If you are going to form a Wisconsin limited liability company for the first time, the process might seem troublesome and confusing. You will need to choose a state you want to operate in, file the official documents, choose a registered agent for your LLC, obtain permits, and check a few other steps necessary for a successful start of the company.
That’s why we have prepared a detailed guide with seven simple steps for you to follow. These recommendations will help you launch an LLC in Wisconsin in no time, learn how to compensate for any associated costs, and avoid most of the risks.
Step 1: Name Your Wisconsin LLC
LLC name is the face of the company, the core of its reputation and brand. Choosing a good LLC name is not easy. Not only do you have to be creative to make it memorable but also comply with certain state requirements for the application.
According to Subchapter 1 (General Provisions) of the Wisconsin Statutes 183.0103 the following regulations in terms of an LLC business name have to be considered:
- Uniqueness. Your Wisconsin LLC’s name is your company’s identity, thus it must not be used by any other LLC operating in the state;
- Availability of an “identifier”.: Your Wisconsin LLC’s name must contain the words: “Limited Liability Company,” “Limited Liability Co.,” etc. or abbreviations “LLC,” “L.L.C.,” or “LC” ;
- No forbidden words.: Your Wisconsin LLC’s name should not mislead the company regarding its purpose or nature. In addition, you must not use offensive terms, ‘sensitive’ words or expressions, or words that suggest a connection with the government or local authorities.
In the event of violation of any of these conditions, the application for registration will be rejected.
The most common reason for refusal is lack of uniqueness. The law requires that an LLC name should be 100% distinguishable from others in the notes. But what exactly should be considered?
The following differences are not considered essential:
- Plural and singular forms, use of possessive form;
- the existence or not of “insignificant words,” such as “the,” “and,” “of”;
- Punctuation marks and intervals;
- Lowercases and capital letters;
- The word “Wisconsin” and its abbreviations;
- Changing numbers in digits to words.
The Name Search on the Wisconsin Department of Financial Institution’s website will allow you to check and make sure that the choice you have made is sufficiently unique. If it turns out that similar names are already registered, visit the FAQ page page on the site to find out how you can resolve this issue.
If the name is already taken, don’t get upset. It will require extra brainstorming and searching, but knowing this before you file your paperwork, pay your filing fee, and launch an advertising campaign is much better.
Name Reservation (Optional)
If you have a perfect idea for your Wisconsin LLC name and you know it’s available, then you can reserve it to make sure nobody else will take it.
Reservation is valid for 120 days, during which the state government will retain it for you. This will give you time to prepare and file the Articles of Organization. This only makes sense if you really want exactly this name for your future LLC and have spent a lot of time and effort on brainstorming.
You cannot apply online, but there are two ways available to deliver your documents:
After you download the Name Reservation Application and indicate the preferred option, you can reserve that name by attaching a check for a $15 fee and sending the materials to the following address:
Department of Financial Institutions
P. O. Box 7846
Madison, WI 53707-7846
If you live in Madison, you can pay a $15 fee and hand-deliver your form to 4822 Madison Yards Way, North Tower, Madison, WI 53705.
The process usually takes up to 5-7 business days, but if you don’t want to wait, you can get your documents the very next day once you pay an additional $25 for expedited processing.
The preliminary Wisconsin LLC name search and reservation is not obligatory. However, taking these steps before starting your LLC, might save you from possible issues in the long run. If you come up with the right name for your Wisconsin LLC and are ready to start it right away, the reservation is unnecessary. After government approval of the company, your LLC name will be automatically registered.
Step 2: Choose a Wisconsin Registered Agent
To register an LLC in Wisconsin, you must have a registered agent and physical office, no matter if your company is local or foreign. This rule is established by the Wisconsin Statutes 183.0105 and there are no exceptions.
All business owners must have a registered agent while filing Articles of Organization, i.e. before the official approval of the company. In case of missing relevant data, your documents will be rejected, and you will have to start from the very beginning. Considering the fact that a registered agent is a key element of a company, required to ensure communication with the state, such a request is quite well-founded.
