How to Start an LLC in Wisconsin

12/11/2023 12:26 PM

Everything you need to know about Wisconsin LLC filings.

Are you an entrepreneur with dreams of starting an LLC in Wisconsin? Our 7-step guide will show you how to start an LLC in Wisconsin and get your business off the ground. Read on to discover if an LLC is the business structure that will work best for you and how to start the process of forming a Wisconsin LLC. To form an LLC in Wisconsin, you will need to:

Choose your unique business name
Decide how to manage your company
Set up your registered agent
Compile articles of organization
Draft an operating agreement
Obtain an EIN
Maintain your LLC

What Is an LLC?

Before you learn how to start an LLC in Wisconsin, you’ll want to know more about this flexible type of business. An LLC, or limited liability company, is a type of business entity, like a corporation or sole proprietorship. Forming a Wisconsin LLC is a popular choice for fledgling businesses because it allows you to take advantage of many benefits but is relatively easy and inexpensive.

Types of Business Structures

Every business structure has its benefits and drawbacks. One of the main perks of setting your business up as a Wisconsin LLC is its flexibility. For entrepreneurs who want a simple, straightforward corporate structure, it’s a better choice than some other business types.

Corporations, for example, have many corporate formalities, such as having regular meetings and keeping minutes. LLC owners, called “members,” aren’t required to comply with these requirements. This makes forming a Wisconsin LLC an appealing choice for owners who don’t want to spend a lot of time on administrative tasks.

Management Options for Your WI LLC

When you think about how to start an LLC in Wisconsin, you’ll need to decide how you’d like your company to be managed. An LLC gives its members a good deal of control over how to invest their time, financial commitment and energy into the company.

Single Member WI LLC

LLCs that have just one member or owner are usually run as a single-member LLC. Wisconsin allows a single-member LLC to elect a manager to assist with daily business operations. For instance, an LLC that owns rental property may elect a manager to arrange repairs, handle tenant complaints and collect rent from tenants. However, the member retains all legal authority to make business decisions.

With this type of LLC structure, the owner is the sole member. Thus, any business profits and expenses are taxed through the owner’s personal tax return using a Schedule C tax form.

Member-Managed WI LLC

For LLCs whose members want all owners to be accountable for managerial duties, member-managed LLCs are a good choice. In this management structure, all members share responsibility for the day-to-day operations of the company. This option makes sense for less complex businesses that don’t need multiple tiers of management.

Manager-Managed WI LLC

Some LLC members prefer that the daily business operations rest with a select group. For these LLCs, owners can elect to be manager-managed. This is a good choice for Wisconsin LLCs looking to attract passive investors: Venture capital contributors who may want an ownership stake but are not interested in management duties.

Key Benefits of a Wisconsin LLC

An LLC provides limited liability protection to its members. This is a major benefit because it protects personal assets from being used to satisfy debts or judgments against the business. Members who are concerned about protecting their personal funds and assets will find the limited liability offered by the Wisconsin LLC structure very attractive.

Tax Advantages of a Wisconsin LLC

When learning how to start an LLC in Wisconsin, consider your tax options. One of the benefits of LLCs is pass-through taxation, where your LLC’s profits pass through to its owners and are reported on their personal tax returns.

This method allows Wisconsin LLC owners to enjoy a lower tax rate than corporations. It also avoids double taxation, when the same income stream is taxed on both the members’ individual and corporate returns.

Seven Key Steps for How to Start an LLC in Wisconsin

Now that you know some of the benefits of starting a Wisconsin LLC, review our guide on how to start an LLC in Wisconsin in seven steps.

1. Choose Your Unique Business Name

Naming your company is one of the first and most important things you’ll do for your LLC. Wisconsin requires your LLC’s name to be unique and distinguishable from any other business entities in the state.

To verify that your name isn’t being used by another company and check for Wisconsin LLC name availability, run a business entity search on the Wisconsin Department of Financial Institution’s website. If your desired name is available, you can apply for a name reservation to hold it for up to 120 days.

Wisconsin LLC rules set out some naming conventions and requirements you’ll need to keep in mind. Your name must include one of the following phrases:

Limited liability company
Limited liability co.
L.L.C.
LLC

Inside Scoop: Once you’ve settled on your perfect name, consider registering for a website and setting up social media accounts for your Wisconsin LLC. This will ensure that when you’re ready to build up your web presence, your company’s name isn’t associated with anything else.

2. Decide How to Manage Your Company

Before learning how to start an LLC in Wisconsin, decide whether it will be member-managed or manager-managed. This is information you’ll need to include in your articles of incorporation and operating agreement (more on that below).

Inside Scoop: For companies where all the owners (members) will be active in the day-to-day operations, member-managed is the way to go. For companies where there will be a smaller group designated with managerial responsibilities, manager-managed is the better choice.

3. Set Up Your Registered Agent

You’ll need to designate a person or company to act on behalf of your LLC as a registered agent. This individual will accept official documents like tax paperwork, legal mail and court summonses on behalf of your company.

