single-member LLC: This type of company has a sole owner, also known as an LLC member.
- Multi-member LLC: This type of company has multiple owners.
Is an LLC the Right Choice for You?
Entrepreneurs often prefer opting for an LLC due to its heightened personal liability protection and tax advantages over sole proprietorships or partnerships. While corporations (both S corp and C corp) offer their own tax benefits and personal asset protections, they entail more organizational structure and reporting obligations.
The LLC business structure strikes a balance for small and medium-sized business owners, providing:
- Personal Asset Protection: LLCs safeguard owners from personal liability in legal actions against the company, unlike partnerships and sole proprietorships. Even in the event of a lawsuit or bankruptcy, while the company may suffer asset loss, the personal finances of LLC owners remain safeguarded.
- Avoidance of Double Taxation: The IRS considers LLCs as pass-through entities, with profits or losses passing through to individual owners for reporting on their personal income tax returns. This stands in contrast to corporations, which are subject to corporate income tax on profits before owners face personal income taxes on their salaries.
- Varied Membership Classes: LLCs can encompass two distinct owner types, managing members who both own and operate the business and non-managing members who solely possess the business without participating in day-to-day operations.
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Differences Between Wisconsin LLC Regulations and Service Corporation Regulations
In many states, professional entities often choose to form Professional Limited Liability Companies (PLLCs) instead of traditional LLCs. However, the legal framework in Wisconsin is different. In Wisconsin, traditional LLCs are allowed to offer professional services, and there’s no provision for PLLCs.
Instead, businesses that would typically opt for PLLCs in other states have the option to be established as “service corporations” in Wisconsin. Service corporations function similarly to regular corporations and are owned by shareholders who can issue stock.
The guidelines for setting up both single-member and multi-member Wisconsin LLCs remain the same, regardless of whether the business provides professional services or not.
Dissolving Your Wisconsin LLC
If you find yourself when you need to dissolve your LLC, there are two options available to begin the process: submitting either Form 510 or Articles of Dissolution. The fee for this service is $20, and if you require expedited processing, an additional $25 will be charged.
For questions or concerns about your Wisconsin LLC or the dissolution procedure, reach out directly to the Department of Financial Institutions. They’ll be able to provide further help and guidance.
LLC Formation Service in Wisconsin
Choosing online Limited Liability Company (LLC) formation services presents startups with an economical and convenient option. These services offer adaptable pricing plans, enabling businesses to customize the formation process according to their requirements. They come with the following notable features:
- Intuitive dashboards for convenient storage and access to crucial documents
- Registered agent services, removing the necessity of finding one independently
- Aid in obtaining an Employer Identification Number (EIN)
- Live expert assistance during the data input stage
- Tax preparation and consultation services
Outlined below are some of the frequently utilized LLC formation services:
ZenBusiness is a digital platform specifically created to assist entrepreneurs and small business proprietors in establishing and growing their companies. Their all-encompassing range of tools enables individuals to initiate and expand their businesses efficiently.
By offering cost-effective packages for LLC formation, ZenBusiness provides valuable services like registered agent assistance and annual report filing. In addition, they offer ongoing support and access to valuable resources that aid businesses in maintaining compliance and attaining success.
Swyft Filings is a renowned service that specializes in the formation of LLCs, recognized for its streamlined and straightforward approach to creating an LLC. Their array of services encompasses all aspects of LLCs, ranging from the initial incorporation process to ongoing compliance requirements and support for registered agents.
Swyft Filings offers personalized help to assist businesses in navigating the intricate landscape of LLC formation while ensuring adherence to both state and federal regulations.
Tailor Brands is a digital platform that focuses on branding and design, with the goal of assisting companies in establishing a professional and unified brand image. They provide a range of branding solutions, such as logo design, business card creation, and social media branding.
Tailor Brands empowers businesses by offering design tools and assets that can be personalized to meet their unique needs. This allows businesses to create and modify their branded materials in line with their specific preferences.
