LLC in Wisconsin is one of the easiest types of corporate organizations to start. It is preferable as it offers taxation benefits and protects the personal properties of its members: limited liabilities. Before the 1st of January 2023, the formation and running of LLCs in Wisconsin were guided by the old WULLCL which was revised and took effect from the 1st of January 2023. LLCs formed before this time that did not want to be governed by the new WULLCL needed to file a ‘Statement of Non-applicability’ with the Wisconsin Department of Financial Institutions (WDFI). These LLCs can in the future ‘opt in’ by filling a Statement of Applicability. Organizations that did not opt-out and those filed after 1st January 2023 are automatically included and guided by the Uniform Limited Liability Law; Chapter 183.
The process for forming an LLC in Wisconsin is outlined below:
- Wisconsin LLC Article of Organization.
- Wisconsin LLC Operation Agreement.
- Wisconsin LLC Statement of Information.
- In-person or via mail.
- Comply with the Wisconsin LLC Annual filing.
The Department of Financial Institutions (DFI) supervises the process of filing and registration of LLCs and maintains records related to the LLCs in Wisconsin. Members of the public who want to access these records can check the web page maintained by the department.
According to the statistics published by the DFI, as of January 2023, there were 434,921 both foreign and domestic LLCs active in the state; 5,420 new domestic LLCs and 263 foreign LLCs formed that same month.
What is an LLC?
An LLC (Limited Liability Company) in Wisconsin is a type of business structure where one or more persons own percentages in the organization; these persons are called members. It has characteristics of a corporation as its individual members bear limited liabilities, as well as a partnership in the manner of its taxation. LLCs in Wisconsin can either be owned by a single person (single-member LLC) or a group of persons (multi-member LLC) in which case it is called a partnership. Single-member LLCs are taxed in the same way sole proprietorship businesses are taxed.
The legal provisions for LLCs in Wisconsin are guided by the Wisconsin Limited Liability Company Act. These provisions cover Domestic LLCs and Foreign LLCs, both of which can only do business in Wisconsin after registering with the DFI. The Act gives directions on the formation process, running, dissolution, and winding up of LLCs in the state.
To organize an LLC in Wisconsin, applicants would need to choose a name that complies with the naming rules of Wisconsin. The LLC would need to have members 18 years of age or older and a resident registered agent. Residency for the members of the organization is not a requirement, however, the LLC would need to have a registered, physical street address within Wisconsin.
Step 1: Wisconsin LLC Name Search
The first step to forming an LLC in Wisconsin is to select an uncommon name. It is recommended that applicants do a name availability search using the Wisconsin Corporate search tool on the DFI’s website. Inquirers can also do a name availability search on third-party sites that offer this service, however, it is best to check the DFI web page directly. The search would confirm if the selected name is obtainable and complies with the LLC naming requirement in the state. If the name is available, one can apply for a name reservation by filling out and submitting the name reservation form provided on the DFI website. An LLC’s name can be reserved for up to 120 days in Wisconsin. The fee is $15.
The LLC naming requirement in Wisconsin is as follows:
- The selected name should contain Limited Liability Company. It can appear as LLC, L.L.C, LC, Limited Company, Ltd Liability Company, or Limited Liability Co.
- The name of the LLC should be distinguishable. However, as provided in the WULLCL, an LLC (domestic or foreign) can send an application to the Department requesting to use a name that is not distinguishable. While this is possible, only when the organization with the name consents in written form or the applicant provides a judgment from a court granting this request can the name be used.
- Words that would confuse the LLC with a government agency or mislead the public about the purpose of the LLC should not be used.
Alongside conducting a name availability search, individuals looking to form an LLC can also carry out a search on the United States Patent and Trademark Office (USPTO) web page; the search can be done using the electronic trademark search system provided. One is encouraged to carry out this search to ensure that the name of the LLC is not confused with another registered organization.
Step 2: Choosing an LLC Registered Agent in Wisconsin
As stated in 183.0115 LLCs in Wisconsin are required to have and sustain a registered agent within the state. A registered agent serves as a representative of the organization, receiving legal documents on behalf of the LLC. Registered agents can be a person or a business entity who has consented to serve as an agent for the organization. Please note that if the selected agent is a foreign LLC, only those authorized to do business in the state can serve as registered agents.
