It’s good to know that forming a new limited liability company (LLC) doesn’t need a very difficult legal procedure if you’ve been asking how to create an LLC in Wisconsin. If an LLC is the best company structure for you, some major benefits of launching your small business as one include potential tax benefits and the shielding of personal assets from business liabilities.
Pros and Cons of Forming an LLC in Wisconsin
Pros
- The filing fee to form an LLC in Wisconsin is only $130, lower than many other states
- Single-owner LLCs are not subject to Wisconsin income tax
- Articles of organization can be filed quickly online in Wisconsin
- Cons
- Wisconsin requires a $130 annual filing fee to maintain LLC status
- Taxation structure for multi-owner LLCs can be more complex in Wisconsin
Step One: Checking Wisconsin LLC Name Availability
The Wisconsin Department of Financial Institutions provides a business name availability tool that you can use to determine whether your desired company name is available. If it’s not available, you’ll unfortunately need to choose a different name for your business. Wisconsin doesn’t allow two companies with the same name to operate in the state simultaneously. It’ll also be to your company’s benefit if you pick a name that won’t confuse potential customers or clients down the road.
Additionally, Wisconsin prohibits the use of names that are similar to existing LLCs or corporations in the state, to the extent that they can reasonably cause confusion. For instance, simply adding “A” or “The” in front of a name that’s already registered is likely to cause confusion and wouldn’t be allowed.
Step Two: Appointing a Registered Agent
The aspect of how to start an LLC in Wisconsin that tends to surprise aspiring business owners the most is the requirement to appoint a registered agent for the company. This agent will serve as the point of contact for the company for official mail from the state and legal notices. Also, whoever you appoint as your registered agent isn’t required to maintain their registered office (official address) at the company’s place of business.
According to Wisconsin state law, a registered agent for a WI LLC may be:
- A natural person who is both a Wisconsin resident and whose business office is used as the registered office
- A company organized in Wisconsin whose business office is used as the registered office
- A non-Wisconsin company authorized to do business in the state whose business office is used as the registered office
You also may choose to work with a registered agent service whose primary business is to fulfill the role of registered agent for LLCs and corporations. They will receive any legal documents addressed to your company and alert you when they’re received.
Step Three: Filing Articles of Organization
Filling out your company’s official Wisconsin LLC articles of organization is arguably the most critical step you’ll take when going through the process of learning how to start an LLC in Wisconsin. Submitting this document will make your company official in the eyes of the state.
The information you’ll need to provide on the form is relatively straightforward, and includes:
- The name of your company
- The names and addresses of the LLC members/organizers
- The name of your registered agent
You won’t be permitted to operate your business in the state until you file this form with the Wisconsin Department of Financial Institutions, and pay the required filing fee.
Step Four: Securing Necessary Tax and Regulatory Documentation
If your company is going to formally employ at least one person, you’ll need to secure an official Employment Identification Number (EIN) from the IRS. This number functions for companies in much the same way that Social Security numbers function for individuals. It’s unique and will not be shared by any other business as long as your company remains operational.
A crucial part of learning how to start an LLC in Wisconsin is knowing that the state requires you to submit an annual report to the state. Becoming familiar with the requirements of this report now will help to ensure that you track all mandatory information mandated by the state as soon as your LLC launches.
The easiest way to file an annual report is to file online by visiting the state’s One Stop Business Portal. You’ll start out by searching for your registered business name, and then follow the online prompts. Before you file, make sure you have the following information ready:
- State/country under whose law your company is formed
- Name and mailing address of your LLC’s registered agent
- Address of your principal office (where the LLC maintains its main executive offices)
- Names and addresses of each manager and members
- Brief description of the nature of your business
Step Five: Prepare an Operating Agreement
Although this step isn’t technically required by the state as part of the process for how to start an LLC in Wisconsin, your LLC members should consider taking the time to draw up an operating agreement before opening your company doors. An LLC operating agreement can:
- Detail your financial expectations, including how distributions will be handled
- Document the management structure of your LLC
- Safeguard your company’s limited liability status
- Clarify ownership interest percentages
- Explain buyout and buy-sell rules
This step may not be required by the state, but you should take this step seriously to avoid legal, financial, and practical tensions down the road.
