Are you an entrepreneur, business owner, or startup founder living in Wisconsin? If so, then obtaining an LLC license (limited liability company) could be one of the best decisions you’ll ever make!
LLCs separate your personal and business assets, providing you with much-needed protection if something ever happens to your organization. LLC owners also enjoy tax benefits and flexibility that other business entities lack.
Let this post serve as your step-by-step guide on how to start an LLC in Wisconsin. We will cover:
Let’s get started:
What To Do Before You Start An LLC In Wisconsin
Before you start a LLC in Wisconsin, you need a name for your business that’s not already taken. Do a business entity name search on the State of Wisconsin’s government website. Typically, business owners use their organization’s name to establish name recognition and brand identity. However, if you’re only interested in using your official name when filling out legal documents, you can opt for a “Doing Business As” (DBA) name.
You should also check the Trademark Electronic Search System (TESS) database before applying for your LLC license. Conducting a business entity name search is usually enough, but it never hurts to be extra thorough.
LLCs require you to include either “Limited Liability Company,” “LLC,” “L.L.C.,” “LC,” or “L.C.” as part of your organization’s official name. In Wisconsin, you cannot include anything related to a government entity, such as “State Department,” “Treasury,” or “FBI.” If you want to include words like “Bank,” “University,” or “Attorney,” you may need to fill out additional paperwork to legally include them in your business name.
We also recommend looking up the URL availability of your business name. If your business name is “Fran’s Cupcakes” but www.franscupcakes.com is already taken, people looking to find you online may get confused.Finally, if you’re worried your name may get taken by someone while setting up your LLC, don’t be! In Wisconsin, you can reserve your name for up to 120 days, and it’ll only cost you $15. The peace of mind is definitely worth it!
How To Start An LLC In WI
Select A Registered Agent
Once you pick out your business name, you need to choose a registered agent. Your registered agent accepts all legal and government correspondence for your organization. It can be one of your LLC members or partners, or a business entity authorized to conduct business in Wisconsin.
Your registered agent is required to have a physical registered address, not just a P.O. Box. This address will become public record once you obtain your LLC license. To protect their privacy, many LLC owners opt to use a business entity as their registered agent.
Draft Your Articles Of Organization
Filing your Articles of Organization with the Wisconsin Department of Financial Institutions is what makes your Wisconsin LLC an official LLC. Your Articles of Organization include the basic information about your LLC, such as:
Double-check this document before submitting it. If you accidentally make a typo or leave something blank, you could risk legal repercussions later on.
Create Your Operating Agreement
Your operating agreement defines the rights, duties, powers, obligations, and liabilities of your LLC’s partners between themselves and to your LLC. Creating an operating agreement in Wisconsin isn’t required, but it’s a good business practice—even for single-member LLCs.
In Wisconsin, your operating agreement should include:
File For Additional Business Licenses
Depending on what industry you’re in and where you’re located, you may need to obtain additional business licenses for your LLC. Check with the local city or county clerk of where your LLC is primarily doing business to see if additional local licenses are required. You should also check out the Wisconsin Department of Safety and Professional Services site, just in case you need additional state licenses.Also, if your LLC sells goods and collects a sales tax, or if you have employees, you need to register with the Wisconsin Department of Revenue.
Obtain Your Employee Identification Number (EIN)
If your LLC consists of more than yourself, you need to get an EIN from the IRS. You should get one anyway, in the event that you want to have employees one day or decide to be taxed as a corporation. You should get an EIN by filling out an online EIN application. It’s free to do so.
Open A Business Bank Account
One of the main benefits of starting LLCs in Wisconsin is liability protection. LLCs separate your business assets from your personal assets. In other words, LLCs safeguard personal assets protected if something happens to your business, like if you get sued or if one of your partners breaks the law. Without this protection, personal assets like your house, car, and other valuables may be in jeopardy.Opening a bank account for LLCs further separates your business and personal assets. You’ll need an EIN and an LLC license to do so, but it’ll make tax season much easier.
LLC Cost Wisconsin
Wisconsin LLC costs are about average compared to other states. It costs $15 to reserve your business name, and $130 to file your Articles of Organization online ($170 to file by mail). In addition, you’ll need to file your annual report every year, which includes a $25 filing fee.Comparatively, the cost of LLCs in Wisconsin is less than states like Tennessee, which costs $300 to file and then an additional $300 filing fee each year. In the long run, it’s also cheaper than LLC Florida costs, which are $125 for the initial filing, then $138.75 for each year the LLC is open. However, there are also states where forming an LLC is cheaper. For example, to start an LLC in Missouri costs only $50 to file, with no additional fees necessary.
Filing Your Annual Report
Whether your Wisconsin LLC is domestic or foreign, your organization is required to file an annual report each year with the Department of Financial Institutions. Your annual report is due at the end of the calendar quarter based on when you formed your LLC. For example, if you start a LLC in Wisconsin in May, your annual report is due by June 30th of each year, starting the year after your LLC is formed. If you filed in October, your annual report is due by December 31st.
The cost to file your annual report is $25 for domestic LLCs, and $80 for foreign LLCs.
Do you still have questions about how to start a LLC in Wisconsin? We’ve got answers!
LLCs provide business owners with the opportunity to adopt the tax status of other business entities, like sole proprietorships, C corporations, and S corporations. The IRS will designate your LLC as a disregarded entity, unless you opt to be taxed as a corporation. In other words, you’ll enjoy the tax responsibilities of a sole proprietorship unless you choose otherwise.
Paying yourself from an LLC, or taking an “owner’s draw,” is a straightforward process. To do this, simply transfer a portion of your LLC’s cash reserve from your company account to your personal account.
If you divide funds among your LLC’s partners, do so based on agreed-upon percentages. Another benefit of forming an LLC is the profit distribution flexibility. For example, if Sun and Eric each own 50% of their LLC, but Sun does most of the work, she and Eric can distribute profits in a way that’s fair to them both (which is typically outlined in your operating agreement). Similarly, if Sun owns 75% of the LLC and Eric only owns 25%, but they want to share the profits 60/40, they can do so.
Single-member LLCs have only one owner, instead of two or more. Typically, single-member LLCs often enjoy the same benefits as sole proprietorships, but with the added bonus of liability protection.
Setting up an LLC in WI can be done in just hours if you already have all the information. To make things official, you must obtain approval from the Secretary of State’s office. This usually takes five to seven business days.
To dissolve an LLC, you must file the Articles of Dissolution with the Division of Corporate & Consumer Services of the Department of Financial Institutions. The filing fee is $20.
In Wisconsin, you’re technically not required to file any type of final document, but we recommend doing it anyway. Before you can dissolve your LLC, you must pay all your taxes, distribute any remaining assets, settle all your remaining debts, and inform creditors of your closing.
Conclusion: How To Start Your Wisconsin LLC
Are you ready to start your Wisconsin LLC and enjoy added flexibility, tax benefits, and personal liability protection? By following the step-by-step process outlined above, you should get your LLC License in no time—and if you have any questions, don’t be afraid to ask!Also, are you ready to amplify your organization’s potential? Check out The Lazy Man’s Guide to Living The Good Life, and learn how to enhance your chances of running a successful business!