The dream of becoming the next prominent entrepreneur is not so far out of reach once you have an idea that you can turn into a business. If you already have your idea, you might wonder which legal status to give your business — and you have likely considered a limited liability company (LLC).
Starting a new business in Wisconsin can feel overwhelming. What are the steps your business needs to take to operate? What are the fees? How do you hire people when you are ready? If you are setting up an LLC, there are some specific steps to take in Wisconsin to ensure your business and partners are protected. This guide will help you with each step of the journey.
The 5 steps to form an LLC in Wisconsin:
To start a Wisconsin limited liability company, you’ll need to file your Articles of Organization with the Wisconsin Department of Financial Institutions. But before it becomes an official LLC, you’ll need to decide on a name for your business, appoint a registered agent, and consider creating an Operating Agreement. While some steps are more complicated — and costlier — than others, this step-by-step guide will break down each task so that building your business is a straightforward and quick process. Complete each task, and you’re one step closer to getting your Wisconsin LLC up and running.
Step 1: Name Your Wisconsin LLC
There’s a lot to a name: It has to be catchy enough to draw people in, clever enough to represent your brand, and compliant enough to get approved by the state. To ensure your LLC name is compliant with Wisconsin regulations and available to be used, it will need to be unique from all existing ones.
Fortunately, the state of Wisconsin makes it easy to find a name that won’t get rejected. All you have to do is make a list of possible names and run each through the Wisconsin Department of Financial Institutions’ name availability search engine. Before you begin brainstorming ideas, it might be helpful to check Wisconsin’s detailed guidelines for naming an LLC. Note that slight variations in spelling, punctuation, and suffix are not enough to be considered unique in Wisconsin.
As with other states, Winsconsin state law mandates that your company’s name end with the proper suffix. For LLCs, you have a few options: Limited Liability Company, Limited Liability Co., LLC, or L.L.C. Whichever one you settle on must appear at the very end of your company’s name — with or without a comma before it.
Finding an available business name is the first step. Then, you’ll need to reserve it to ensure nobody else scoops it up. If there’s going to be a long time between the date you’ve chosen your name and the time you expect to file your Articles of Organization, you can fill out the Name Reservation Application and deliver it to the Wisconsin Department of Financial Institutions, Division of Corporate and Consumer Services. For a one-time nonrefundable fee of $15, you can reserve the name for 120 days. You also can expedite your name reservation for an additional fee of $25; to do this, check the box at the top of the form.
Something else to think about is whether you’ll want to use a trade name or “Doing Business As” (DBA). A DBA is simply a name you use for your business that isn’t its legal name. To get a DBA in Wisconsin, visit Wisconsin’s Department of Financial Institution’s website and search for your new DBA name to make sure it isn’t already in use. If the name is available, you can file online via the same site.
Another thing to consider is whether you want to trademark anything with your business. To see if your business’s name or logo is trademarked, you can do a free search with the U.S. Patent and Trademark Office.
Step 2: Appoint a Registered Agent in Wisconsin
Once you’ve picked and reserved your company’s name, you’ll need to choose a person or entity to be the point of contact for all legal matters — in other words, appoint a registered agent. If your company is subpoenaed or sued, the state of Wisconsin will deliver all necessary documents to your registered agent. This is also the person who would handle a service of process.
It is possible to be your company’s registered agent; however, it’s often better to outsource the role. You can choose any person who is a resident of the state of Wisconsin or any business entity that is authorized to do business in Wisconsin, as long as they also have a physical street address in the state. Hiring an outside registered agent ensures all of these requirements are met and is an affordable way to avoid awkward encounters in front of customers.
Some additional benefits of hiring an outside registered agent service include:
- Prioritize your time: With someone else in charge of any legal documents, you can use your time to grow your business.
- Ensure compliance: Running a business requires you to follow state and federal regulations. It’s a lot to keep up with, and a registered agent service like ZenBusiness can ensure your business is compliant and in good standing.
- Keep legal documents all in one place: A registered agent service can help organize any legal documents and keep them in one place so that you don’t have to search for anything.
Step 3: File Wisconsin Articles of Organization
Picking a name and a registered agent isn’t enough to make your business official yet. To make it an official LLC in Wisconsin, you’ll need to complete your Articles of Organization and file it with the Wisconsin Department of Financial Institutions. There are a few things you will need to fill out the form. Make sure you have the following on hand before you begin:
- The name of your LLC
- The name of your registered agent and the registered office address
- The type of management your LLC will use
- The names and addresses of each organizer
- The name of the person drafting the document
- The preferred effective date
- The ability to sign the document with one or more organizer signatures
- Information on how to reach the designated contact person
- Payment for the nonrefundable fee
If you prefer to fill out the document on paper and mail it in, you will be responsible for paying a non-refundable fee of $170. However, if you choose to utilize the online system, you will need to include a nonrefundable fee of $130. While sending your paperwork via mail will take about five days to process, you can pay an optional fee of $25 for expedited service. With expedited service, your Articles of Organization will be processed by the business’s close on the first business day following the date of receipt.
Step 4: Create an Operating Agreement
LLC Operating Agreements cover the rules your company will follow, how finances will be handled, how decisions will be made (including partner voting structure), and details any additional necessary rules. However, not every state requires LLCs to have one, including Wisconsin.
