How to Create a Series LLC in Wisconsin

What Is a Series LLC?

A Series LLC is a unique form of a limited liability company that allows for the creation of multiple, distinct series within a single LLC. Each series operates independently, with its own assets, liabilities, and members. This structure allows for the segregation of assets and liabilities among the series, providing liability protection for each series from the debts and obligations of the others.

Does Wisconsin Allow Series LLCs?

Yes, Wisconsin permits the formation of Series LLCs under its state laws. The relevant statute is found in the Wisconsin Statutes, Chapter 183, which governs limited liability companies. It is essential to include specific language in the formation documents to establish a Series LLC, ensuring that the series structure is recognized legally.

How a Wisconsin Series LLC Works

In a Wisconsin Series LLC, the master LLC acts as the umbrella entity, under which multiple series can be created. Each series can hold its own assets, incur liabilities, and have distinct members and managers. The separation of liabilities is a key feature, as it protects each series from the financial obligations of the others. Proper recordkeeping and adherence to structural requirements are crucial to maintaining this separation.

Benefits of Forming a Series LLC in Wisconsin

• Cost Efficiency: Forming a Series LLC can be more cost-effective than establishing multiple separate LLCs, as it reduces the need for multiple filings and administrative tasks.
• Asset Segregation: Each series can hold different assets, providing protection and isolation from the liabilities of other series.
• Administrative Flexibility: The structure allows for streamlined management and operations across different business ventures under a single legal entity.

Limitations and Risks of a Wisconsin Series LLC

• Legal Uncertainty: Some jurisdictions may not recognize the series structure, potentially leading to legal challenges.
• Banking and Lending Challenges: Financial institutions may be unfamiliar with Series LLCs, complicating banking and lending processes.
• Tax Complexity: Navigating tax obligations for each series can be complex, requiring careful compliance with state and federal tax laws.

Who Should Consider a Wisconsin Series LLC?

A Series LLC is suitable for businesses with distinct operations or assets, such as real estate investments, asset holding companies, or intellectual property portfolios. It is ideal for those seeking liability protection across different business lines. However, for simpler business structures, a traditional LLC may be more appropriate.

Step-by-Step: How to Create a Series LLC in Wisconsin

Step 1: Choose a Name for the Series LLC

The name must comply with Wisconsin's naming requirements, including the use of "Limited Liability Company" or abbreviations like "LLC." Each series should have a distinguishable name that includes the parent LLC's name.

Step 2: Appoint a Wisconsin Registered Agent

A registered agent is required to receive legal documents on behalf of the LLC. The agent must be a resident of Wisconsin or a business entity authorized to do business in the state.

Step 3: File the Certificate of Formation

File the Certificate of Formation with the Wisconsin Department of Financial Institutions. This document includes the LLC's name, registered agent information, and management structure. Filing can be done online or by mail.

Step 4: Include Series LLC Language

Ensure the Certificate of Formation includes language authorizing the creation of series. Failure to include this language may result in the series structure not being legally recognized.

Step 5: Draft a Series-Compliant Operating Agreement

An operating agreement is crucial for internal governance. It should outline the management, asset, and liability separation provisions for each series.

Step 6: Establish Individual Series

Create each series internally, maintaining separate records and documentation for each. This includes distinct financial records and operational documents.

Step 7: Obtain EINs (Parent and Series, If Needed)

An Employer Identification Number (EIN) is required for the parent LLC and may be needed for each series, depending on their operations and tax obligations.

Step 8: Open Separate Bank Accounts

Each series should have its own bank account to ensure financial separation and prevent commingling of funds, which could jeopardize liability protection.

Step 9: Comply With Wisconsin Tax Requirements

Understand and comply with Wisconsin's tax obligations, including sales tax, income tax, and any other applicable state taxes. Each series may have separate reporting and payment requirements.

Wisconsin Series LLC Filing Fees and Costs

The filing fee for the Certificate of Formation is $130 if filed online and $170 if filed by mail. Additional fees may apply for each series and ongoing compliance.

Wisconsin Franchise Tax and Series LLCs

Wisconsin does not impose a franchise tax on LLCs. However, each series must comply with state tax reporting obligations, which may include income and sales taxes.

Ongoing Compliance Requirements for Wisconsin Series LLCs

Series LLCs must file annual reports and maintain accurate records for each series. Compliance with state regulations is essential to preserve liability protection.

Common Mistakes When Forming a Series LLC in Wisconsin

• Missing Required Series Language: Failing to include series authorization in formation documents can invalidate the series structure.
• Poor Recordkeeping: Inadequate documentation can lead to liability issues.
• Mixing Assets Between Series: Commingling funds or assets can compromise liability protection.

Series LLC vs Traditional LLC in Wisconsin

A Series LLC offers liability protection and cost savings for businesses with multiple operations, while a traditional LLC is simpler and may be more suitable for single-business entities. The choice depends on the complexity and needs of the business.

Additional Resources

• Wisconsin Statutes - Chapter 183
• Wisconsin Department of Revenue
• Contact: Wisconsin Department of Financial Institutions, Phone: (608) 261-9555, Email: DFI@wisconsin.gov

This article provides general information about Wisconsin LLC formation requirements under Wisconsin Statutes Chapter 183. It is not intended as legal advice. Persons forming an LLC should consult with a private attorney regarding their specific circumstances.