However, a registered agent is not only required when starting your company – you also need one to keep your business running safely. Even if your physical office is outside of Wisconsin, you will need a registered agent to manage taxes, lawsuits, deadlines, and other possible government requirements. All these factors considerably determine your LLC’s future success and affect its reputation.
A registered agent can be either an individual, i.e. any resident of the state who is 18 years or older or a local business entity. However, as an LLC, you can’t be your own registered agent in Wisconsin.
Individual as Registered Agent
Anyone who fits the following criteria can become a registered agent in Wisconsin:
- 18-year old resident;
- Has a physical address in Wisconsin (not just a PO box);
- Available during normal working hours at the registered office address of the LLC to receive official correspondence from the state.
You can appoint a family member, a friend, a lawyer, or yourself as an agent. However, these options have a number of disadvantages, so it is advisable to consider contracting with a professional organization.
Registered Agent Service
If you are looking for a reliable registered agent in Wisconsin, using an LLC formation service is the best choice.
Here are the top 3 LLC formation services in the industry:
Hiring any of the above services before starting your LLC, you will get professional assistance in any arising matters and a free registered agent for 1 year.
In case you have already started running your business or prefer to start an LLC on your own, these national services can provide you with professional registered agent support, complemented by useful features in their affordable packages.
A registered agent can become your reliable assistant and a guarantee of perfect record keeping in the course of your Wisconsin LLC activities. However, there may be a situation where your existing registered agent resigns (for any reason) and you will need to have a new one. The reasons for changing your registered agent can be as follows:
- Increased service cost;
- Dereliction of duties;
- Your desire to assign the duties to someone else, etc.
In any case, the process of changing your registered agent agent requires mandatory notification of the state. Otherwise, the company may be subject to administrative dissolution and fines.
Step 3: File the Formation Documents with the State
Filing Wisconsin LLC formation documents is the key point in the process. Only after their approval can the company be considered fully formed.
The information in Articles of Organization for a Wisconsin LLC includes the following points:
- Company name;
- Management structure type (member-managed or manager-managed);
- Registered agent information;
- Information about the owners and their signatures;
- Certificate of Good Standing (for foreign LLCs).
Articles of Organization must be filed in duplicate with an included registration fee check. The fee depends on the filing method.
You can save your time and money by using Wisconsin’s QuickStart LLC online service. Your Articles of Organization will then be processed on the day of filing, and the service will cost you $130.
Hard Copy Filing
You can send the documents and a $170 check to the following address:
Department of Financial Institutions
P.O. Box 93348
Milwaukee, WI 53293-0348
If you live in Madison, you can hand-deliver it to 4822 Madison Yards Way, North Tower Madison, WI 53705.
It takes 5-7 business days to process hard copy filings, depending on the workload. If you need to get your documents faster, you can pay an additional $25 for next-day processing. This is how you can boost the process to start running your business in Wisconsin as soon as possible.
Step 4: Create an Operating Agreement for LLC in Wisconsin
An LLC Operating Agreement is the main legal document of the company. It regulates the way the company operates, distributes owner rights and responsibilities, and contains procedures for various contingencies, e.g. voluntary dissolution. The Operating Agreement also provides details about the LLC’s inside management, including regulations on how decisions are made, when meetings are held, and how new members can enter the LLC, etc.
An LLC Operating Agreement for a company running a business in Wisconsin is optional, however, it gives you the following benefits:
- Protects members of an LLC from business liabilities;
- Keeps business and personal identities separate;
- Allows you to avoid state-imposed default rules;
- Clarifies succession;
- Identifies how future investors will be treated for better investment negotiations.
There are two ways to create an Operating Agreement:
- Independently. You can use, say, ZenBusiness templates or search for alternatives online;
- With the help of an attorney.
