How to Apply for an LLC in Wisconsin

Starting a limited liability company (LLC) in Wisconsin can be a great way to formally structure your small business. An LLC offers both tax benefits and personal liability protection, making it an appealing option for many entrepreneurs. The process involves reserving your business name, drafting and filing articles of organization, creating an operating agreement, obtaining any necessary licenses or permits, and more. While starting an LLC does require some upfront preparation, the process in Wisconsin is fairly straightforward. With a bit of planning, you can ensure your Wisconsin LLC is properly established and ready for business.

Understanding LLCs

An LLC, or limited liability company, is a business structure that combines aspects of partnerships and corporations. LLCs provide liability protection like a corporation, so the owner’s personal assets are generally protected from business debts and claims. However, LLCs also have the management flexibility and pass-through taxation of a partnership or sole proprietorship.

Some key things to know about LLCs:

• LLCs limit personal liability for business debts and claims
• Profits and losses can pass through to the owners’ personal tax returns
• LLCs have fewer regulations and reporting requirements than corporations
• LLCs offer flexibility in management structure and distribution of profits

Forming an LLC establishes business credibility while protecting personal assets. It’s important to understand these basics before starting your Wisconsin LLC.

Choosing a Name for Your LLC

When starting an LLC in Wisconsin, one of the first steps is choosing a business name. Here are some tips for choosing an LLC name:

• Check name availability by searching the Wisconsin Department of Financial Institutions database. Make sure another business is not already using the name.
• Include descriptive words about your business. For example, “Acme Construction LLC” or “ABC Consulting LLC.”
• You must include the words “Limited Liability Company,” “Limited Company,” or the abbreviation “LLC” in the name.
• Avoid words that could be confused with government agencies or restricted words that require additional paperwork.

Choosing a unique, descriptive name will help establish your Wisconsin LLC’s brand and make your business easier to find online. Check name availability early in the process to ensure you can use your preferred business name.

Selecting a Registered Agent

When starting an LLC in Wisconsin, you must designate a registered agent. This agent receives important legal and tax documents on behalf of your LLC. When selecting a registered agent, consider the following:

• The agent must have a physical street address in Wisconsin, not just a P.O. Box. This ensures important paperwork can be served in-person if needed.
• Using a third-party registered agent service can save you time and effort compared to designating yourself or a company member. Reputable services like Northwest Registered Agent and Incfile maintain compliance on your behalf.
• An out-of-state registered agent service with a Wisconsin address is also an option for convenience and reliability.
• Compare costs across providers. Third-party services generally charge $125+ per year while designating yourself costs only the $10 statement of change filing fee.

Take time to review multiple registered agent options before starting your Wisconsin LLC to ensure you choose a reliable, compliant service that meets your business needs.

Filing Your LLC Paperwork

Once you have chosen a business name and obtained an EIN, the next step is to file your LLC formation documents with the state. This paperwork legally registers your LLC with the Wisconsin Department of Financial Institutions (WDFI).

• The articles of organization form formally registers your LLC. This simple document requires your business name, registered agent information, and principal office address. The $170 filing fee can be paid online.
• You’ll also need to file a separate form to register your registered agent. This agent receives important legal and tax documents on behalf of your LLC.

Filing online through the state’s online filing system allows you to complete the paperwork and payment in one step. You will receive a confirmation email and official copies of your processed documents within 5-7 business days.

Once your LLC paperwork is processed by the WDFI, your Wisconsin limited liability company formation is complete. You will receive an approval letter containing your FEIN and entity number for tax and banking purposes.

Drafting an LLC Operating Agreement

An operating agreement is an important document that outlines the financial and functional decisions in an LLC. Here are key steps to draft an operating agreement for your Wisconsin LLC:

• Define membership structure – Include details on ownership percentages, voting rights, members’ roles and responsibilities.
• Allocate profits and losses – Specify the distribution method, such as dividing based on ownership percentage.
• Choose management structure – Will your LLC be member-managed or manager-managed? Define which members/managers can enter contracts.
• Plan distributions – Decide frequency and process for distributing profits to members.
• Establish voting procedures – Specify voting rights, quorum requirements, membership approvals needed for actions.
• Plan for changes – Address what happens when members join/leave, or if the LLC dissolves.
• Set up dispute resolution process – Mediation, arbitration, and court options for resolving internal disputes.

Use online templates from sites like NOLO as a guide when drafting your agreement, but be sure to customize it for your specific situation. Consult a business lawyer in Wisconsin to review the agreement before finalizing it. Keep the signed copy with other LLC formation documents.

Having a detailed operating agreement will help your LLC run more smoothly while establishing rules and processes upfront. Review and update it as business needs evolve.

Obtaining Tax Identification Numbers

One of the steps for starting an LLC in Wisconsin is obtaining tax identification numbers from the appropriate government agencies. This includes getting an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) online or through Form SS-4. Additionally, you must register with the Wisconsin Department of Revenue and get a Wisconsin tax account number. This allows you to collect, report, and remit sales tax as required. Other tax obligations may also apply depending on your type of business, such as excise taxes or gambling taxes, which would require additional registrations and tax IDs from state and federal agencies.

