Understanding LLC in Wisconsin
The state of Wisconsin has untapped cities with abundant business opportunities. This advantage is due to prime location, and investment in training and education. Creating an LLC in Wisconsin is favorable due to many reasons such as flexible profit distribution, sales and use tax exemption, etc.
LLC separates personal assets from business liability and debts.
Start an LLC in Wisconsin in five easy steps
Step 1: Name Your Wisconsin LLC
Choosing a name is the earliest step while forming an LLC in Wisconsin. The name should follow the Wisconsin naming guidelines.
Consider the below-mentioned points while naming your LLC:
- The name must be distinctive from other existing entities in the state.
- The name must contain the phrase “Limited Liability Company” or one of its acceptable abbreviations such as LLC or L.C.C.
- The name must not implicate a purpose other than that mentioned in the articles or organization.
- The name cannot have words that imply a government agency such as Federal, FBI, etc.
- The name must not include restricted words such as attorney unless your LLC has a licensed individual (lawyer, doctor, etc.) or has permission to operate as such.
- Availability of a suitable name – Before settling on a name, search for the availability of the desired name with the State of Wisconsin’s Business Entity Search. This avoids the chance of any deceptive similarity between any two entities.
- (Optional) Check for the availability of a suitable URL – The Internet leads way for the growth of your business. Look for accessibility to a suitable domain name for your website, which will be easily accessible to prospective clients.
You can reserve a name by filing the Name Reservation Application form for 120 days by paying a $15 fee or an additional $25 for expedited service.
Step 2: Choose a Registered Agent
A registered agent is an individual or a business entity that receives legal documents and service of process from the government on behalf of your business. It acts as the point of contact between your business and the State. You or any individual from your LLC can become a registered agent. The registered agent for your LLC must have a physical street address or must be an entity licensed to transact business in the state.
The State of Wisconsin requires every LLC to have a registered agent.
Perks of having a registered agent:
- Available during conventional hours of business
- Handles your lawsuits keeping you in compliance with the State
- Enables you to focus entirely on growing your business
Step 3: File Articles of Organization
For setting up an LLC in Wisconsin, file articles of organization form with the Department of Financial Institutions. This could be done online by paying $130 or via mail by paying $170. Optional expedited service can be requested by paying an additional $25 fee for online and offline applications.
Following details are required to file articles of organization:
- Name of the LLC
- Name and address your registered agent (a PO box is insufficient alone)
- Management-type of the LLC
- Name and address of each organizer
Read the instructions given in the articles of organization form.
Apply online: File online
Apply via mail: Download articles of organization form
State of WI – Dept. of Financial Institutions
P.O. Box 93348
Milwaukee, WI 53293-0348
- How much time does it take for Wisconsin LLC formation?
The processing time takes five business days if filed via mail or two business days if filed online. Processing requested via expedited service takes 24 hours.
- What is the difference between member-managed or manager-managed LLC?
- Member-managed LLC is decentralized management where the decision-making authority lies in the hands of every member. The vote of every member is counted.
- Manager-managed LLC is centralized management where the administrative authority lies in the hands of the manager(s).
- How to order a Good Standing Certificate in Wisconsin?
You can e-mail your Good Standing Certificate request to firstname.lastname@example.org. The e-mail must have your name, address, and contact number. The fee is $10.
Apply via mail: Certificate of status by paying $10 or $35 for expedited service.
The standard processing time is ten days. Expedited service requests are acted upon by the end of business on the first business day following the date of receipt.
- What is the difference between a domestic LLC and a foreign LLC?
If you transact your business in the same state where it was formed, it is a domestic LLC. Whereas, if an LLC has expanded its business to other states, it is a foreign LLC in those states.
Step 4: Draft an Operating agreement
An operating agreement is an internal legal document that ensures all the members of the LLC are concurrent with the business proceedings. Wisconsin does not demand an operating agreement for LLCs. However, having an operating agreement is advisable for the smooth running of your business. It has a proper structure of your company’s operating procedure. In the situation of dispute among the members, this agreement can be referred for proceedings or amendments.
