It takes a lot of careful planning to start a business and ensure its long-term success. When you decide to register your business for the first time, be ready to undertake a slew of unfamiliar tasks to complete your entity’s formation.
Starting with drafting the Articles of Organization or opening a business bank account and ending with website development, the entire process requires you to be proficient in several specific areas.
But obtaining expert knowledge of business law and online marketing is not exactly the best option, so it would be easier to hire a professional service to help you out along the way.
Service providers like ZenBusiness and LegalZoom can take a huge part of the responsibilities and form a company on your behalf. Aside from these two, the current market offers dozens of LLC formation services, making it hard to choose the best option for you.
To compare the best LLC services, this article will delve deeper into some of the leaders of the industry. Whether you decide to go with the DIY method or hire an online service, examining all options in this comparison of the top 7 deals and outlining your course of action will only help with your endeavors.
Step 1. Write a Business Plan
Having a solid business plan is a vital part of ensuring the future success of your company. The process of drafting a plan will not only help you analyze key elements of your business but also thoroughly examine the aspects of its operation down to every minute detail. Aside from the basic info, here are some of the main points you should be including in your business plan:
- resume: an individual document summarizing the basic information about the company;
- description of your chosen business type: outlining the general concept and other advantages;
- goods and services: description of your product or service and what distinguishes it from similar goods offered by competitors;
- market research: understanding your target market and evaluating the existing demand for your product;
- marketing strategy: forming an approach to your potential customer base and predicting their needs;
- interior structure: outlining the potential structure of your company’s staff, possible contractors, and third-party experts;
- financial forecasting: unlike general budgeting which anticipates a desired amount of income for the upcoming fiscal year(s), financial forecasting calculates the expected revenue figures for a specific period.
To learn more about drafting a business plan, check out this guide from the U.S. Small Business Administration that examines each step of the process.
Step 2. Decide on a Business Name
Finding a good name for your company plays a huge part in defining its future. It’s in fact the very core of your business’ identity and reputation. Aside from being unique and memorable, the name must meet all naming regulations in the state of Wisconsin.
It’s not terribly difficult to choose a perfect name by following the main naming requirements found on the Department of Financial Institutions FAQ page:
- availability: perform a name search to see if your preferred business name hasn’t already been taken; if the search results are negative, the name for company is still free;
- file your Wisconsin formation documents to register the chosen business name;
- if you’re not ready to form the company yet, it’s possible to hold onto the chosen name—you can simply reserve it.
- matching designation: the name should correspond to the company’s business structure; to learn more on the subject, check out DFI’s FAQ page;
- avoiding prohibited words: the name shouldn’t include descriptors that could mislead the public on the nature of your business (e.g. using words like “hospital” for the company that doesn’t provide such services).
Step 3. Decide on a Legal Structure
The most popular types of business structures in Wisconsin are:
- sole proprietorship: operated by a single owner and does not require state registration; the main drawback of this business model is the lack of limited insurance in the event of litigation, placing personal assets of the owner at risk;
- general partnership: operated by several partners with the goal to sell goods and services under a single entity; state registration also not required, but just as with sole proprietorships, the liability protection is non-existent and all owners may be held personally accountable for company lawsuits;
- limited liability company (LLC): the LLC offers both personal asset protection as well as excellent structural and legal flexibility;
- C corporation: on the one hand, this business model ensures personal asset protection, but on the other hand, it binds the owners to adhere to strict corporate laws;
- S corporation: although it’s a corporation sub-type, this structure merits its own classification due to its unique regulations; mainly used by small businesses, this structure differs from C corporation by introducing more favorable taxation methods;
It’s always a good idea to thoroughly examine each option before making your final decision. Feel free to look through the following articles with developed side-by-side comparisons of LLC vs. Corporation or LLC vs. Sole Proprietorship.
The time it takes to conduct research on each business type is nothing compared to the benefits of getting the full picture of all available options, their pros, cons, and other unique features.
Step 4. Choose a Registered Agent
Finding an intermediary for your company—in this context, such a mediator is called a registered agent—is a legal requirement for business formation.
A registered agent is responsible for receiving correspondence on your behalf and forwarding it to your company. They normally handle legal documentation, tax forms, and state correspondence.
According to state law, an individual or entity can perform the duties of the registered agent in Wisconsin if they meet the following requirements:
- residency: individuals must be a resident of the state of Wisconsin, while legal entities must acquire a Wisconsin business license;
- availability: a registered agent must be available during standard office hours as outlined in the Articles of Organization;
- physical address in Wisconsin: simply providing a PO box information isn’t enough in this case—a registered agent must have a valid state address.
Even though the somewhat relaxed nature of the rules concerning Wisconsin registered agent qualifications allow you to designate almost any individual, your best option would still be hiring a professional registered agent service.
