How to Start a Business in Wisconsin: Everything You Need to Know
First you’ll need to come up with a business idea. This is the first step, as the business idea will lead to a business plan. You’ll want to think about the short-term and long-term objectives for your business.3 min read
2. Choose a Business Structure
3. Identify Tax Obligations
4. Obtain Licensing
If you want to learn how to start a business in Wisconsin, you’ll want to follow the below steps to ensure that you remain compliant with the state’s regulations and laws. The steps to take when forming your Wisconsin business include the following:
- Come up with a business idea
- Choose a business structure, i.e. LLC, partnership, corporation, etc.
- Identify tax obligations
- Obtain licensing
Create an Idea
First you’ll need to come up with a business idea. This is the first step, as the business idea will lead to a business plan. You’ll want to think about the short-term and long-term objectives for your business. When you initially form your business, it could be more difficult, as you might not have the appropriate amount of capital to finance the business. Therefore, you might need to figure out a way to obtain financing. Once you get past this part, you will want to choose which type of business structure you want for your company.
Choose a Business Structure
There are several ways in which you can structure your business. Some options include a sole proprietorship, general partnership, corporation, and LLC. Depending on the type of flexibility you are looking for, if you want to sell shares of the company, and the type of taxation you desire, you will want to pay particular attention to the characteristics of each type of business structure.
Identify Tax Obligations
After you have officially formed your Wisconsin business, you will need to consider what tax obligations you have. Wisconsin taxes every type of business structure; this includes economic development surcharges applied to a business with $4 million or more in gross receipts. In order to find out what other tax implications there are, you can visit the Wisconsin Department of Revenue website.
If you are operating as a sole proprietorship, you will need to pay state taxes on the company’s profits. Such taxes will be reported on your own personal income tax return.
Partnerships must also pay state taxes for the company’s profits on the owners’ personal income tax returns. However, while the partnership need not pay corporate state income tax, the business must file Form 3, known as the Wisconsin Partnership Return, in addition to ensuring that the owners’ include the business’s profits and losses on their personal tax returns.
LLC owners will each pay a portion of the business’s profits on their personal income tax returns, similar to the partnership and sole proprietorship. However, if the LLC is classified as a C corporation for federal tax purposes, then the business will be required to pay corporate state income tax, as opposed to having the owners report the profits and losses on their personal tax returns.
For corporations, shareholders will pay state taxes on dividends earned throughout the taxable year. However, if the shareholder is also an employee of the corporation, then he must also pay state income tax on his personal income tax return. In addition, corporations in Wisconsin must pay corporation franchise tax.
For any of the aforementioned business structures, if you plan on hiring employees, you will need to pay state employer taxes. You might also have other tax implications, including withholding taxes, workers compensation fees, and unemployment insurance. For any business, it is a good idea to obtain insurance regardless of whether or not it will have employees.
In addition to the tax requirements, you might also need to obtain licensing before conducting business in the state. You can visit the Wisconsin Department of Safety and Professional Services to find out what licensing and permits might be required of you. For example, if you are going to be selling goods in the state and/or hire employees, then you will need to register with the Department of Revenue to collect sales tax and withhold taxes.
You might also need to obtain an Employer Identification Number (EIN). Particularly, if you have more than one owner or intend on hiring employees, then you will need this ID number. It is basically a Social Security Number for your business. However, keep in mind that even if you are not required to obtain one, you might need an ID number in order to open a business bank account, obtain lending, and enter into contracts with outside vendors, as such vendors might require their business partners to obtain an EIN for added security.
If you need help with learning how to form a business in Wisconsin, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.