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Are you ready to start a business in Wisconsin? You can start by forming a Limited Liability Company (LLC). There are many advantages to going this route, one of the biggest is aiding in limiting your personal liability.
Additionally, there are tax advantages to being incorporated in Wisconsin. An LLC’s profits are only taxed once, which offers significant tax savings.
In regulatory matters, an LLC has few restrictions. In Wisconsin, any number of owners is acceptable, and LLCs are not required to have a board of directors or any annual meetings. LLCs do not have any limitations on the way profits are distributed, and owners can agree on what share of profits they want to use.
As a business, you could also qualify for several loans and incentives. Checking the State of Wisconsin’s Department of Financial Institutions website can provide additional information for those starting an LLC in the state.
There is a series of forms required to create your LLC that asks for specific information about the members. Be prepared with the names, addresses, telephone numbers, and addresses of all the members listed.
These are the steps you’ll take to file your LLC in Wisconsin:
You’ll find a detailed outline to walk you through each step below.
There are specific requirements to follow when naming a business. These requirements exist to ensure you are correctly registered with the state. All policies are outlined by the Wisconsin Department of Financial Institutions. Additional questions can be answered by the Division of Corporate and Consumer Services.
When naming your business, here are a few guidelines you should follow:
Once you have decided on your business name, conducted a search, and determined it can be used, the next step is filing a Name Reservation Application. This is a paper form that must be downloaded, printed, completed using black ink, and mailed. One original must be sent to State of WI-Dept. of Financial Institutions, Box 93348, Milwaukee, WI, 53293-0348 with a check for the non-refundable filing fee of $15 payable to the department. An additional $25 is required if you request expedited service.
Any questions should be directed to the Division of Corporate & Consumer Services at (608) 261-7577.
If you plan on conducting LLC business under an assumed name, you should file a DBA form at the Department of Financial Institutions online portal. The filing fee to do this is $15. If you wish to register multiple trade names, each one needs a separate form and fee. Wisconsin does not require publishing notice of a DBA name registration, unlike some other states. A trade name is not a requirement to operate an LLC in the State of Wisconsin.
Before registering your federal trademark, you must conduct a search to verify the uniqueness of your mark. You can do this online using the Trademark Electronic Search System (TESS) at the USPTO.
Once you have verified your mark is unique and not in use, you may file online or download the documents to fill out and mail. The filing fee for trademarking in Wisconsin at the state level is $15 for each mark. The application is filed online. Trademarking at the federal level requires additional fees. The State of Wisconsin does not require an LLC to file a trademark of its name to conduct business.
Wisconsin requires a registered agent for LLCs. This is to ensure there is always someone available during the normal business day to receive correspondence, packages, or service of process.
Wisconsin statute 183.0105 governing registered agents should be carefully reviewed. On average, a registered agent will cost from $50 to $300 per year. Anyone over the age of 18 can be named as a registered agent if they have a Wisconsin street address. It is always wise to hire someone who understands their obligations and has experience. You may also be your own registered agent.
Filing fees for the required documents in the State of Wisconsin include:
To complete articles of organization, you’ll need:
All requirements are spelled out in the documents for each separate filing. You will need:
All documents to file an LLC in Wisconsin may be completed online using the Department of Financial Institutions portal.
All transactions are done online, except for the name reservation form, of which one original copy must be sent to the State of WI-Dept. of Financial Institutions, Box 93348, Milwaukee, WI, 53293-0348 with a check for the non-refundable filing fee of $15 payable to the department. An additional $25 is required for requesting expedited service.
Any questions should be directed to the Division of Corporate & Consumer Services at (608) 261-7577. Be sure to follow all instructions and completely fill out each section to avoid delays.
An operating agreement is a legal, binding document that outlines the goals, objectives, and duties of the LLC and its members.
There are only 5 or 6 states that require an operating agreement. And although they are required, in most cases, they do not have to be filed with the state. However, they must be kept with the other company documents. This document is important because it helps avoid disagreements between the LLC’s members in the future.
Operating agreements are not required in the State of Wisconsin, but it is wise to have one in place. You will be required to file annual reports about your business with the Department of Financial Institutions portal. Your business will be notified via email when the report is due. In the State of Wisconsin, it is due the quarter in which you originally filed.
Depending on the nature of your business, you may need certain licenses or permits to operate. This information can be verified through your local government officials to ensure you are complying with local laws. Certain sales may require verification of whether a seller’s permit is needed from the Wisconsin Department of Revenue (DOR).
An EIN, or Employer Identification Number, is required by the Internal Revenue Service (IRS). Every registered business in the United States must have one.
There are benefits to having an EIN, including:
Applying for an EIN is quick and convenient. Go to the IRS website and fill out form SS-4 for an LLC EIN. You will be required to answer specific questions. The social security number of the managers/members is also required, as well as the physical address for your LLC. This could be the address of a manager/member or registered agent.
Use your EIN for all tax and business purposes. The number is used in these different ways:
Business owners face many challenges when attempting to ensure compliance with state tax requirements. Here are some general rules on how taxes must be handled by your LLC.
LLCs do not pay income taxes; only the members do. While some states require both state and federal taxes, Wisconsin is not one of them.