• Apply for an EIN from the IRS to identify your business for federal tax purposes
• Register with the Wisconsin Department of Revenue to get a state tax account number
• Determine if you need additional tax IDs based on your business activities

Pros and Cons of Starting an LLC in California

Starting a limited liability company (LLC) offers both advantages and disadvantages compared to other business structures. When weighing whether an LLC is right for your business, consider these key pros and cons:

Pros:

• Limited personal liability – An LLC protects your personal assets if the business is sued or has debts it can’t pay back (SBA).
• Tax flexibility – LLCs can choose corporate or pass-through taxation to minimize taxes.
• Less paperwork – Forming an LLC is generally simpler than forming a corporation.

Cons:

• Self-employment taxes – Members of an LLC often pay self-employment taxes on their share of profits.
• Limited life span – An LLC can dissolve if a member dies, leaves, or goes bankrupt.
• Higher taxes – Pass-through taxation means profits are taxed at the personal tax rate, which may be higher than the corporate rate.

Cost Considerations

When starting an LLC in Wisconsin, there are several costs to consider. The filing fee to form an LLC with the state is $170. You may also choose to hire a business formation service to handle the paperwork for you, which typically costs $100-200.

Here are some other costs to keep in mind:

• Operating agreement – $40-200 to have one drafted
• Annual report filing fee – $25 per year
• Registered agent fees – $50-200 per year
• Business licenses and permits – Varies by industry and location
• Accounting and tax filing fees – Several hundred dollars for an accountant to handle

As you can see, the ongoing annual costs for maintaining a Wisconsin LLC add up. Prepare a budget in advance to ensure you have sufficient funds for these recurring expenses. Structuring your LLC properly from the start can save money over the long run.

Economical LLC Formation Options

When starting an LLC in Wisconsin, it’s important to be cost-conscious and choose the most affordable formation option for your business. Here are some economical tips to keep LLC costs low:

• Use an online service like LegalZoom to handle all the paperwork and filing with the state. This can cost as little as $79 plus state fees.
• File the articles of organization yourself through the Wisconsin Department of Financial Institutions. The state filing fee is $130.
• Consider designating a registered agent service to receive important legal documents on behalf of your LLC. Some services like Northwest Registered Agent charge as little as $125 per year.
• Use free business templates from the Wisconsin government to create your LLC operating agreement rather than paying a lawyer.

Following these economical tips will help you form your Wisconsin LLC official for under $400 in many cases. Take time to explore all the affordable options for each required step when starting your small business.

Pre-Formation Steps

Taking the proper pre-formation steps when starting a limited liability company (LLC) in Wisconsin will ensure your business gets off on the right foot. Here are some key things to do before formally creating your LLC:

• Choose a business name – Pick a name that is distinct and memorable. Check the Wisconsin Corporation Database to make sure your chosen name isn’t already taken.
• Select a registered agent – All LLCs formed in Wisconsin must designate a registered agent, who can receive important legal documents on behalf of your business.
• Draft an operating agreement – This document outlines the ownership structure, member responsibilities, voting rights, profit distribution, and other governance rules for your LLC.
• Obtain licenses and permits – Make sure you have any required local or state business licenses, sales tax permits, and employer identification number (EIN) before filing formation documents.

Completing these key pre-formation steps allows you to establish the foundation for a strong LLC in Wisconsin before you even officially register with the state.

Comparing Business Entity Types

When starting a business in Wisconsin, you have several options for structuring your company. Some of the most common business structures include sole proprietorships, partnerships, corporations, and limited liability companies (LLCs). Here is a brief comparison of some key factors to consider when choosing an entity type:

• Formation Requirements – Sole proprietorships have virtually no formal requirements, while corporations and LLCs require filing articles of organization with the state.
• Liability Protection – Sole proprietorships and partnerships offer no personal liability protection, while corporations and LLCs limit owners’ personal liability.
• Taxes – Sole proprietorships and partnerships pass profits/losses to the owners to report on their personal tax returns. Corporations and LLCs allow profits/losses to pass to owners without taxation at the entity level.
• Management Structure – Sole proprietorships are managed directly by owners, while corporations and LLCs can have formal management in place through appointed managers and officers.

Many small business owners choose LLCs because they provide personal liability protection like a corporation while allowing taxation benefits similar to a partnership or sole proprietorship. LLCs also provide great flexibility in management structure. When starting a business in Wisconsin, weighing these entity comparison factors can help you select the right structure.

After Filing Your LLC

Once your Articles of Organization have been filed with the Wisconsin Department of Financial Institutions, there are still some important next steps you need to take to properly set up your LLC.

