Wisconsin LLC: Everything You Need to Know
Forming a Wisconsin LLC involves several steps and rules8 min read
Wisconsin LLC: Everything You Need to Know
Forming a Wisconsin LLC involves several steps and rules. Start by considering what to name your Wisconsin LLC. This will involve some research. It would also be helpful to create a list of possible names that reflect what your business will be about, and what would be easily accessible and searchable by possible clients.
The state of Wisconsin has guidelines for naming a LLC. Here is what you should consider:
- Whatever moniker chosen, the guidelines state that it should end with the words Limited Liability Company, or the acronyms LLC or L.L.C.
- Be aware in Wisconsin some restriction exists on using some words such as Attorney, Bank, University, etc. Those particular words have an association with licenses and other statutes and unless an owner has those particular certificates, they cannot use those words in a business name.
- Other restricted words include making business names similar to state or federal agency names, such as FBI, Treasury, or Secret Service.
After creating a list of possible names visit the State of Wisconsin website and do a name search. Your business name cannot duplicate another business entity. It must be unique.
Once a name has been decided upon, reserve a domain name on the internet. This establishes a business presence quickly and protects anyone else from using the name in that venue. Even if the business has not had time to formally organize, you can reserve the name for a time by paying a $15 filing fee plus mailing a document by mail. Then, it would also be a good idea to create an email address using the same business name.
To begin formalizing the Wisconsin LLC further, nominate a Registered Agent for your enterprise. A registered agent is defined as a person who agrees to receive and send legal papers for the LLC to individuals and agencies. It will include filing documents for the business. The state of Wisconsin requires a registered agent to be a resident of the state, with a physical street address in Wisconsin. An owner can be the registered agent.
Further formalization of the Wisconsin LLC continues with creating the Articles of Organization with the State of Wisconsin. Filing the articles of organization has the option of mailing a document or filing online. The costs are listed as $170 by mail and $130 online and those filing fees remain non-refundable. The parameters are:
- File in duplicate
- Must have LLC’s name and address
- Name and address of the registered agent
- Name, address, and dated signature of organizers
- Name of the drafter of the articles
At this point make the decision if your business LLC will become member-managed or manager-manager style. If you happen to have an LLC in another state and you wish to expand to the state of Wisconsin, then the process of filing switches to one for a Foreign LLC.
The operating agreement in Wisconsin is not required to be filed with the articles of organization. However, most recommend that business owners do so anyway in case of court disputes. The operating agreement is a legal document that delineates the ownership and lists how your business operates. The registered agent must keep the document on file. For a Wisconsin LLC with more than one member, it is advised to have an operating agreement among members.
EIN stands for employee identification number or Federal Tax Identification Number. It identifies a business entity with the USA government, and can be given in lieu of an individual’s social security number. The following covers the functions of an EIN:
- An EIN separates business processes from individual accounts and therefore protects an owner’s assets.
- Obtaining an EIN allows the filing of state and federal taxes of a business; not having an EIN means an individual would have to use their social security number to file, and all liability and taxes would become the responsibility of the individual.
Even if you do not plan on hiring employees for an LLC, you must obtain an EIN. When opening a business account with a bank, they will require an EIN. Apply for an EIN online or print the form from the IRS site and mail.
After registering, begin exploring bank business accounts. Obtaining a business bank account begins with the separation process between an owner’s personal assets and the business’ assets. This protects your personal assets. As an added bonus, it makes accounting and tax filing an easier process.
Next, apply for a business credit card that allows recording of personal and business expenses separately. This builds a credit history in a business’ name rather than an individual’s name. At some point, you may need investors, and a business credit history may prove useful in that.
Wisconsin requires registration for Wisconsin Unemployment Insurance in the Department of Workforce Development. In the State of Wisconsin Department of Revenue, register for Employee Withholding Tax. A business owner can use the DOR Taxpayer Access Point known as TAP online or uses form BTR-101 Application of Business Tax Registration.
If the business has taxable goods or services in Wisconsin also register for Wisconsin Sales Tax with the Department of Revenue. Check on the Workman Compensation Insurance. Depending on how an employee becomes classified, determine if this type of insurance is needed. Though not required, a general liability insurance may be needed as well to protect assets.
Tracking income, expenses, and bills make up the transactions of LLC business finance. Well-managed, it can make an owner aware of trends in the business that would allow him to make decisions that maximize profits and simplify annual tax filing.
Find a software that matches your business needs. A feature that helps make it run efficiently and smoothly remains that accounting software that synchronize with the bank automatically. Make sure the software correlates transactions to invoices, purchase orders, and bills. If the software gives phone access so much the better.
