If you’re reading this article then you’re either trying to decide whether to form an LLC in Wisconsin or you’ve already made the decision to form a Wisconsin LLC and simply need to know which steps you should take next. Any time you transition into a new phase of your business is cause for celebration, so congratulations!
I’ll tell you everything you need to know about forming an LLC in Wisconsin, but first I’m going to provide you with an overview of Limited Liability Company (LLC) definitions as well as some of the reasons small business owners choose LLCs over various other business types.
(If you want to skip to the ‘how to form an LLC’ section, click here)
Table of Contents
What Is A Wisconsin LLC?
A Wisconsin LLC is a Limited Liability Company formed in the state of Wisconsin that is governed by the laws, regulations, and statutes of the state of Wisconsin.
Why choose An LLC?
You’ll likely find loads of benefits from forming an LLC in Wisconsin over the course of your business career. Here are some of the benefits a Limited Liability Company (LLC) can provide as well as some of the more common reasons that small business owners cite for choosing LLCs rather than other business structures (like a sole proprietorship or corporation).
1. Limited Liability And Asset Protection
The main reason that many business owners choose to form an LLC in Wisconsin is the asset and personal liability protection that they enjoy. As the owner of a Wisconsin LLC, you can’t be held responsible for the debts and liabilities of your Limited Liability Company (LLC). Your personal assets along with personal liability and business assets are considered two separate things in a legal sense once you form a Wisconsin LLC and get limited liability protection.
If you’ve formed a Wisconsin LLC rather than a corporation or sole proprietorship and your business is sued or goes bankrupt for some reason, the creditors of your Limited Liability Company (LLC) can’t request your personal assets as compensation for the debts your company owes them. This means they can’t list things such as your house, car, boat, your personal finances, bank account, or any other personal assets you may have because you enjoy liability protection as the owner of your Wisconsin LLC.
We’ve all learned that all it takes is one unexpected event or natural disaster (like wildfires, floods, tornadoes, hurricanes, brutal winter storms, and a worldwide viral pandemic just to name a few from the past year) to financially cripple a business. The personal asset protection that you can get from forming an LLC in Wisconsin makes LLCs an attractive option to any business owner.
The business world is ever-changing and volatile so you never know when you might be in danger of losing your business. But, when you form a Wisconsin LLC, you can at least protect all of the things you’ve worked to obtain and achieve. This is why the personal asset protection provided when you form a Wisconsin LLC is so valuable to many business owners.
Another reason that business owners choose to form an LLC is the privacy and protection of your personal information that you can enjoy as a Wisconsin LLC owner.
The reason it’s important to protect your information is hackers and online swindlers have become masters of their craft during the past decade. They can now steal your identity and amass debt in your name worth tens of thousands of dollars with small bits of information that most people would think of as inconsequential, like their name and address.
If you’ve chosen a sole proprietorship, sole trader, or corporation business structure rather than a Wisconsin LLC, you’ll need to register your information with the Wisconsin Department of FInancial Institutions to be listed on the public record. This means that anyone with internet access will also have access to your personal information and you’ll be vulnerable to identity theft and other cybercrime attacks.
However, one of the benefits of forming an LLC in Wisconsin is the option to protect your information.
You can do this by hiring a Wisconsin state LLC formation service. An LLC formation service is a professional service that not only helps you to prepare and file business formation documents and establish your Limited Liability Company in the state of Wisconsin but will also register their information with the Wisconsin Department of Financial Institutions rather than your own. This is a win-win situation for owners of LLCs because, even though the LLC formation service registers their information with the Department of Financial Institutions, they don’t obtain ownership of the Wisconsin LLC and the LLC owner’s information remains secure and protected from the prying eyes of cyber criminals.
The third most common reason that makes business owners choose LLCs over other business structures like a sole proprietorship or corporation is the tax benefits that Wisconsin LLCs enjoy. This is especially well illustrated when you compare an LLC in Wisconsin to a corporation.
Corporations are subject to a phenomenon known as “double taxation”. I’ll explain how a corporation’s taxation works differently than Wisconsin LLC taxation as well as what “double taxation” means.
All profits from corporations are initially charged corporate taxes before the profits are disbursed among the shareholders as dividends; you pay taxes on the dividends as well. This means that the dividends that the shareholders receive have had taxes deducted twice before they get any monetary benefit, thus the term “double taxation”.
However, when you form an LLC in Wisconsin you avoid “double taxation” altogether.
