Do you want to start a business in Wisconsin and want to form an LLC? If YES, here is how much it cost to form an LLC in Wisconsin successfully. This article will help you understand how to form an L.L.C. in Wisconsin. We will show you a step-by-step process on how to create an L.L.C. in Wisconsin and what you need to do after forming an L.L.C. in Wisconsin.
Wisconsin is a U.S. state located in the north-central, Midwest and Great Lakes regions of the country. It is bordered by Minnesota to the west, Iowa to the southwest, Illinois to the south, Lake Michigan to the east, Michigan to the northeast, and Lake Superior to the north.
Wisconsin is the 23rd largest state by total area and the 20th most populous. The state capital is Madison, and its largest city is Milwaukee, which is located on the western shore of Lake Michigan. The United States Census Bureau estimates that the population of Wisconsin was 5,822,434 on July 1, 2019, a 2.38% increase since the 2010 United States Census and the median income for the state is $59,305.
Table of Content
- What is an L.L.C.?
- STEP ONE: Choose a Name for Your LLC
- STEP TWO: Hire a Wisconsin LLC Registered Agent
- STEP THREE: Wisconsin Articles of Organization, State Business License, and Initial List
- STEP FOUR: Craft Your Wisconsin LLC Operating Agreement
- STEP FIVE: Apply for an EIN for your Wisconsin LLC
- How is a Wisconsin LLC Taxed:
- STEP SIX: Wisconsin LLC Annual Requirements
- Step SEVEN: Wisconsin State and Regulatory Licenses and Permits
- STEP EIGHT: Taxes Requirements in the State of Wisconsin
- FEDERAL LLC TAX REQUIREMENTS
- STEP NINE: Open a Wisconsin LLC Bank Account
- STEP TEN: Obtain a Wisconsin Business Phone Number
- Step ELEVEN: Hiring of Employees
What is an L.L.C.?
L.L.C. is the abbreviation for Limited Liability Company. Creating an L.L.C. is one of the easiest ways to build a wall between your private assets and your company financial liability. It helps protect your personal assets if someone sues your company. An L.L.C. offers you the protection you simply can’t get as a sole proprietorship or General partnership.
An L.L.C. also has some tax advantages; the business itself is not responsible for taxes on its profit. Instead, the members of L.L.C. report their share of business profit and loss on their personal tax returns just the way taxes are reported for a general partnership; this is called “pass-through taxation.” This means a lower tax rate on company profits along with asset protection and tax flexibility. The L.L.C. business structure has a number of other advantages
- No Residency Required: Owners of an L.L.C. don’t have to be U.S. Citizens or permanent residents.
- Legal Protection: Owners of an L.L.C. are given limited liability for business debts.
- Enhanced Credibility: Partners, suppliers, and lenders may look more favourably on your business when you formed an L.L.C.
- Ownership Flexibility: There is no limit on the number of owners an L.L.C. can possess. Additional members can buy equity in the company.
- Less Record Making: With an L.L.C. no annual meeting or minutes books are required.
- Gain Access to Business Loans: When you form an L.L.C., your business will begin to build a credit history. This will aid your business access loans.
An L.L.C. combines the assets protection of a corporation with the simplicity of a partnership, which makes it one of the most popular entity structures for small business.
Starting a Business: How to Form an LLC in Wisconsin in 12 Steps
Forming an L.L.C. in Wisconsin is a straightforward process and won’t cost you much money. Below are the steps to follow if you want to form an L.L.C. in Wisconsin.
STEP ONE: Choose a Name for Your LLC
In Wisconsin, prior to filing your Wisconsin LLC’s Articles of Organization with the Secretary of State, it is expected that you search the state’s database to make sure your desired LLC name is available for use. Be sure to choose a name that complies with Wisconsin naming requirements and is easily searchable by potential clients. You are expected to follow the naming guidelines below;
- Your name must include the phrase “limited liability company” or one of its abbreviations (LLC or L.L.C.).