An LLC registered agent is mandated to fulfill the following requirement:
- Be a resident of Wisconsin.
- Be 18 years or above.
- Have a physical address for conducting business in Wisconsin and an email address.
- Be available to receive notices or legal documents during working hours.
Members of the public who desire to reach the registered agent of an LLC can check the records regarding the company on the WDFI registered corporation database. The name, address, and email address of the registered agent are usually some of the information included in the Article of Organization. The inquirer can conduct this search using the name of the LLC.
How Do I Change the Registered Agent for My LLC in Wisconsin?
An LLC can choose to change its registered agent in Wisconsin. This process is usually simple and straightforward. To change a registered agent, the Statement of Change form-13 would need to be filled and submitted to the DFI, Division of Corporate and Customer Services. The fee is $10. Submission can be done online (filing fee to be paid using a credit or debit card) or via mail. The requester would need to enter the details of the registered agent to be changed, and the new registered agent. For submission via mail, the form should be sent to the address below including a check for the filing fee payable to the department.
Box 93348, Milwaukee
Those using priority or express mail are to send the filled form to:
State of Wisconsin Department of Financial Institutions, Division of
Corporate and Consumer Services,
4822 Madison Yards Way,
4th Floor, North Tower,
Madison Wisconsin, 53705
Upon filing, the updated registered agent would be made public.
Another way to change a registered agent in Wisconsin is to update the details on the annual report before filing.
Step 3: LLC Filing Requirements in Wisconsin
Applicants looking to form an LLC to conduct business in Wisconsin would be required to register with Wisconsin’s DFI. This process apart from other requirements would involve filing certain documents that provide details about the company. These documents include the LLCs Article of Organization, Operating Agreement, and Statement of Information (also called Annual Report). Please bear in mind that filing these documents applies only to Domestic LLCs as Foreign LLCs would be required to file different documents.
LLC Articles of Organization in Wisconsin
An Article of Organization is an official document that is required to be filed with the Wisconsin DFI for an LLC to be formed. This document contains information such as a statement that the LLC is formed under Chapter 183 of the WULLCL; the name of the company, the details of its registered agent, the purpose of the LLC, its duration, the details of members of the company, and its management structure. The fee for filing this document is $130 (online filing) or $170 (paper filing).
LLC Operating Agreement in Wisconsin
An Operating Agreement in Wisconsin is an official document stating how an LLC would be run. Although this document is not required by law in Wisconsin, it is essential that an LLC has one as it can serve as a guide and clarification for the organizers of a company. This document can contain information such as how voting would be conducted, the rights of its members, transfer of percentages, dissemination of profit or loss, and even dissolution of the company. It also contains ownership layout and the responsibility of management. Having all this information clearly written ensures that there is no confusion or conflict in case of any event. In addition, because the responsibility and rights of organizers are stated, members are protected.
Wisconsin LLC Statement of Information
A Wisconsin LLC Statement of Information is an Annual report filed with the Wisconsin DFI by an LLC; it is a requirement for all LLCs within the state. An annual report form which is to be filled out and submitted is usually sent to the registered agent before the deadline of filing. The report contains all recent happening or changes within an organization. In Wisconsin, a Statement of Information is first filed 90 days after the formation of an LLC, and then subsequently filed biennially. This is to ensure that the DFI has updated information about the core staff of the LLC, its operations, taxation, and compliance.
The form can be submitted online or via mail. Failure to submit an annual report up to a year after the due period may lead to the dissolution of the organization. The cost to file an annual report online and via mail is $25 for domestic LLCs; $65 for online filing and $80 for reports filed via mail for foreign LLCs.
Do You Need a Wisconsin Address for LLC?
Yes. LLCs in Wisconsin are required to have a physical address. This address would be included in the Article of Organization and serve as the primary meeting point for business for the LLC. Notices, official mail, and legal documents would be sent to the address provided. In the event that an organization does not have a physical space in Wisconsin, the address of the registered agent can serve. Additionally, the LLC can opt for a virtual address. There are services that offer a Wisconsin address, meeting all the requirements of a physical address while the LLC works remotely.