- For federal regulations regarding a business, visit the U.S. Small Business Administration (SBA). The website offers guidelines for federal business permits and licenses for different industries.
- For state government regulations, use Wisconsin’s Department of Safety and Professional Services to discover licenses, registration, and permits needed.
- For local requirements, use the Local Chamber of Commerce.
Professional services can also do research for the business owner of an LLC. Each state has its own variant of requirements for LLCs, so when expanding, be sure to check requirements for that state.
Take note of other legal obligations, including annual reports, biennial reports, and state taxes.
Hiring employees has a whole set of parameters to meet. It begins with ensuring the employee has eligibility to work in the U.S. Other things to consider are:
- Classifying employees as new hires in the State of Wisconsin
- Providing Workman’s Compensation Insurance
- Withholding Income Tax
- Print and Install Compliance Posters
- Payment of Employees
- Develop policies and schedules for each area.
The following is an overview of the process of developing an LLC.
- Create a suitable business idea
- Analyze the idea
- Make a business plan
- Formally organize the business using the LLC structure
- Acquire business license, permits, and register with the state in all areas
- Open a business bank account
- Build a website and decide on your brand
Using the larger organization pattern lets a business owner break up the needs into smaller increments at create a business at their pace. It helps delegate some of the responsibility to other members.
There will be an initial flurry of activity, but soon the business will become operational and move into a different mode, away from permits and licensing. Implementing a daily routine will become a major concern for the business.
Some maintenance items have to be taken care of. In Wisconsin, this includes filing periodic reports to keep the business in good standing. Wisconsin requires LLCs to file online annually with the Wisconsin Department of Financial Institution. These documents can be mailed, but most recommend that this process be done online. The deadline for these documents is the anniversary date of the LLC formation that is nearest the calendar quarters: March 31st, June 30th, September 30th, and December 31st.
The LLC’s registered agent will receive a notice from the department outlining the instructions of using the online filing form. For a domestic in-state LLC, the fee for annual reports is $25 and for an out-of-state foreign LLC, the fee is $80.
If an annual report is not filed, the state of Wisconsin will dissolve your LLC within the next year for failure to file.
A registered agent should take on the responsibility of preventing late filings and submitting reports, and owners should check if the agent has performed these duties.
A foreign LLC might undergo a different process since their business covers two states. Wisconsin no longer requires that taxes be paid to the state, but it does not relieve the responsibility in the other state.
As a pass-through entity, the LLC itself does not pay income tax, but the individuals do once they receive a profit. If an LLC crosses state lines, then the LLC may need to report income to the appropriate states so keep a record and the information clear. In Wisconsin, multi-membered LLCs must file a partnership income return Form 3.
These certificates show that the LLC is well-run, and is often used to obtain investor capital. The certificate certifies proper maintenance and formation, and can be used for forming a foreign version of the LLC in another state, renewal of specific licenses or permits, and getting funding from banks.
If the business fails, do not let it fade away. A process exists to dissolve the business officially. Tax liabilities and penalties are possible if the business does not officially dissolve. An owner can remain legally liable. Check with members and close the business accounts and file an Article of Dissolution.
As referred to earlier, out of state LLCs operating in Wisconsin are foreign LLCs. These LLCs also register with Wisconsin Department of Financial Institutions.
Interested parties may apply online or by mail. Like a domestic LLC, a registered agent is appointed for the foreign LLC. Begin by filing a Foreign Limited Liability Company Certificate of Registration Application form 521 with the Wisconsin Department of Financial Institutions.
The fee costs $100. If the foreign LLC name has been taken in Wisconsin, do not give up. File for a fictitious business name in the state and register. Then file a Name Registration Application Foreign Corporation or Foreign Limited Liability Company annual form 1-R with the Department of Financial Institutions for $50.
Every year, the foreign LLC must file a new name since it expires every December 31st. It may be renewed between October 1st and December 31st, with the same process as before however labeled as “renewal”. With this, your companies across state lines can operate as if one entity in different jurisdictions.
Wisconsin has state-specific requirements follow those and ask questions. The process remains long but obtainable.
The processing time for LLC documents and filings average about 5 business days upon receipt of the documents. If high volume occurs, then that time will be delayed so leave plenty of time for obtaining the documents. For an additional fee, an expedited service will speed up the process.
Be aware Wisconsin does treat LLCs more like a corporation than a sole proprietorship. An owner opts in on what tax responsibility to do. Depending on services rendered other fees and taxes may apply.
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