An individual registered agent is required to live in Wisconsin, have an address in the state and be at least 18 years of age
If you want to designate an out-of-state company as your registered agent, it must have an in-state office that is designated as the site where service of process can occur
If you don’t want to designate an individual or company, you can use a professional registered agent company

Inside Scoop: You may think it’s cheaper and easier to just designate yourself, but are you going to be available at your business address during all regular business hours? If you’re not, delivery of important information may be delayed. Using a professional service eliminates that uncertainty.

4. Articles of Organization

The next step in your Wisconsin LLC registration is to file your paperwork with the WI Department of Financial Institutions.

The first official required document is the Articles of Organization. This form includes some of the specifics of your company, like what industry you work in and how the business will be managed. It informs the state of your plans to establish your LLC and creates the powers, duties, rights, obligations and liabilities between the LLC and its members.

You can file your Wisconsin LLC Articles of Organization online, in person or via mail. Owners filing in person or via mail must download and submit Form 502. The turnaround time after submitting your articles of organization is about 4-7 business days. You can pay an expedited fee if you want your LLC to get off the ground more quickly.

Inside Scoop: You can designate a date up to 90 days in the future for your Articles of Organization to take effect and authorize your Wisconsin LLC. This may be beneficial for tax purposes or other reasons specific to your situation.

5. Draft an Operating Agreement

For an LLC, Wisconsin does not require an operating agreement. However, it’s a good idea to create one. This document details how your business will be run and the role its members will play. You don’t need to file or record it with the state, but all members should have a copy.

The operating agreement is an internal document that establishes the functional structure and rules for the members to follow. It helps with the day-to-day management and ownership issues of your LLC. Wisconsin articles of organization, on the other hand, simply provide the state with official information regarding the LLC, such as ownership, management and tax structure.

Inside Scoop: This document is extremely important. You want to make sure that everyone’s rights and financial responsibilities are crystal clear. It can be helpful to consult with an attorney who focuses on small businesses to draft your LLC’s operating agreement.

6. Obtain an EIN

Many LLCs are required to obtain an employer identification number, or EIN. EINs are used by the IRS to keep track of businesses. Without one, your Wisconsin LLC won’t be able to complete basic business functions like opening a bank account, applying for a loan or filing taxes. Apply for your EIN easily and online for free.

Your LLC will also need a Wisconsin State Tax Identification Number. This allows you to file and pay Wisconsin taxes and complete any other applicable Wisconsin business registration or licensing obligations.

Inside Scoop: If you’re opening a single-member LLC, it’s not necessary to get an EIN, but it can be helpful to keep your personal financial records separate from your business.

7. Maintaining Your Wisconsin LLC

You’ve figured out how to start an LLC in Wisconsin and have nearly completed all the steps — now what? Once your business is up and running, you’ll need to stay on top of your annual obligations as an LLC owner.

File annual reports with the Wisconsin Department of Financial Institutions, which you can complete online for a nominal fee
You may need to apply for licenses, permits or registrations, depending on your company’s industry; for example, companies that serve alcohol will need an alcohol beverage permit
If you notice an error in your Wisconsin LLC registration paperwork, you’ll need to submit Form 53, Articles of Correction, to the Wisconsin Department of Financial Institutions

Inside Scoop: To end an LLC, Wisconsin requires you complete and file Form 510, Articles of Dissolution and pay a filing fee (don’t forget to follow dissolution steps in your operating agreement if you have one!)

How much does it cost to start an LLC in Wisconsin?

Starting an LLC in Wisconsin costs more when filing in person versus online. In addition to filing fees and costs, you’ll have to factor in other operational costs and expenses. It can be helpful to use an online tool to calculate your projected startup costs before you begin learning how to start an LLC in Wisconsin.

If you’re operating from out of state and want to file as a “foreign” LLC in Wisconsin, you’ll also have to pay a fee to the state where you form the LLC in addition to the fee for registering your LLC in Wisconsin.

Growing Your LLC: Wisconsin Small Business Resources

Learning how to start an LLC in Wisconsin is only the first step. Fortunately, the Badger State has many helpful resources for small businesses. These include:

The Wisconsin Small Business Development Center (SBDC), which has 14 centers around the state offering resources to help you find funding, make connections and learn more about how to make your business a success
The state Department of Workforce Development, which helps you understand and comply with the legal requirements of operating a business in Wisconsin
Links, news and updates from the Wisconsin Department of Economic Development
SBDC locations at the UW-Madison School of Business and UW-Milwaukee School of Business, offering students and small businesses the opportunity to collaborate and grow together
WWBIC, an economic development corporation that offers support, resources and assistance to historically underrepresented and marginalized entrepreneurs in Wisconsin
Resources from local government agencies (such as the Madison chamber of commerce and the City of Milwaukee’s Business Capacity Building Program)

Wisconsin is a very accommodating state for businesses. The cost to start up and maintain an LLC are minimal, and the atmosphere is welcoming to new entrepreneurs.

Benefits of Legal Advice

You now know quite a bit about how to start an LLC in Wisconsin, but an experienced business formation company can make the process even easier. They’ll complete all the necessary paperwork and ensure that all your documents are filed in a timely manner.

Legal Disclaimer: This article contains general legal information but does not constitute professional legal advice for your particular situation and should not be interpreted as creating an attorney-client relationship. If you have legal questions, you should seek the advice of an attorney licensed in your jurisdiction.