Here’s how an LLC’s tax works. The profits of an LLC are first subject to company taxes and then disbursed to LLC members in the form of personal income which they will have to pay personal income taxes later in the tax year. So an LLC’s tax payments are different from a corporation’s and you can therefore avoid “double taxation” by forming an LLC in Wisconsin.
But there are even more tax benefits for LLCs.
The Tax Cuts and Jobs Act was instituted in 2017 which provided an additional tax benefit exclusive to LLCs known as the Qualified Business Income Deduction (QBID). QBID provides LLCs with a 20% tax discount, which is a perk great enough to sway many business owners to choose a Wisconsin LLC over other business structures.
How To Start An LLC In Wisconsin
If you’ve read this far (or skipped ahead to this part) then you should now know what a Wisconsin LLC is as well as some of the reasons that people choose to form an LLC in Wisconsin. You can now make a more informed decision about whether an LLC is the right structure for your small business in Wisconsin. If you’d still like to know about LLC formation, here are the five steps you must take to start a Wisconsin LLC today.
*IMPORTANT* If you’d like help through all of the red tape and form filing associated with forming an LLC in Wisconsin, there is a professional service designed to do just that. They’re called LLC formation services or business formation services and they help to establish an LLC and file forms on your behalf.
Formation services typically charge fees as low as $0 plus state filing fees for their services. However, my personal favorite formation service is ZenBusiness which charges $49 plus the state filing fee.
If you would like to learn more about LLC formation services, click here to read my guide on the best LLC service.
1. Obtain Articles Of Organization Form
The first step in your journey to turning your Wisconsin business into a Wisconsin LLC is to get your hands on an Articles of Organization form from the Wisconsin Department of Financial Institutions.
You can get the Wisconsin Articles of Organization PDF from the Wisconsin Department of Financial Institution’s website here.
This is the primary form associated with LLC formation in the state of Wisconsin that you’ll need to file so the following steps will refer to the Articles of Organization form.
2. Choose Your Business Name
The first thing that you’ll add to your Articles of Organization form is the LLC name of your Wisconsin LLC.
However, you can’t just add the first name you think of for your LLC to the form. Every business in Wisconsin (LLCs included) is required by the Wisconsin Department of Financial Institutions to register a unique name. This means that if another business has already used the business name you chose, you can’t use it for your LLC name.
How do you find out whether another business has taken the name you want for your Wisconsin LLC? Run a simple search for the name on the Department of Financial Institutions Search Station’s website here.
In accordance with Wisconsin state laws and regulations, LLCs must contain the words “Limited Liability Company”, “Limited Liability Co.”, or the abbreviation LLC or L.L.C.
After you’ve chosen a name for your Wisconsin LLC you need to file a Name Reservation application with the Wisconsin Department of Financial Institutions (which you can get here) along with a filing fee. This application must be filed by mail, and the filing fee is $15. This is also the LLC name that you’ll list on your Articles of Organization form.
If you’re not happy with the name you’ve officially registered with the Wisconsin Department of Financial Institutions for your LLC then you can use what is called a trade name, fictitious name or DBA (“Doing Business As”) name. This is the business name that you present to the world on signs, cards, advertisements, and your website. In Wisconsin, you should register your trade name with the Department of Financial Institutions by filing a Registration of Tradename/Trademark application by mail or online. You can find the form or submit the application online here.
3. Choose A Wisconsin Registered Agent
The next step in the process of forming a Wisconsin LLC is to choose and name a registered agent for your business to list on your Articles of Organization form. Every LLC in Wisconsin is required to have what is known as a “registered agent” or “resident agent”.
A registered agent or resident agent is a person or professional service that is available during business hours on business days to receive mail, legal documents, and service of process from official government agencies (like the Wisconsin Department of Financial Institutions and the Wisconsin Department of Revenue) on behalf of your business entity.
There are two options when it comes to choosing a registered agent or resident agent for your LLC: you can either choose to take on the role of registered agent for your business yourself or you can hire a professional registered agent or resident agent service for your business in Wisconsin. I’ll discuss the pros and cons of each choice so that you can decide which is best for your business.
If you choose to be the registered agent for your Wisconsin business, then you should know that it will cost you a lot of time and energy. You’ll be required to be available during business hours on business days to receive mail, legal documents, and service of process from official government agencies. The unfortunate reality is that most LLCs are also open during normal business hours on business days, and you can’t be in two places at once.