Please note that a virtual address would only be permitted if it is a physical street address; a P.O. box address is not acceptable in Wisconsin.
How to Get a Virtual Address for LLC in Wisconsin
There are several service providers that offer different packages for a virtual address, at varied prices. Packages can include a business address, registered agent, coworking space, mail handling, a meeting room, services of a receptionist (some live, some virtual), services of a secretary, etc. The owner of the LLC can check out and consider the different packages available, and select the one that best serves the purpose intended. Bear in mind that while a virtual address can be used as the primary address of the office, a registered agent is required to have a physical office.
Step 4: How to File for an LLC in Wisconsin
Persons looking to form an LLC in Wisconsin can file via mail or in person. For either mail or in-person filing, applicants would need to download and complete the Article of Organization form. Following completion of the form, one can include any other additional document required to be submitted and take along the required filing fee. These documents can then be submitted at the Wisconsin DFI office during working hours. The cost of filing in person is $170, however, it is $100 for foreign LLCs. DFI office is located at:
Wisconsin Department of Financial Institutions
Division of Corporate and Consumer Services
4822 Madison Yards Way, North Tower
Madison, WI 53705
Persons who want to file via mail can forward it to:
Wisconsin Department of Financial Institutions
Division of Corporate and Consumer Services
PO Box 93348
Milwaukee, WI 53293-0348
Please note that LLCs in Wisconsin are expected to file a Statement of report 90 days after its formation, and biennially afterwards.
How to Create an LLC Online in Wisconsin
Once all the requirements by the law of forming an LLC in Wisconsin are met, the owner of the LLC can choose to file online with the Wisconsin Department of Financial Institutions (DFI). Online filing is relatively simple and easy to do. Persons who choose this option can visit Wisconsin’s DFI web page and use the online filing system provided following these steps:
- Click on ‘Business Services’ at the top left-hand corner of the homepage.
- From the drop list, click on ‘Business Entity File Online’, under Business Entities.
- On the page displayed, click on ‘Create a corporation or LLC. A page would be displayed where one can select the Entity (domestic or foreign).
- After clicking on the entity type (domestic), a page of instructions would be displayed. It is important that the applicant carefully reads through it.
- At the end of the page, the applicant can click on the button in the left corner.
- A page would be displayed, read through the instructions then enter the name of the LLC in the box provided.
- At the bottom of the page click the ‘next’ button.
- Another page would be displayed. Enter the details of the registered agent and the registered office address. At the bottom of the page click ‘next’.
- A page would be displayed, fill out the details of the principal office, scroll down, then click next.
- On the next page, fill out the details of the organizers, and click the save button (there is an option to add details of other organizers). Once this is done, click on save, then next.
- A page would be displayed where one can add any other additional information (this is optional). When done, click next.
- On the page displayed, fill out the details of the drafter (the person filling out the form). There is an option to declare a delayed effective date (for an applicant who wishes for the effective date to be in the future). To continue the filing click next.
- On the next page, click on the little box next to the name of the registered agent as a signature. Click next.
- Enter the details for contact on the page displayed. Click next.
- A preview page would be displayed. In case of an error click the edit button. Persons who wish to accelerate the processing of filing can click on the expedited service option for an additional fee of $25. Once that is finished, click on next to proceed to the payment of the required fee.
- A page would be displayed where the drafter would need to enter card details to be used for payment. After payment, one may proceed to submit the Article of Organization.
Organizers applying online are also expected to file a Statement of Information form (Annual report). This can be done on the WDFI web page. On the home page:
- Select the ‘Business Services’ option at the top left-hand corner.
- A drop list would be displayed. Click on ‘Business Entity File Online’, under Business Entities.
- On the displayed page click on ‘File an Annual Report’.
- A page would be displayed where one can search for the business entity by name or ID. Once the name or ID of the business is entered click the search button. The data on the business would be displayed; click on it to open it.
- The details of the business would be displayed on the next page, below the name of the company click on ‘file Annual Report’.
- Fill out the form as accurately as possible. Proceed to make the necessary payment, then file the document.
An inquirer can also create an LLC online or file a Statement of Information using the Wisconsin OneStop Business (OBS) portal. One would need to create an account with OBS to form an LLC using this service. However, this is not necessary to file an annual report. To file a Statement of Information without an account, individuals can do the following:
- Visit the OBS website, on the home page, click on the ‘file now’ in your right-hand corner.