Think of it as road map for your business that addresses both the opportunity your company is pursuing and the challenges (including potential problems) it faces along the way. You’ll also want to include the responsibilities, capabilities, compensation, and contributions of your key officers. Some may contribute money, while others are more operational or provide inventions or other valuable resources.
Additional resources you may add to your operating agreement include:
- Member meetings
- Voting rights
- Exit rights and dissolution process
- Dispute resolution
The Cost of Forming an LLC in Wisconsin
The upfront costs to form a limited liability company in Wisconsin are relatively affordable compared to other states. The filing fee to register articles of organization with the Wisconsin Department of Financial Institutions is only $130. Hiring a business attorney to handle the formation process typically costs between $400 and $800. Costs for business licenses, permits, and registration of a company name generally total a few hundred dollars at the local level.
On an ongoing basis, Wisconsin LLCs must submit an annual $130 filing fee. Multi-member LLCs are also subject to Wisconsin’s corporate income tax of 7.9% on profits over $100,000. Additionally, LLC owners need to budget for unemployment insurance taxes, worker’s compensation insurance, legal and accounting assistance, commercial leasing if renting space, and other basic operating costs. All considered, the start-up and first-year costs of establishing an LLC in Wisconsin can range from $1,000-$2,000 or more.
Wisconsin LLC Rules vs. Service Corporation Rules
In most states, LLCs that provide professional services are formed not as traditional LLCs, but as professional limited liability companies. Wisconsin law allows professional services to be provided by traditional LLCs and doesn’t recognize the formation of PLLCs. Companies that would ordinarily form as PLLCs in other states can be formed as “service corporations” in Wisconsin. Like ordinary corporations, service corporations are owned by shareholders and are empowered to issue stock.
The rules for forming a single-member Wisconsin LLC and those for forming a multi-member Wisconsin LLC are the same, whether professional services are being provided by the new business or not. Next, we’ll share details on how to start an LLC in Wisconsin. Note that if the process feels like too much to handle on your own, LLC formation services can be a big help.
The Bottom Line: Forming an LLC in Wisconsin
Forming an LLC in Wisconsin is a fairly straightforward process that can be completed in just a few steps. Wisconsin is one of the best states to start an LLC, providing ample resources like step-by-step guides and template forms to simplify the paperwork. Additionally, exploring leading LLC formation services can further streamline the process.
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Learn More About How to Start an LLC in Wisconsin
To make sure you take all the right steps when starting an LLC in Wisconsin, consider using resources that can walk you through this process. Complete the Wisconsin LLC registration process efficiently and effectively today with a trusted and affordable online formation service.
Legal Disclaimer: This article contains general legal information but does not constitute professional legal advice for your particular situation and should not be interpreted as creating an attorney-client relationship. If you have legal questions, you should seek the advice of an attorney licensed in your jurisdiction.
Frequently Asked Questions: Wisconsin LLC Formation
What are the requirements to form an LLC in Wisconsin?
You must file articles of organization, appoint a registered agent, and pay a $130 filing fee. An operating agreement is recommended but not required.
What are the costs to form an LLC in Wisconsin?
The filing fee is $130. Total costs typically range from $1,000-$2,000 including legal fees and licensing expenses.
How is a Wisconsin LLC taxed?
A single-owner LLC is taxed as a sole proprietorship. Multi-member LLCs are taxed as partnerships but face a 7.9% tax on income over $100,000.
How long does it take to form an LLC in Wisconsin?
If filing online, the formation process usually takes 3-5 business days after the Department of Financial Institutions approves your articles.