You should also know that when you take on the role of registered agent for your business and miss a service of process or other forms of legal documents, you could be sued and then have no way to defend yourself. This scenario often leads a judge to grant a default judgment against the LLC that can result in catastrophic financial loss. Also, if you miss a piece of mail or legal documents from a government agency, the Wisconsin Department of Financial Institutions may find that you aren’t complying with regulations regarding LLCs and registered agents in the state, which may cost your LLC its legal good standing status. In short, you could either lose your business entirely or no longer be able to do business in a legal capacity in the state of Kansas.
The benefit of becoming the registered agent for your LLC is you don’t have to pay any registered agent fees.
If you choose to hire a professional registered agent or resident agent service, then you’re guaranteed to receive every piece of mail and legal document that is sent to your LLC. What’s more, registered agent services will keep your personal information secure.
The only drawback of hiring a professional registered agent service is that you have to pay a fee of between $99-$299 per year for their services.
But when you consider that you could lose your business or your legal business standing in Wisconsin, it’s well worth the cost of the fees to have peace of mind. This is why I always recommend that new LLCs use a registered agent service.
If you’d like to hire a registered agent service to help with some of the workload or you’d simply like to learn more about registered agent services, click here to check out my guide on the best Wisconsin registered agent services:
4. Choose Your LLC Address
Another important bit of information that you’ll need to register with the Wisconsin Department of Financial Institutions is the mailing address for your LLC. You can list it on your Articles of Organization form. The mailing address you list on your Articles of Organization form is where mail and important legal documents will be sent for your business. This address will also be listed on the public record, much like anything else listed on the form.
If you’ve forgone a registered agent service then you’ll need to list the physical street address for your business entity here. If your business doesn’t have a physical street address, you’ll be forced to use either your home address or your home office address which is not ideal. You don’t want your personal information to fall into the hands of hackers and scam artists. No matter which address you choose to list on the form it’s important to note that you can’t list a PO Box address.
If you’ve decided to use a registered agent service, the service will add an address to the form to be registered with the Wisconsin Department of Financial Institutions and listed on the public record. This address can’t be traced back to you nor your home address and can’t be connected to you in any way.
5. Sign And File Your Articles Of Organization
Once you’ve filled in all the information on the form and double-checked it for accuracy, it’s time to sign and file the Articles of Organization form for your LLC.
If you’re comfortable with your information being listed on the public record you can sign and file the Articles of Organization form yourself. But, if you use a Wisconsin state LLC formation service, they will sign and file the form on behalf of your LLC and register their information with the Wisconsin Department of Financial Institutions rather than yours.
You have a couple of different options when it comes to filing your Articles of Organization. You can file online or by mail. If you choose to file by mail you’ll need to send the form along with a check or money order payment for the filing fee to this address:
DFI Corporations Unit
Department of Financial Institutions
Mailing: PO Box 7846
Madison WI 53707-7846
If you choose to file online, you can make a payment for the filing fee with either a debit or credit card when you go to the Department of Financial Institutions filing website here.
Once you’ve completed the filing process by submitting your Articles of Organization form and the state filing fee payment with a check, money order, or credit card, the Wisconsin Department of Financial Institutions will contact you by mail or email once they’ve processed your forms. Regardless of your method of filing, your documents and registration will typically be processed within five days of the filing request.
If you’d like to speed that registration process along, the Wisconsin Department of Financial Institutions does offer expedited processing for an additional $25 fee. Expedited filing requests are usually processed by the close of the following business day.
Other LLC Activities
Filing the registration for your Articles of Organization won’t be the only thing that you must do. Once you’re finished forming your LLC in Wisconsin, you’ll have to take part in a number of activities that have nothing to do with LLC formation.
One of the most important activities is the annual report that you’ll need to file every year. Every LLC in Wisconsin must file an annual report at the end of the calendar quarter of the anniversary month of your LLC’s formation. So if, for example, your LLC’s formation date was January 2nd, your annual report would be due on March 31st. The due dates for an LLC’s annual report each quarter are: March 31st, June 30th, September 30th, and December 31st. You can file your annual report along with the state filing fee ($25 for domestic LLCs, $80 for foreign LLCs) online at the Wisconsin Department of Financial Institution’s website here. The Wisconsin Department of Financial Services will notify your LLC’s registered agent with instructions on how to complete the filing as well.
You’ll likely be required to obtain business licenses from both local and state by filing registration with authorities for your Wisconsin LLC. To find out more about registration for local business licenses for your small business in Wisconsin, contact the county clerk’s office in your area. To find out more about registration for state business license requirements, go to the Department of Safety and Professional Services website here.