- On the page displayed enter the name or ID of the business entity and search.
- Click on the retrieved data, if the data displayed is accurate, click on next.
- A page containing instructions would be displayed. Go through the instructions then click next.
There are instructions on every page displayed, follow the prompts and complete the form then submit. The fee for filing is $25 and an additional $1 for the portal fee
Can You Have Multiple Businesses Under One LLC in Wisconsin?
Yes. As provided for by the WULLCL an organizer can have multiple businesses under one LLC in Wisconsin, not needing to file each one as a separate entity. The LLC would need to file DBA (fictitious names) for each extra business. While this is possible, the organizer may need to secure different permits or licenses for the businesses, depending on the type. Additionally, it is advised that each business maintains a different financial report and bank account. One should also review the consequences of this venture as whatever affects one business would affect the rest. For instance, if one of the businesses is sued or suffers liability, other businesses are affected.
How Long Does it Take to Set Up an LLC in Wisconsin?
The duration for setting up an LLC in Wisconsin differs depending on the complexity of the company formed, and the method used for filing. For example, an LLC that requires more paperwork would take a longer time than one that does not, also, filing online takes a relatively shorter time. Once the LLC is filed, and approved, it becomes effective. On the other hand, filing by mail would take 5 working days to 2 weeks, except if one opts for expedited service for an extra $25.
An in-person filing may be processed that same day or take longer. The length of time taken is dependent on the workload of the department as of the time the LLC is filed, the presence or absence of errors or omissions from the applicant, and the type of service applied for. Nonetheless, these time frames are conditional and subject to modification.
Step 5: How to Get an EIN for LLC in Wisconsin
LLC organizers can apply to IRS for an Employer Identification Number (EIN) online, via mail, or fax. Getting an EIN for an LLC online is practically easy, straightforward, and recommended. There is a guide provided on the IRS home page that one can follow. As soon as applicants fill out and submit the required information an EIN is generated.
To obtain an EIN via mail or fax, interested persons would need to complete and submit Form SS-4 to the following address:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Individuals with no legitimate residence, primary place of business, office, or agency in any state can forward it to:
Internal Revenue Service
Attn: EIN International Operation
Cincinnati, OH 45999
Fax: 855-215-1627 (within the U.S.)
Fax: 304-707-9471 (outside the U.S.)
Processing time for mail application is 4 weeks, while fax is 4 days.
Step 6: Do LLCs Pay Taxes in Wisconsin?
Yes. LLCs pay tax in Wisconsin. Businesses are subjected to different types of taxation. The total amount of tax paid depends on, the method of taxation, the number of employees, and local and state rules. LLCs are expected to pay tax at the state (franchise and income) level. Despite the two types of tax, only one of either is enforced on a company per taxable year. Because tax laws are often updated, it is important that one contacts Wisconsin’s DOR for inquiries.
How Are LLCs Taxed in Wisconsin?
All tax payments are made to the Wisconsin Department of Revenue (DOR). LLCs in Wisconsin are mandated to pay annual taxes and annual fees. LLCs can choose how they want to be taxed. By standard, an LLC can either be taxed as a single-member or multi-member LLC. Single-member LLCs are taxed as disregarded entities (pass-through taxation), while Multi-member LLCs are taxed as a partnership. The tax rate for “default status” varies from 3.54% to 7.56% as it depends on the income of the owner of the LLC.
Alternatively, an LLC can apply to IRS for an “elective status”, on approval, the LLC is taxed as a corporation. LLCs taxed as a corporation must make tax payments if their present-year liability is $500 and above except if the income for that year is less than $250,000 and the LLC owes no tax for the previous 12-month taxable year. The tax rate IS 7.9%.
Tax Benefits of an LLC in Wisconsin
There are a number of benefits to forming an LLC in Wisconsin, some of these benefits include the following:
- Pass-through taxation: as in other states, LLCs in Wisconsin enjoy pass-through taxation. In this type of taxation, the LLC is not directly taxed, instead, profit and losses go directly to the owners who in turn report it as personal returns. This reduces the tax load of the business preventing double taxation.