Create an LLC Operating Agreement on your own
The Internet offers a lot of free LLC Operating Agreement templates. Most of them are acceptable but getting a high-quality template via a reputable, professional service is preferable.
ZenBusiness provides a high-quality LLC Operating Agreement template in their Starter package ($49 + $130 Wisconsin fee, billed annually). You will be able to organize the work of your company and be protected from legal disputes.
Hire an attorney.
There is no official form for a operating agreement in Wisconsin. It can be as long (or short) as you want. The best thing to do is to provide as many points as possible to avoid any risks/conflicts or default rules of the state.
Professional lawyer services are highly valuable. Of course, you have to pay for it, however, in return, you get a legal document that fully considers the interests of your company, along with all peculiarities of your business sphere, and possible risks. Free Wisconsin LLC Operating Agreement templates are unified, which makes them available for different types of businesses, but this can also become a disadvantage.
Although maintaining an LLC Operating Agreement in Wisconsin is optional, having it, especially for company owners, is definitely beneficial.
No matter what option you choose, ensure the agreement fully incorporates all regulations, considers every risk, and is detailed as much as possible. An LLC Operating Agreement is the tower of strength that will support the LLC throughout its entire existence.
State default rules. What are they?
Each state has a set of basic rules for how LLCs should operate. These rules are applied by the state in case the agreement does not contain certain instructions.
By their nature, state default rules are appropriate for different cases, however, they focus primarily on effectiveness rather than the LLC’s best interest. For that reason, you should consider as many disputes as possible in your agreement, even if you are the only member of the LLC.
For example, with the dissolution of the company comes the distribution of its debts and remaining assets. If your Wisconsin LLC Operating Agreement does not specify how this distribution should be handled, the state will make that decision for you by fixing the procedure in default laws.
Step 5: Get an Employer Identification Number (EIN)
Taxes cause problems for many startups that are still “getting on their feet,” take a significant amount of their profit. Searching for ways to avoid taxes can eventually lead to even more serious consequences.
Every LLC must pay taxes and receive an Employer Identification Number (EIN), a special nine-digit code issued by the IRS. An EIN is a sort of like a Social Security number for your LLC. The range of its purposes is quite large. But the main one is the identification of your business to the IRS. EINs can be used for opening business bank accounts, filing taxes, handling payroll (if applicable), obtaining business lines of credit/business loans, obtaining credit cards for your LLC, and applying for other business licenses. It also allows you to hire employees officially (in case you need them).
If you have doubts about getting an EIN, you should visit this page if you need one or not.
According to federal laws, an LLC is considered a pass-through entity (or a flow-through entity) by default, which means it pays taxes through an individual income tax code rather than through a corporate tax code. LLCs do not submit declarations, and all of the LLC’s profits (and losses) “pass through” the business to the owners (AKA members), who report this information on their personal tax returns.
However, depending on the LLC’s tax status and the number of employees, some LLCs have to pay federal income taxes.
You can prepare documents and apply for an EIN online, getting an EIN for your Wisconsin LLC immediately. This is the most efficient method. However, you must apply between 7 a.m. and 10 p.m. EST, Monday through Friday. Also, in order to use the online application, you must have a valid Taxpayer Identification Number.
Download and fill out Form SS-4, then fax it to (855) 641-6935. Typically, the IRS will respond with return fax in about one week.
Download Form SS-4, fill it out, and send it to the following address:
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
It will take from four to five weeks to get your Wisconsin EIN if you choose to apply in this way.
Step 6: Open a Business Bank Account in Wisconsin
Having a separate bank account for your Wisconsin LLC is key to maintaining its status and keeping your (as an LLC owner) personal assets safe.
Separating your company’s and personal assets is a wise idea. Thus, in the case of a lawsuit or any legal dispute, you may need to prove that your Wisconsin LLC is a separate legal entity. In this situation, having a separate business account will be a compelling argument.