If your LLC is the type of business that sells goods and collects sales tax then you’ll need to register with the Wisconsin Department of Revenue and pay a business tax. For more information about collecting sales tax or for online registration, go to the Wisconsin Business Filing Center website here. You can also register your business in Wisconsin by mail by printing out the PDF from the Wisconsin Department of Revenue website here and filing it.
You can file for an LLC in Wisconsin if you’re from another state as well. This is known as a foreign LLC and the steps to forming a foreign LLC are much the same as forming a domestic LLC, the only real difference are the forms. You’ll be required to file a Foreign Limited Liability Company Certificate of Registration Application, which you can get in PDF form here. Unlike other states, Wisconsin offers no option to file this by mail. You need to register this request online here, along with paying a $100 filing fee. You must also ensure that your business name is available in Wisconsin. If it isn’t, you’ll need to file a Name Registration Application-Foreign Corporation or Foreign Limited Liability Company (Annual) with the Wisconsin Department of Financial Institution’s website here. This form must be filed by mail and has a $50 filing fee. You’ll also be required to have a registered agent because you’re operating the business outside the state of Wisconsin.
Along with remembering to file annual reports and complying with LLC tax regulations, you’ll also have to obtain a Certificate of Good Standing from the Department of Financial Institution and obtain an EIN for your business entity.
This likely sounds like a lot of work and forms to file, and it is. If you’d like to relieve some of the paperwork burden from yourself you can hire a Wisconsin PEO service as well as subscribe to some online legal services.
Wisconsin LLC Fee Summary
One of the most frequently asked questions about LLCs is “How much does it cost to form an LLC in Wisconsin?” There are a number of state filing fees and other costs that you’ll encounter during the formation process, but here are some of the fees you can expect to pay when you form a Wisconsin LLC.
Articles of Organization filing fee: $170 by mail $130 online
Name Reservation filing fee: $15
Registered Agent Fee: $99- $299
Annual Report filing fee: $25 for domestic LLCs, $80 for foreign LLCs
State Personal Income Tax: 3.54%- 7.65%
State Corporate Income Tax: 7.9%
After Starting Your Wisconsin LLC
Once you’ve formed your LLC you can sit back and celebrate for a bit. Go out and have a nice meal, go on a shopping spree, enjoy a quiet weekend away, or simply have a glass of wine or champagne. But you can’t stay away for long because there are still a few things you’ll need to do to make sure that your LLC has strong foundations and can function properly as a business.
Here are three crucial steps you must complete after forming your LLC.
Step 1. Create An Operating Agreement
LLCs in Wisconsin aren’t required to draft and file LLC Operating Agreements, but it is highly advised that you do so anyway. If you choose to forego an Operating Agreement, your LLCs Articles of Organization, as well as any existing bylaws, or member control agreements will act as your Operating Agreement.
I’ll use a metaphor to illustrate the importance of an LLC Operating Agreement. Imagine your LLC is your favorite animal. The LLC is comparable to the creature’s skin because it protects it and the LLC Operating Agreement is like the animal’s nervous system because it tells the animal what to do and how to respond to things around it.
An Operating Agreement is both a contract between LLC members and a set of detailed instructions that describe how the business should run. Operating Agreements should list LLC members, and provide comprehensive explanations of the financial, managerial, structural, and operational facets of your business.
*IMPORTANT* Before you draft the Operating Agreement for your LLC you should decide which sort of managerial system you want your business to utilize. Your choices are to have a single-member or multi-member managerial system. In a single-member system, one member makes all of the decisions, whereas in a multi-member system a handful of members vote on important decisions.
The Operating Agreement should list each of your LLC members, then describe whether you’re using a single-member or multi-member managerial system (which should explain whether one member or a handful of members have the authority to make high-level decisions for the LLC) and spell out the ownership percentages and the percentages of profits and losses of each of the members. You should be sure that your Operating Agreement defines the job and role of each of your LLC members, who they should most closely interact with, their supervisors, and which tasks each department is in charge of. Designing Operating Agreements this way prevents a lot of arguments in the workplace.
It’s important to add a section to your LLC Operating Agreement about succession. This section will explain what happens when LLC members leave or when new members join, which gives LLC members clear, logical instructions in the event of a falling out between them. A set of clearly thought-out and well-explained instructions during times of emotional distress is priceless.