- Method of taxation: Members of an LLC have the flexibility of choosing how they want to be taxed. This means that members can manage the tax demand for maximum benefit.
- Deduction of expense: organizers of an LLC in Wisconsin can remove some essential expenses pertaining to the business: expenses such as the cost of rent, wages of employees, utilities, etc. This would reduce the taxable income.
Do You Have to Renew LLC Every Year in Wisconsin?
No. The organizers of an LLC in Wisconsin are not required to renew it yearly after its formation. There is no expiration date for an LLC unless it is dissolved. As long as it remains in good standing, an LLC can do business in the state. For an LLC to remain in good standing, it would be required to:
- File every necessary document within the appropriate timeframe (annual report).
- Pay its taxes.
- Comply with the state’s guidelines governing LLCs.
An LLC that fails to meet this requirement would be declared not in good standing and may eventually be dissolved.
How Much Does It Cost To Start an LLC in Wisconsin
The cost of starting an LLC in Wisconsin differs as it depends on several factors. The total cost incurred from forming an LLC can be divided into basic costs and optional costs.
Method of filing: filing an LLC (Article of Agreement) online in Wisconsin is $130, however, filing in person cost $170.
Annual report: There is also the cost of filing annual report which is $25, the first of which would be submitted by the end of the month of the formation of the LLC.
Taxes: taxes to be paid by a business depends on the type of business and its activities. Some of the taxes imposed on businesses in Wisconsin include federal income tax, state income tax, local tax, business tax, sales tax, payroll tax, etc.
The cost of employing the services of a registered agent: an owner who does not want to be the LLC registered agent may incur an additional cost of up to $200.
Filing for a name reservation would cost $15
Contracting the work of drafting an operating agreement can cost as high as $200
Filing a DBA cost $15
Other possible costs include obtaining business licenses, obtaining permits for the particular business, brand name registration, and employing the services of an accountant or lawyer.
Can You Form an LLC In Wisconsin For Free?
No. Nevertheless, individuals looking to form an LLC in Wisconsin can reduce the cost of forming one by taking care of part of the work demanded.
How to Start an LLC in Wisconsin For Free/At Minimal Cost
Usually, LLCs in Wisconsin are obligated to pay a filing fee of $130 fee (for online filing) or $170 (for paper filing), annual report fees, and taxes. However, there is a provision for low-income earners and student entrepreneurs to apply for a waiver of the required filing fee. A low-income earner can apply for a waiver. Such an individual would need to provide proof of such a claim. Please note that it would be left for the Wisconsin DFI to determine if the applicant qualifies for a waiver based on the information provided.
Those who do not fall in the above-mentioned category cannot file an LLC for absolutely free. However, an organizer can choose to only incur compulsory fees. For instance, applying online costs lower and this is easy to do. An organizer can also act as the registered agent and by doing so reduce the cost of employing one.
What Businesses Should Consider Forming an LLC in Wisconsin?
LLCs are arguably the best structure for start-ups, small, medium, and partnership businesses as it provides several benefits. They are simple, and easier to manage in comparison with corporations. Its management and ownership structures can be adapted to suit its purpose and running. Generally, LLCs can be used for any type of business, as long as its operation is within legal boundaries.
What are the Benefits of An LLC in Wisconsin?
The benefits of an LLC in Wisconsin include the following:
- Simplicity: LLCs are simpler and easier to manage business structures compared to other forms of business. LLCs do not have internal regulations or stakeholders which reduces the complexities that come with them.
- Formation: an LLC can be formed by a single individual or a group of persons.
- Limited liabilities: limited liabilities are one of the top perks of an LLC as the assets of members are protected if the business is sued or runs into debt. It combines sole proprietorship and partnership.
- Recognition: most persons readily accept an LLC as a more formal type of business in comparison to sole proprietorship and partnership.
How Does an LLC Work in Wisconsin
LLCs in Wisconsin are a combination of sole proprietorship and partnership in function. The members of an LLC are preserved from personal liabilities. The organizers of an LLC enjoy the benefits of stockholders of a corporation, at the same time taxed as partnerships.
An LLC can either run as a one-person or a multiple-person company, this is what makes it different from other business structures. Other types of business can only operate as one of the two.