If you choose a registered agent service, you will naturally be expected to pay a certain fee for their work but these costs are almost always worth it. Not only do these companies take care of your correspondence, but they also keep you aware of your submission deadlines.
Step 5. Register Your Business
Entrepreneurs who choose business types based on whether or not they will need state registration have some bad news coming—in Wisconsin, registering your business is a necessary requirement in the formation process regardless of the business structure.
Whether you choose LLC or corporations, the company must be registered with the Department of Financial Institutions in order to do business in the state, otherwise, any business activities conducted by the entity would be deemed illegal which in turn may lead to legal action.
The process of filing an Articles of Organization is a necessary step when forming a Wisconsin limited liability company. There are a few methods to file the documentation:
- online: submitting an application for a Wisconsin LLC costs $130;
- by mail or in-person: in both cases, you will be delivering the articles to the Department of Financial Institutions in Wisconsin and both will cost $170.
After the application has been approved, your Wisconsin LLC is official and one step closer to doing business.
The document that officially creates your business in this state is known as the corporation-specific Articles of Incorporation. The articles can be submitted online or on paper. Either method costs $100.
Sole Proprietorship/General Partnership
Wisconsin doesn’t require either of these structures to submit any official forms or fees to register. But drafting an operational agreement would be more advantageous to your business in the long run.
Despite the simplicity of sole proprietorship and general partnership formation, incorporating your business will grant your entity certain insurances unavailable with partnerships or proprietorships.
Filing an Articles of Organization is an essential step of domestic LLC registration. All foreign businesses in Wisconsin must apply for the foreign entity status.
When you file formation documents for an entity registered in another state that now expands to Wisconsin, be sure to include the following:
- Application for Certificate of Registration (LLCs);
- Certificate of Authority Application (corporations).
Step 6. Get an EIN
EIN is a nine-digit number issued by the IRS to be used as a unique identification of a business entity. In other words, it’s similar to a Social Security Number but where SSN is used to conduct personal operations, the purpose of an EIN is to allow a legal entity to perform certain activities.
When forming an LLC, an EIN can be acquired using three methods:
- faxing Form SS-4 to (855) 641-6935;
- mailing the application to the following address:
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
If you are still unsure whether your company needs the Employer Identification Number, be sure to check with this page on the IRS website.
Step 7. Open a Business Bank Account
Liability insurance is primarily achieved through the separation of personal and business finances. Personal assets of LLC and corporation owners can only be adequately protected when their company has its own financial infrastructure, meaning that you need a business bank account to isolate your personal finances.
You can open a business account in any bank of your choice, whether it’s true giants like Chase or Bank of America or local state banks. It mostly depends on your location, branch accessibility, and other logistical aspects.
But first, make sure to check with the bank’s local branch for the full list of documentation you will need to submit. Most banks tend to ask for the following:
- formation documents вашего бизнеса;
- an EIN number or SSN;
- organizer’s personal information.
If you plan to hire an LLC formation or incorporation service, look for those who include opening a business bank account in their formation packages. IncFile is one of the services that offer this feature, specifically with Bank of America. And if you pay for this service, you’ll even get $450 for registration.
Step 8. Handle Any Tax Obligations
To run a business в Wisconsin, it’s vital to meet business’ tax requirements imposed by the state. The main step to managing your taxes is your registration. First, you will need to register with the Department of Revenue and pay their $20 registration fee. After this, you will need to renew the registration every two years for a $10 fee.
Always check with the financial plan going forward, but first, you need to draft it based on your taxation process. Let’s look at the type of taxes each business structure is required to pay:
- sole proprietorships only pay self-employment taxes;
- partnerships pay both self-employment tax and partnership taxes calculated from the entity’s revenue;
- LLC generally do not pay federal income taxes, nor do they file tax returns with the state; all profits and losses are filed by the owners on their personal returns;
- a corporation is required to pay a Corporate Income Tax according to its designation:
- C-Сorporation files its corporate tax return as a legal entity; after the company’s revenue has been taxed, its shares are distributed between the owners who pay additional income tax individually;
- S-Corporation avoid double taxation seen in the case of C-corps; all profits and losses are filed by owners only;
The good news is, Wisconsin doesn’t impose a franchise tax or privilege tax. Still, taxation is determined based on the nature of your business. Entities operating in certain fields may be required to pay the following taxes:
Additional taxation may be imposed based on the entity’s features, for instance, fuel and property taxes. Check the Department of Revenue website for any further information.
Step 9. Find an Accountant
Most business owners have a lot on their plate without the added stress of bookkeeping. Entrusting the financial responsibilities to a professional is common practice, mostly for the benefit of saving time. Plus an expert will ensure all accounts and other documentation remain in order.
Hiring a professional will not only make sure your company operates smoothly but will also guarantee all financial reports are submitted on time and in compliance with all tax procedures imposed by the state.