Opening a business bank account in Wisconsin is easy. It’s enough to choose a reputable bank and provide the necessary documents. As a rule, banks ask for:
- Articles of Organization;
- LLC Operating Agreement;
- Meeting minutes where a decision to open a bank account was made;
- Driver’s license of the owners;
- Driver’s license of the owners;
Step 7: Taxes, Licensing & Income Reporting
So your company is ready to go. All that remains is to obtain the necessary permits to maintain a good reputation in the future, managing all taxes and reports.
As mentioned earlier, an LLC is a pass-through tax entity. This means that all profits pass through the company to individual members. The individual members, rather than the company, must report the members’ share of the profits on their individual tax returns. For tax reasons, the IRS treats an LLC as a sole proprietorship, a partnership, or, if the LLC chooses, as a corporation.
If an LLC has only one member, the IRS classifies it as a sole proprietorship for tax filing purposes. The member of the LLC must file Form 1040 and report profits (and losses) on a Schedule C (“Profit or Loss From a Business”).
The IRS also automatically classifies an LLC with multiple members as a partnership (unless the LLC chooses a corporation tax status). Like a business partnership, the LLC must file Form 1065 (U.S. Partnership Return of Income), which includes a Schedule K-1. The LLC must report the profits/losses that pass through to each member on individual Schedule K-1 forms. Each member must report this information on a 1040 tax return also attaching a Schedule E.
Wisconsin state and local taxes
Wisconsin does not impose a privilege or franchise tax. This means that you do not have to pay additional state income tax if the LLC owners file business income and expenses on their returns.
Depending on your business type, main office location, and the specifics of the company, you will need to pay certain peripheral taxes, such as:
- Sales tax and Use tax;
- Unemployment Insurance Tax and Withholding Tax;
- Local tax in favor of the city, municipality, or district, in which the LLC operates, etc.
In case your LLC will have employees, you will need to register for the Unemployment Insurance Tax via the Department of Workforce Development.
To do business, you need to obtain a license from one of three levels of government. Depending on the type and location of your business, the number of licenses and Wisconsin LLC fees may vary.
The most common licenses are:
- General license. There is no general state of Wisconsin business license;
- Zoning permit (depending on the location of the business, you should verify whether it needs an occupancy permit or has specific zoning regulations to follow);
- Signage permit (some municipalities require a permit before adding signage);
- Building permit (may be needed from the city (or county) building and planning department if there is any construction or renovations to a facility);
- Seller’s permit (every individual, partnership, corporation, or other organization making retail sales, leases, or rentals of tangible personal property or taxable services in Wisconsin must register for a Wisconsin Seller’s Permit (also called a sales tax permit) from the Wisconsin Department of Revenue.);
- Professional license (a variety of professional services in the state are regulated and need to be registered before offering certain services. A few common occupations that require licensing in Wisconsin are barbers, home inspectors, interior designers, manicurists. etc.).
For more information on state licenses, use the Department of Safety and Professional Services website.
You have finally passed all the steps needed to start your LLC and run your business. Your Wisconsin LLC is growing and making profits. Remember that every LLC must file an annual report, which is due by the end of the quarter during the first year, in which your LLC was formed. After this first year, the report is due annually during that anniversary quarter. Filing dates for each quarter are March 31, June 30, September 30, and December 31.
A stable LLC status is essential, thus, marking your deadlines for annual reports is always a good idea. When the time comes, visit the Wisconsin Department of Financial Institutions and the Wisconsin One Stop Business Portal. Filing an annual report for an LLC in Wisconsin will cost you $25.
Need Help Crating Your LLC?
Now you know all the steps you need to follow to start an LLC in Wisconsin. You’ve learned Wisconsin LLC taxes, costs, and other business peculiarities of the state. It’s time to get down to business!
Whether you decide to use an LLC formation service or start a new LLC on your own, the knowledge you gain will help you to avoid mistakes. You can always get back to our website if you need to learn more about the most reputable LLC formation services. Besides helping you with registering your Wisconsin LLC, they can also provide a registered agent service, take care of your annual reports, and offer many other useful features.