Step 5: Get an EIN
EIN stands for Employer Identification Number. It is a nine-digit number issued by IRS which paves way for legal benefits. Applying for an EIN is free of cost.
A few of the benefits of an EIN are mentioned below:
- Open a business account
- Get a business credit card
- Ensures the safety of your personal assets from business liabilities
- Get a business loan
- Hire employees
- File and manage Federal and State taxes
Request for an EIN online: Apply online
Apply via mail: Download Form SS-4
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Fax: (855) 641-6935
- How long does it take to receive an EIN?
You will get an EIN immediately by applying online. Fax takes one week. Application via mail takes 4-5 weeks.
- How can I file an EIN without a Social Security Number?
You need Social Security Number only if you apply online for an EIN. You can fill out IRS form SS-4 via mail or fax to get an EIN without a Social Security Number for your LLC.
- Which tax structure should I choose for my Wisconsin LLC?
By default, IRS taxes an LLC by the number of members in it. While applying for an EIN, you have to inform the IRS about the number of members in your LLC. Accordingly, you will be informed about the different tax classification options available. There are several factors to consider, such as financial plans, the goal of your company, etc., before choosing a tax status for your LLC. We recommend you speak to a tax professional to discuss thoroughly every aspect before making the final call.
- What is the income tax liability in Wisconsin?
LLCs are a pass-through entity that reduces the double taxation burden, they are not liable for corporate taxes. However, your LLC is liable to various types of taxes such as:
- State employer taxes, if you have hired employees
- State unemployment insurance taxes, when employees lose their job
- Excise tax, if you sell specific goods and services
You are not required to pay franchise tax in Wisconsin unless you opt to be taxed as a corporation.
For better knowledge about the taxes, refer to the Wisconsin Department of Revenue’s Limited Liability Companies guide.
- Which license and permits are necessary for business in Wisconsin?
Depending on the type of business, you may require different licenses and permits for doing business. Refer to the State of Wisconsin’s Department of Agriculture, Trade, and Consumer Protection license list for a clear idea.
- Do I have to file an annual report for my LLC in Wisconsin?
Yes, you are required to file an annual report with the Wisconsin Department of Financial Institutions. A non-refundable annual fee of $25 is to be paid for a domestic LLC and $80 for a foreign LLC.
Your LLC gets dissolved automatically if you fail to file the annual report for a year.
How to Dissolve an LLC in Wisconsin?
- Refer to your operating agreement – The process of dissolution will be mentioned in it. The important points of dissolution will be highlighted in the document, such as holding the voting process of members, asset distribution, and notifying editors.
2. Close bank accounts – Your LLC must have different tax accounts maintained by the various Wisconsin State government departments. Before you dissolve your LLC, you must pay off every tax and debt associated with your LLC. Cancel every license and permit.
3. Winding up – Before filing for dissolution, you must wind up your LLC. The winding-up procedure involves:
- Distribution of assets and profits among members
- Discharge company’s obligations, debts, or liabilities
The remaining assets and profits must be distributed among the members of your LLC after paying off all the debts and taxes.
4. Filing Article of termination
Articles of termination are filed with the Wisconsin Department of Financial Institutions. The filing fee for articles of dissolution is $20 (an additional $25 fee is to be paid for expedited service). This document includes basic information about your LLC like:
- Name of the company
- Date when articles of organization were filed
- Reason of dissolution
- (optional) delayed effective date
- Authorized signature
- Name of the person who drafted the document
Read the instructions given in the articles of dissolution form.
Apply via mail: Download form
State of WI – Dept. of Financial Institutions
Milwaukee WI 53293-0348
Note: You will have to file articles of dissolution in every state where your business has a presence. Failing to do so will make you liable for different tax and annual filings in the other states.