Your LLC’s Operating Agreement is one of the most important documents you’ll need during its first few months. It goes into detail about the roles of each LLC member, their ownership percentages, and percentages of profits and losses, and also provides comprehensive instructions about how the business should be run. You’ll want to design your LLC Operating Agreement similarly to the definitions I’ve provided because it can be devastating if you don’t.
In case I haven’t made this clear, the rules you provide for your business in the Operating Agreement are the operation specifications that your business must abide by, so if you mess up your Operating Agreement, your business growth could be stifled. It’s easy to get an Operating Agreement wrong by simply not leaving room in it for things like change, innovation, and growth. But, if you’ve drafted a well-thought-out and artfully designed agreement, you’ll be able to sit back and watch as your business flourishes and grows to new heights.
If you’re nervous about drafting the Operating Agreement for your LLC (which is definitely something to be concerned about if you’ve never done it before), you have a few options available to you to make the process go more smoothly.
The first option is, of course, to use an LLC formation service, because they will typically create and file an Operating Agreement on behalf of your LLC. The second is to use the free Operating Agreement for LLCs that Northwest Registered Agent puts out on their website here. And lastly, you can subscribe to online legal services that will help you get the wording right.
Step 2. Apply For An Employer Identification Number
Certain activities will require you to get an EIN (Employer Identification Number) for your LLC, like hiring employees or opening a business bank account for your LLC. LLCs don’t have to hire employees to get an EIN (Employer Identification Number). An EIN is simply a tax identification number that qualifies your business for certain licenses and permits.
An EIN is a number that identifies LLCs much like a Social Security Number identifies individual people. You get an EIN from the IRS and it’s a lot more simple to apply for an EIN than you would think.
If you’ve chosen to use an LLC formation service they will typically apply for an EIN on behalf of your LLC, which takes a lot of the guesswork out of the EIN application process. But you can easily apply for an EIN yourself.
To apply for an EIN, you just go to the IRS online application portal here Monday – Friday between 7 am – 10 pm. All you have to do from there is fill out the application for an EIN for your LLC and then submit the EIN application.
Step 3. Open A Business Bank Account
The last step you’ll need to complete for your LLC to have the foundations necessary to function properly as a business is to open a bank account dedicated to LLC financial transactions.
A lot of business owners overlook this step or underestimate its significance, but it’s an important one. Many people run both business and personal transactions through their personal accounts, believing that it’s a legal way to make financial transactions and tax season easier. But there are two vital reasons you shouldn’t do business for your LLC this way.
The first reason is that opening a bank account that’s dedicated to business transactions makes filing taxes much easier, which can keep your LLC out of legal, hot water. Many owners of LLCs assume that they’ll be able to look at the transactions in their personal bank account and differentiate business and personal transactions when it comes time to file taxes. The problem with this line of thinking is that it’s often not time to pay taxes until several months after these purchases are made and time does nothing but fog the memory. So, to make filing taxes easier, just open one bank account for all of your LLC transactions.
The second vital reason to open a separate account is that by not doing so you leave yourself vulnerable to lawsuits. Of course, you do enjoy some degree of personal liability protection when you form an LLC, but if you make business transactions from your personal account that negates this protection. Not only does all of the information on your bank account become vulnerable, but all the funds in your personal account are up for grabs by the creditors of your LLC and online hackers as well.
So, to make tax season far easier and to protect your information from cyber criminals, just open a dedicated business bank account for your LLC.
To open a bank account for your LLC you’re going to need what is known as a “bank kit”. A bank kit contains several formation documents and forms from the state of Wisconsin such as copies of your Articles of Organization, EIN, Certificate of Good Standing, and your Operating Agreement. You could certainly put a bank kit together yourself by collating all of these forms, or you could hire an LLC formation service in the state of Wisconsin to collect all of the forms and create a bank kit for you.
Making the decision to form an LLC in the state of Wisconsin is a monumental step forward for your business, so congratulations!
If you’ve chosen not to use an LLC formation service (which typically cost as little as $0 plus state filing fees), here are the five steps you must take to form an LLC in the state of Kansas.
- Obtain the Articles of Organization form
- Name your LLC
- Choose your Registered Agent
- Choose your LLC address
- Sign and file your Articles of Organization
It’s easy to quickly become overwhelmed by the seas of red tape, mountains of forms to file, and loads of legal jargon to learn when traversing the LLC formation process. However, if you get through it and can form an LLC on your own without a formation service then there’s nothing to compare with the sense of accomplishment and achievement you get from that, so it’s well worth all the trouble!
Congratulations again on your LLC and good luck with the rest of your business journey!