Reliable accounting services are far from cheap, but one thing is certain: by employing the help of a professional, you will ensure your company’s taxes are filed and paid correctly.
Step 10. Create an Operating Agreement
Although it’s not legally required to draft an operating agreement, doing so will only help your company find stability. Some of the benefits of creating an agreement include:
- avoiding internal conflicts by providing the outline of the processes for member conduct;
- minimizing the risk of disputes by detailing asset allocation and compensation policies;
- describing voting procedures and dissolution plans keeps the processes internal without the right to a decision defaulting to the state legislature;
- adopting an operating agreement reinforces the company’s structure and operational stability which can attract potential business partners and investors.
The Department of Financial Institutions does not provide a single form template for drafting the agreement since the document is intended for internal use. There are a few options you can use to draft a well-structured operating agreement:
- hire an attorney;
- choose a good online template;
- get a template from an incorporation service with your formation package; the only online service that offers this template with every formation package is ZenBusiness.
You don’t need to submit the operating agreement with the state, only ensure it has been signed by every single one of the LLC’s members.
Step 11. Acquire the Necessary Licenses
Filing formation documents is the key part of your company’s registration. And even when your business is legitimate, it might still be too early to start any operations without the licensing. Some of the most common licenses include:
- Seller’s Permit: this certification is required if a business sells any merchandise in Wisconsin or rents property; read more about it here;
- Professional Licenses: the Department of Safety and Professional Services website provides a complete list of licenses for various expert fields; the list of licensed professions includes accountants, doctors, engineers, etc.
- Environmental Permits: the Department of Natural Resources may require you to obtain specific permits for doing business that involves the following:
For more details, visit the Department of Natural Resources website.
- Health Permits: businesses dealing with any form of catering and food service will need permits from the Department of Agriculture, Trade, and Consumer Protection; to see if your business needs any of their permits, visit the Department of Agriculture, Trade, and Consumer Protection website; businesses that provide social services (CBRF, nursing homes, EMT) may require permits from the Department of Health Services;
- Local Licenses: certain municipalities ask for additional licensure requirements for businesses that operate in their jurisdictions; you can find more details on a local government’s website, but it’s better to do it beforehand when you’re in the early stages of formation.
Step 12. Consider Business Insurance
By forming an LLC and corporation, you will be automatically protecting your personal assets. But this isn’t always enough since your company’s assets also require protection.
This is why getting business insurance is highly recommended if you want to protect the company against lawsuits, damages, and other unforeseen events.
There are many forms of business insurance, including:
- commercial property insurance;
- quality assurance;
- commercial auto insurance;
- workers’ compensation insurance required for hiring stuff etc.
Check out SBA.gov’s detailed guide to help you decide what type of insurance your business might need. The average insurance rate is $300.
Step 13. Build a Website
To their great detriment, some entrepreneurs still don’t take this aspect that seriously. The main benefits of building an effective website for your business include:
- increasing the company’s reputability and ranking;
- reaching out to potential customers;
- providing comprehensive information about your business, goods and services.
There are a few ways to develop a website for your company:
- use one of the web development services with easy templates like GoDaddy or Weebly or Wix;
- hire a formation company that offers web development services, for instance, ZenBusiness or IncFile;
- contract a web development firm that will assign a team of professionals to work on your website.
Step 14. Launch Social Media Accounts
In this day and age, getting a website running is not enough to sustain your brand. To keep the awareness of your business growing, you will likely need to establish a consistent social media presence. Having a substantial presence on Facebook, Twitter or Instagram will allow you to:
- promote your goods and services;
- build brand recognition;
- interact with your customer base;
- analyze reviews directly;
- solidify your reputation.
Step 15. Understand Ongoing Wisconsin Requirements
Every business operating in Wisconsin must follow certain state regulations, specifically submitting your reports on time.
Depending on the business type, you may be required to follow annual or biennial business requirements, with the most commonplace document being an annual report.
For domestic entities
Businesses registered in Wisconsin must file their annual reports before the end of the quarter in which you launched your business in the official capacity.
In short, your quarter due dates are as follows:
- Q1 (January – March): March 31st;
- Q2 (April – June): June 30th;
- Q3 (July – September): September 30th;
- Q4 (October – December): December 31st.
The domestic annual report filing fee is $25.
Companies registered in other states but expanding their activities to Wisconsin must file their annual reports before March 31st regardless of their formation date. The filing fees are $65 for corporations and $80 for LLCs.
Step 16. Check Out Wisconsin Small Business Resources
Managing your own business requires some skill and more in-depth knowledge of corporate law. Fortunately, it’s possible to obtain this thanks to the many free resources available today.
By growing as a skilled professional, you will also be growing your business. A smoother and more structured approach is not that unattainable.
- business events;
- credit opportunities;
- business development centers that offer private consultations and more.