As long as an LLC files all the documents in the proper time required by Wisconsin DFI, it would remain in good standing and actively operational. However, negligence of this responsibility would have consequences.
LLC VS S Corp in Wisconsin
Like an LLC, S Corp is treated as a pass-through entity, however, there are a few differences between both. An LLC is a legal structure, whereas an S Corp is a tax election. LLC has a flexible, taxation, management, and ownership structure, including less paperwork, on the other hand, an S Corp requires a more strict approach to taxation, management, and ownership and requires more detailed paperwork.
An LLC provides limited liability security to its members whereas, members of an S Corp are affected by the profit or loss of the company and this is reflected in the personal tax returns of its member. There is no limit to the membership of an LLC and the type kind of members that can be a part of it, however, it is not so in the case of an S Corp as it can not have beyond 100 members and may only include a certain type of stockholder.
If members of an organization plan towards expanding their business capital and activities, an S Corp would prove a better option than an LLC. There are also certain tax benefits enjoyed by S Corp that an LLC does not benefit from. For instance, LLC organizers are mandated to pay self-employment tax on the net profit if taxed as a partnership or sole proprietorship, while, members of an S Corp can evade it.
LLC vs. Sole Proprietorship in Wisconsin
An LLC is a formal business structure formed by one or more persons in which the business is treated as a separate entity from its owner. In other words, the personal assets of its owner are protected from any harm experienced by the business. On the other hand, a sole proprietorship is a one-person business where the business and the owner are perceived as the same so that when a business is sued or debt is incurred, the owner is not protected from it.
While an LLC can have a limitless number of members, a sole proprietorship just has one member who is the owner of the business.
A Sole proprietorship is one of the easiest and simplest of all types of business structures. It does not require filing any document with the Wisconsin DFI, which cuts down the cost of starting the business. Furthermore, it requires very little to no legal work, and decision-making is straightforward as this depends on only the proprietor.
LLC vs. Corporation in Wisconsin
Although LLCs and Corporations provide limited liabilities to members of the organization in Wisconsin, both organizations share a few differences.
The management and ownership structures differ in the sense that while an LLC is flexible, a Corporation is not, rather it is more structured. LLCs can be sole proprietorships or partnerships, by contrast, a Corporation has owners ranging from directors to stockholders and officers. Compared to LLCs, Corporations are more complex to run as it requires that the company creates bylaws that clearly define individual roles and responsibilities as well as provide a guide for the various meetings held within the organization.
However, because a corporation is older than an LLC, the laws guiding it are more developed hence issues that may arise have a better reference for quicker resolutions in comparison to LLCs. Corporations can elect to be an S Corp and so enjoy the tax benefits of this election, making it a preferable business entity compared to an LLC.
Business License vs. LLC in Wisconsin
A business license and an LLC are entirely different things. A business license is an official document permitting a business to carry out activities within a state, while an LLC is a type of business structure that requires some document filing with DFI. There is no general business license in Wisconsin, however, businesses require a license to be able to operate in the state.
Do I Need a Business License if I Have an LLC in Wisconsin?
Yes. Businesses in Wisconsin need a business license to run legally in the state. The type of license needed depends on the type of business activities, its location, and the type of business entity. Licenses could be local or state level. Applicants who wish to obtain a license for a particular business can contact a lawyer or the Wisconsin Department of Regulation and Licensing to provide a guide as to the requirements. There are 3 departments that are generally in charge of granting licenses The Department of Agriculture, Trade and Customer Protection, The Department of Health Services, and The Department of Safety and Professional Services. Different statutes govern these businesses. For example, Wisconsin Legislature: 97.71 covers recreational licenses and fees, and Wisconsin Legislature: 97.607 covers lodging and vending machines.
How to Dissolve an LLC in Wisconsin
The WULLCL provides a guide to individuals who want to dissolve an LLC. After agreeing to dissolve an LLC, its members would need to complete and file an Article of Dissolution Form 510 with the Wisconsin DFI. The organization would need to send notices to creditors or anyone who holds a claim to the organization. The members would also need to provide a tax clearance and file the final Annual report. If the company owes any outstanding tax or report, its organizers would be required to be taken care of it before the LLC can be dissolved. The fee for filing is $20.