Considering Wisconsin doesn’t require an Operating Agreement for LLCs, you may feel drafting one is unnecessary — especially if you’re starting your LLC alone. But this isn’t always the case. Operating Agreements can also be used to outline your company’s fate in the event of your demise and protect you and your assets if your company is dissolved or faced with bankruptcy. If you’re creating an LLC with partners or other managers, each involved party will need to sign the document, formalizing their agreement to the terms.
Since the state of Wisconsin doesn’t require an Operating Agreement, there is no form to fill out and file with the Department of Financial Institutions. Instead, you may want to consider turning to a trusted source to help you draft an Operating Agreement.
Step 5: Apply for an EIN
Before your LLC formation can be finalized, you’ll need to obtain a Federal Employer Identification Number (FEIN), also known as an EIN. You won’t need this nine-digit number if you’re a single-member LLC with no employees. For all others, an EIN is required for all tax and financial paperwork, including filing taxes, hiring new employees, and opening business bank accounts. You will obtain your FEIN through a simple and straightforward process with the Internal Revenue Service (IRS). All you have to do is call the IRS Business and Specialty Tax Line at (800) 829-4933 or visit the IRS FEIN application page online. At no cost to you, you’ll receive your FEIN immediately upon applying.
How much does it cost to start an LLC in Wisconsin?
Starting an LLC in Wisconsin is relatively affordable. Filing your Articles of Organization through the mail will cost you $170 while filing online will cost $130. If you prefer to expedite the process, the total will increase to $155.
On top of the fees associated with filing your Articles of Organization, if you choose to reserve your desired name ($15) and partner with ZenBusiness to file an Operating Agreement ($35), forming an LLC in Wisconsin will cost you a minimum of $180.
However, hiring a registered agent and obtaining any required licenses, permits, and insurance policies can cause the price to rise again.
What are the benefits of an LLC in Wisconsin?
LLCs aren’t the only type of business you can form in Wisconsin. However, 90% of ZenBusiness customers, along with the majority of entrepreneurs, choose to form an LLC over all other types. Compared to corporations, limited partnerships, and other forms of entities, LLCs come with enticing benefits.
Forming a Wisconsin LLC means you’ll reap the following benefits:
- Personal asset protection: Your personal liability will be separate from your business liability and debts.
- Tax incentives: You’ll only pay personal taxes rather than both personal and corporate taxes with an LLC. In Wisconsin, in particular, you can take advantage of the Enterprise Zone Tax Credit.
- Flexible management and profit distribution: You’re not required to have a board of directors or annual meetings, and you can select different ways of distributing profits, unlike a partnership where the distribution is 50-50.
- Less reporting: Compared to corporations, LLCs have fewer required meetings and reports.
For a more in-depth look at why an LLC might be a better option for you, see our breakdown of what an LLC is and how it compares to a corporation.
How is a Wisconsin LLC taxed?
LLCs are typically considered “pass-through entities,” meaning they are not subject to corporate taxes. Instead, the profits and losses are passed through to the owner’s personal income, and the responsibility to pay taxes falls on the individual. This holds for all Wisconsin LLCs — unless you choose to file as a corporation, you will not be required to pay Wisconsin’s corporation income tax. However, your LLC could be subject to various other taxes, including:
- State employer taxes, if you have employees
- State unemployment insurance taxes, if you have employees
- Sales and use tax, if you sell goods
- Excise tax, if you sell beverages, fuel, cigarettes, or tobacco
For more information on specific taxes that you may be required to file for your Wisconsin LLC, review the Wisconsin Department of Revenue’s Limited Liability Companies (LLCs) guide. Taxes can be confusing, so if you want to ensure nothing is missed and your business is filing correctly, you may want to work with a trusted professional.
Wisconsin LLC FAQs
- What is the processing time to form my Wisconsin LLC?
In just five business days, your Articles of Organization will be processed with the Wisconsin Department of Financial Institutions, regardless of your means of filing. For an extra fee, you can have your documents processed by the next business day.
- Do I need to file an Operating Agreement with the state of Wisconsin?
No. The Operating Agreement is kept internally by the owner and partners or managers. While some states legally require LLCs to have an Operating Agreement, Wisconsin does not.
- What tax structure should I choose for my Wisconsin LLC?
When you get an EIN, you will be informed of the available tax classification options. Most LLCs elect the default tax status and, therefore, are taxed at the state and federal levels. While LLCs are not taxed as entities, the owner is responsible for paying both state and federal taxes on the business’s income. rnrnIf the LLC has multiple members, it will be classified as a partnership by the IRS, with each partner paying taxes on their share of the business. You can also file as a corporation. This route has its advantages, but be sure to review each option’s details to determine the best one for your business.
- Does Wisconsin allow a Series LLC?
A Series LLC is a group of LLCs operating under one “parent” entity. Wisconsin allows a watered-down form of a Series LLC, but it does not specifically provide for a liability shield between the different series.
- Which licenses and insurance are required for an LLC in Wisconsin?
Determining which business licenses and/or permits your LLC needs requires some research because licensing can be industry-specific and happen at the federal, state, and local levels. To determine if your LLC requires a license or permit, start by visiting the State of Wisconsin’s Department of Agriculture, Trade, and Consumer Protection license list.rnrnWhen it comes to insurance, Wisconsin requires every small business with employees to provide workers’ compensation insurance. You’re also required to have commercial auto insurance for any vehicle you use in connection with your business. For a list of insurance types and state requirements, check out the Consumer’s Guide to Insurance for Small Business Owners.rnrnIn both instances, we recommend hiring a professional service like ZenBusiness who will provide you with a comprehensive package of all the licenses and insurance required for your Wisconsin LLC.