- Your name cannot include words that could confuse your LLC with a government agency (FBI, Treasury, State Department, etc.).
- Restricted words (e.g. Bank, Attorney, University) may require additional paperwork and a licensed individual, such as a doctor or lawyer, to be part of your LLC.
Please note that under Wisconsin law, an LLC name must contain the words “Limited Liability Company” or “Limited Liability Co.,” or end with the abbreviation “LLC” or “L.L.C.” Your LLC’s name must be distinguishable from the names of other business entities already on file with the Wisconsin Department of Financial Institutions.
Names may be checked for availability at the Wisconsin Department of Financial Institutions business name database. You may reserve a name for 120 days by filing a Name Reservation Application (Form 1) with the Wisconsin Department of Financial Institutions. The reservation must be filed by postal mail.
STEP TWO: Hire a Wisconsin LLC Registered Agent
The Wisconsin Secretary of State requires you to list a Registered Agent in your LLC’s Articles of Organization. A Wisconsin Registered Agent is a person or a company designated to receive notices from the state sent to your LLC, as well as any legal mail (called Service of Process) in case your business is involved in a lawsuit.
A registered agent must be a resident of Wisconsin or a corporation, such as a registered agent service, authorized to transact business in Wisconsin. You may elect an individual within the company including yourself. Please note that your Wisconsin Registered Agent must have a physical street address located in the state and PO Boxes are not allowed where Service of Process and other documents can be received.
STEP THREE: Wisconsin Articles of Organization, State Business License, and Initial List
To register your LLC, you will need to file the Articles of Organization with the State of Wisconsin. This can be done online. When filing, you will need to state whether your LLC will be member-managed or manager-managed.
Please note that in order to form a Wisconsin LLC, you have to submit 3 documents to the Secretary of State. The Articles of Organization, the State Business License, and Initial List of Managers or Managing Members. This is mandatory.
- Method of filing: You can form an LLC in Wisconsin by mail or online; however, it is advisable to fill your LLC online since it has a faster approval time and the process is much easier.
- Wisconsin LLC approval: Your Wisconsin LLC will be approved immediately when you file online, but it can take 5-10 minutes before your documents are available for download. After the process, you will see 3 documents available for download and the document will be stamped and approved:
- Articles of Organization
- Initial List of Managers or Managing Members
- State Business License
Please note that if you’re expanding your existing LLC to the State of Wisconsin, you will need to form a Foreign LLC.
State Filing Cost: $130 Online, $170 By Mail, Payable to The Department of Financial Institutions (Non – refundable)
State of WI – Dept. of Financial Institutions
P.O. Box 93348
Milwaukee, WI 53293
STEP FOUR: Craft Your Wisconsin LLC Operating Agreement
A Wisconsin LLC Operating Agreement is a written contract among the partners of the business that clearly state who owns the LLC and how much of the LLC they own. Your Wisconsin LLC’s Operating Agreement will also document how the LLC is managed, how profits will be shared, and how taxes are to be paid among other related issues.
Please note that an Operating Agreement should be put in place for both Single-Member LLCs and Multi-Member LLCs located in Wisconsin.
The fact is that having an Operating Agreement for your Wisconsin LLC helps prove that the company is a separate legal entity from yourself. This helps maintain the personal asset protection provided by your LLC and is very beneficial to have if you ever end up in court.
“Internal Document”: An LLC Operating Agreement is an “internal document”, meaning, you don’t have to send a copy to the Department of Taxation, the IRS, or any other government agency. You just need to keep a copy of the Operating Agreement with your LLC business records and give a copy to the other LLC Members, if applicable. Please note that an operating agreement is not mandatory in Wisconsin, but it’s a good practice to have one.
STEP FIVE: Apply for an EIN for your Wisconsin LLC
The next step you are expected to take is to apply for an EIN for your Wisconsin LLC (Don’t apply for an EIN until your Wisconsin LLC is approved by the Secretary of State). An EIN (Employer Identification Number) is obtained from the IRS after your Wisconsin LLC is approved by the Secretary of State.