When payments are made to the managers of the LLC, their income is distributed and accounted for by an accountant or bookkeeper. Each disbursement made to someone who is part of the LLC is considered income and is subject to tax at the federal level.
As a business, having a tax professional on hand to assist with tax preparation is key. This will help you avoid problems with tax filings and ensure you have good tax records in the event of an audit. Tax records must be maintained for a period of no less than 7 years.
You are required to file corporate and personal taxes. It is important to remain aware of all tax guidelines and understand what deductions you are entitled to as a member of an LLC. This is another reason working with a tax professional is wise.
All Wisconsin businesses can expect to pay 7.9% franchise tax on taxable income. You may read more about the taxes in the Wisconsin Department of Revenue FAQ. You may also find comprehensive tax guides for all businesses.
Certain businesses are required to pay sales taxes depending on the goods they sell. The Sales and Use Tax forms can be found on the Wisconsin Department of Revenue website. A list of required sales taxes is also listed, as well as the application for Sales and Use Tax Certificate of Exempt Status if applicable.
Failure to adhere to sales tax requirements could put your company in jeopardy of financial and legal penalties. Additionally, your business license could be suspended if required payments are not made.
An estimated self-employment tax is required in the State of Wisconsin to prepay any tax that will be on the income tax return for the year. You are required to make quarterly estimated income tax payments if you expect your income tax to show a balance due of $500 or more. More information can be found on the Department of Revenue site.
Self-employment taxes must also be paid to the IRS for federal taxes. You are responsible for Social Security and Medicare taxes as a self-employed person.
The current rate of taxation for self-employment at the federal level is 15.3%. These taxes must be paid as you earn income throughout the year. If you take a withdrawal from LLC earnings, you may need to file quarterly tax returns.
The tax year is divided into 4 quarters or payment periods. You may send any estimated payments with form 1040-ES by mail, online, by phone, or on a mobile device with the IRS2Go app.
If you have employees, you are required to withhold payroll taxes. Wages, supplemental wages, and other benefits are taxable at the state level. Your LLC should have a withholding account that cannot be transferred to another business. You must comply with all payroll tax deductions to avoid penalties and fines.
Businesses in Wisconsin may be subject to additional local fees and an economic development surcharge. More information can be found under Other Taxes and Fees at the Wisconsin Department of Revenue. Be sure to verify your LLC’s federal tax filing rules and obligations. The structure of the LLC dictates how taxes are prepared and filed. More information on this can be found on the IRS website.
To ensure your business income is accurately reported, maintaining a separate account from your personal assets is necessary. To further establish credibility in your business, you should have a business bank account.
All income from the business should be deposited into this account. Any payments or financial obligations owed by the LLC should be paid from the account. This includes taxes, filing fees, supplies needed for continued operations, and professional fees such as legal consultations, registered agent fees, accountants, etc.).
Any disbursements to members of the LLC should be drawn from this account. Remember, you must issue 1099s at the end of the year for each member receiving payments that must be reflected in the personal income taxes.
Once you have set up your LLC, you are required to file an annual report with the Wisconsin Department of Financial Institutions. This filing is $25 per year if filed electronically and $40 on paper. The report is due every year within the quarter the LLC was formed.
You must meet several financial requirements to remain in compliance with state and federal regulations. Hiring a legal firm that has the expertise and experience in handling finances or a certified public accountant (CPA) who can handle taxes for your company can save a lot of time, stress, and money down the line.
Hiring a professional empowers you to focus on growing your business. You can feel confident that you are compliant with any sales tax requirements, income tax, and withholding obligations. Additionally, when you have an outside party handling your finances, you won’t miss important deadlines or new regulations.
In some cases, Wisconsin-registered agents are qualified to handle the financial aspects of your business. Hiring someone who has an understanding and knowledge of Wisconsin’s tax guidelines, federal tax guidelines, and how LLCs should function financially helps. When starting out in business, it is often necessary and wise to seek help from professionals who can guide you in the right direction. This alleviates missteps from the beginning and puts your company in a good position.
Every Wisconsin business must verify all requirements in their jurisdiction regarding business permits and licensing. Wisconsin business owners can search for information on required business licenses and apply online through their online License, Permit, and Registration Services.
Knowing what is required in local towns or municipalities where you are housed or doing business can keep you from fines and penalties. There may be restrictions in place on what type of business can be conducted from home, what types of materials can be stored at your place of business, or other local regulations that could affect you.
Most cities in Wisconsin do not require a general city/county business license, but those with professional or specialty businesses must be registered. There are also zoning permits that may be needed to operate within city limits.
It is not uncommon for towns or cities to have their own specific requirements for business permits. Staying in compliance with local regulations is crucial to avoid sanctions for failing to adhere to the rules. All the Clerk’s offices are listed on the Wisconsin Department of Financial Institutions website to point you in the right direction.
Your business may also need insurance depending on the type of work being done. Any business in the state of Wisconsin requires businesses with 3 or more employees, whether full or part-time, to carry workers’ compensation insurance. LLCs that only have members are not required to carry workers’ comp.
There are other types of business insurance that may be required for your small business. At any rate, maintaining what is required by law in the state is necessary. Wisconsin law requires all business owners to have certain types of liability coverage or show proof of financial responsibility. If business insurance is not needed, it may still be wise to look for a business protection policy to offset costs if the need arises.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.