• Create an operating agreement – An operating agreement establishes rules and regulations for your LLC’s ownership and operations. While not legally required, it is highly recommended.
• Get an EIN – Apply for an Employer Identification Number (EIN) from the IRS. This number will be used for tax purposes instead of your SSN.
• Set up accounting – Establish accounting procedures for financial reporting, tax documentation, etc. You may want to work with an accountant or bookkeeper.
• Comply with regulations – Research if your type of business requires specific licenses, permits, or registrations on the state or local level.
• Open a business bank account – Designate a business bank account to keep your personal and business finances separate.

Properly completing these after filing steps helps ensure your Wisconsin LLC is fully set up and compliant with important regulations. Being organized from the start will also make managing your LLC much easier down the road.

Business Licenses and Permits

When starting an LLC in Wisconsin, you may need to obtain certain business licenses and permits depending on your industry and location. Some common licenses and permits include:

• Business license – Most cities and counties in Wisconsin require a general business license to operate. Fees are typically under $100 annually.
• Sales tax permit – If selling taxable goods or services, you need a Wisconsin sales tax permit to collect and remit sales tax.
• Food service license – Restaurants, food trucks, caterers, and any food-related business needs a license from the state’s Food Safety and Recreational Licensing department.
• Professional license – Occupations like medical, legal, accounting, and others require special licensing through state boards and commissions.

Be sure to research the specific license and permit requirements for your type of LLC business in the city, county, and state in which you plan to operate. The Wisconsin Department of Revenue provides useful information.

Growth Considerations for Your LLC

As your Wisconsin LLC grows, there are some key things to consider. You may need to bring on additional members or employees, so be sure to have an operating agreement in place outlining ownership stakes, responsibilities, salaries and more. You’ll also need to stay on top of paperwork and IRS elections to make sure your LLC status is protected. Additionally, examine whether your business structure still makes sense at larger scale or if you need to consider converting to an S corp or C corp as you add more members or approach an IPO exit.

Some other key considerations as your Wisconsin LLC grows:

• Hire a lawyer and accountant
• Maintain personal and business finances separately
• Regularly hold member meetings
• Consider business insurance needs

Additional Resources

Forming an LLC in Wisconsin involves several steps. Luckily, there are useful online resources that can help guide you through the process. The table below contains additional information on starting an LLC in Wisconsin.

These online government resources provide the necessary forms and guidance for starting your Wisconsin LLC correctly the first time. Additionally, they offer tips to help your new business operate smoothly while remaining compliant with state regulations. Use these helpful tools to ensure your LLC startup process goes as seamlessly as possible.

Conclusion

Starting an LLC in Wisconsin involves several key steps. You need to choose a business name and register it with the state, draft an operating agreement, obtain an EIN from the IRS, set up accounting procedures, and comply with ongoing annual reporting requirements. While the process involves some paperwork and fees, forming an LLC can provide liability protection and tax advantages that make it worthwhile for many small business owners.

As you move forward with starting your Wisconsin LLC, leverage available resources and seek professional advice if you have questions. With careful planning and execution, you’ll be well on your way to operating your business as a fully compliant and protected LLC in Wisconsin. We wish you the best as you embark on your new entrepreneurial journey!

FAQs

What are the requirements to form an LLC in Wisconsin?

To form an LLC in Wisconsin, you need to file articles of organization with the Wisconsin Department of Financial Institutions. You’ll need to include your business name, registered agent and address, and the name and address of each organizer. There is a $170 filing fee to form an LLC.

Do I need a registered agent if I form a Wisconsin LLC?

Yes, Wisconsin requires all LLCs to designate a registered agent, which must be located in Wisconsin and have a physical street address (not just a P.O. Box). The registered agent receives official documents and notices on behalf of the LLC.

What are the publication requirements when starting a Wisconsin LLC?

Wisconsin requires publishing a legal notice about the LLC formation in a qualified county newspaper where your principal office is located. This notice must run for two consecutive weeks. Expect additional fees for handling the publication.

Is there an operating agreement requirement in Wisconsin?

No, Wisconsin does not require a written operating agreement when forming an LLC. However, creating an operating agreement that outlines financial and management procedures is highly recommended for multi-member LLCs.

What are the ongoing compliance requirements for Wisconsin LLCs?

Wisconsin LLCs need to file an annual report with the state each calendar year. LLCs also must track and pay taxes quarterly if you have employees, sales tax permit, or collected sales tax. Keep detailed financial records in case the state audits.

Frank Gogol

A seasoned SEO expert, Frank has a long history of working with and for startups. Starting in mid-2018, Frank served as the SEO Strategist for Stilt, a fintech startup that provided fair loans for immigrants in the US and other underserved markets. While with the company, he scaled site traffic from zero to more than 1.5 million unique visits per month, driving the bulk of the company’s lead generation until it was acquired by J.G. Wentworth in December 2022. As employee #5 at Stilt, Frank was witness to, and part of, the successful building and sale of a fintech company, uniquely positioning him to create content for founders about all things startups.

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