An EIN is also called an EIN Number, FEIN, Federal Employer Identification Number, or a Federal Tax ID Number. They all mean the same thing. You can liken your Wisconsin LLC’s EIN Number as the company’s “social security number”. It helps identify your LLC to the IRS for tax and filing purposes.
Please note that your Wisconsin LLC’s EIN will also be used when you open an LLC bank account, register your LLC with the Department of Taxation, and to process employee payroll (if applicable).
How is a Wisconsin LLC Taxed:
The IRS doesn’t have a specific tax classification for LLCs and instead, a Wisconsin LLC can be taxed 4 different ways with the IRS; 2 of which occur by default (they occur simply by obtaining your LLC’s EIN), and 2 require a special election be made (a form must be filed after you obtain your LLC’s EIN). We recommend reading how is an LLC taxed before applying for an EIN for your LLC.
Please note that;
- An EIN is free ($0): The IRS will issue an EIN to your LLC at no cost.
- Husband and wife LLC: If you are forming a 2-Member LLC in Wisconsin you can elect a special type of taxation called a Qualified Joint Venture. This allows a 2-Member LLC (owned by a husband and wife) to be treated as a Sole Proprietorship instead of a Partnership for tax purposes.
- EIN Responsible Party: This will be the IRS’s “contact person” when you apply for your Wisconsin LLC’s EIN. If you have a Single-Member LLC, you will be the Responsible Party. If you have a Multi-Member LLC, any LLC Member can be the Responsible Party. For more information, please see EIN Responsible Party for LLC.
- How to apply for an EIN: There are 3 ways to apply for an EIN for your Wisconsin LLC:
If you have an SSN or ITIN, you can apply for an EIN online. If you apply for an EIN online and you get an error message, you’ll need to apply for an EIN with Form SS-4 instead If you don’t have an SSN or ITIN, you can still get an EIN for your LLC by following these instructions: how to get an EIN without an SSN or ITIN.
STEP SIX: Wisconsin LLC Annual Requirements
In Wisconsin, every domestic and foreign LLC transacting business in Wisconsin must file an annual report with the Department of Financial Institutions. The report must be filed online at the Department of Financial Institutions website. The annual report is due at the end of the calendar quarter of the anniversary month of the LLC’s formation.
For example, an LLC formed on July 15 must file the report by September 30. The due dates are March 31st, June 30th, September 30th, and December 31st. The Department will send a notice to your LLC’s registered agent with instructions on how to complete the online filing. The filing fee is $25 for a domestic LLC and $80 for a foreign LLC.
Just in most states in the US., LLCs may face fines and even automatic dissolution when they miss one or more state filings. When this happens, LLC owners risk loss of limited liability protection. A quality registered agent service can help prevent this outcome by notifying you of upcoming filing deadlines and by submitting reports on your behalf.
Step SEVEN: Wisconsin State and Regulatory Licenses and Permits
In Wisconsin, in order to operate your LLC you must comply with federal, state, and local government regulations. For example, restaurants likely need health permits, building permits, signage permits, etc.
The details of business licenses and permits vary from state to state. Make sure you read carefully. Don’t be surprised if there are short classes required as well. Fees for business licenses and permits will vary depending on what sort of license you are seeking to obtain. But know that you will be required to find out which of the permits and license you need from;
- Federal: Use the U.S. Small Business Administration (SBA) guide.
- State: Apply for or learn more about licenses, permits and registration with Wisconsin’s Department of Regulatory Agencies.
- Local: Contact your local county clerk and ask about local licenses and permits.
STEP EIGHT: Taxes Requirements in the State of Wisconsin
In Wisconsin, depending on the nature of your business, you may be required to register for one or more forms of state tax.
Sales Tax – If you are selling a physical product, you’ll typically need to register for a sellers permit through the State of Wisconsin’s website. This certificate allows a business to collect sales tax on taxable sales. Sales tax, also called “Sales and Use Tax,” is a tax levied by states, counties, and municipalities on business transactions involving the exchange of certain taxable goods or services.
Employer Taxes – If you have employees in Wisconsin, you will need to register for Unemployment Insurance Tax and Employee Withholding Tax through the State of Wisconsin’s website.
FEDERAL LLC TAX REQUIREMENTS
Most LLCs will need to report their income to the IRS each year using:
- Form 1065 Partnership Return (most multi-member LLCs use this form)
- Form 1040 Schedule C (most single-member LLCs use this form)
Recommendation: You’ll need to speak with an accountant to determine all of your Wisconsin LLC’s tax reporting and filing requirements. Figuring out all of your tax filing requirements can be very complicated and if filed improperly, it can lead to penalties, fines, and interest. We recommend working with an accountant to make sure you properly meet your federal, state, and local tax obligations.
STEP NINE: Open a Wisconsin LLC Bank Account
Once the IRS has issued an EIN Number to your Wisconsin LLC, you can open a business checking account. It’s best practice to have a business checking account for your Wisconsin LLC in order to maintain your personal liability protection. Using a personal bank account for your LLC is called “commingling of assets” and this can lead to personal liability issues if you end up in court.
Please note that having a separate business bank account for your Wisconsin LLC also makes record-keeping easier for accounting and tax purposes. Since banks in Wisconsin has their own rules and regulations, it is recommend calling a few places to determine the following:
- Minimum initial deposit
- Minimum balance requirements
- Monthly maintenance fees (if any)
Required Wisconsin LLC paperwork: In order to open a business bank account for your Wisconsin LLC, you’ll need to have the following:
- Articles of Organization (stamped and approved)
- State Business License
- Initial List of LLC Managers or Managing Members
- EIN Confirmation Letter from the IRS
- Photo ID (driver’s license and/or passport)
- Operating Agreement (it may not be needed, but it’s a good to bring anyway)
N.B: Call the bank ahead of time and double-check what documents are required.
For more details: Please see the following article: business bank account for LLC.
- LLC Members: If you have a Multi-Member Wisconsin LLC, all Members that want to be on the bank account should be present when opening the account.
- Debit card and credit cards: Most banks will provide a business debit card on the spot after the account is opened. If not, they’ll usually mail the debit card in 1 to 2 weeks.
- Non-U.S. residents: If you are a non-US resident that has formed an LLC in Wisconsin, you can still open a U.S. business bank account. You can find more information here: opening an LLC bank account for non-US residents.
STEP TEN: Obtain a Wisconsin Business Phone Number
In Wisconsin and of course international best practices requires that you obtain a business phone number for your company as against making use of your own private number.
You can get a local Wisconsin telephone number or you can get a “1-800” number for your business.
There are many options to choose from when it comes to official phone number, but just ensure that you choose a telecom company that will better serve your business.
Step ELEVEN: Hiring of Employees
Of course, registering an LLC means that you will need employees and in order to get it right as regard hiring employees, then you should ensure that you stay on the side of the law and here are some steps you should follow:
- Verify that new employees are able to work in the US
- Report employees as “new hires” to the State
- Provide workers’ compensation insurance for employees
- Withhold employee taxes
- Print compliance posters and place them in visible areas of your workspace
Lastly, ensure that you find out more information from the Wisconsin Department of Labor, Licensing, and Regulation website.
Forming an LLC in Wisconsin is not a difficult task, all you need to do is search your Wisconsin LLC name in the database, designate your Registered Agent, file your LLC Articles of Organization and it will cost $15 to file a name reservation application, if you wish to reserve your LLC name prior to filing the Articles of Organization.
After your Wisconsin LLC is approved, complete your Operating Agreement, obtain a Federal Tax ID Number, and file your Periodic Report Pronto!
N.B: Even after forming it, there are still some things you need to put in place before you commence operation. Please, note that the information in this article is provided only for general purpose and it is no way a legal advice. No lawyer – client relationship is established or should any such relationship be assumed. For legal advice, please consult with a professional lawyer.
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