This quick guide to forming an LLC in Wisconsin will take you through the key steps of the process. An LLC in Wisconsin is a legal structure for your business that provides liability protection to your personal assets. Additionally, LLCs don’t require formalities that generally come with other ways of structuring your business.
Creating a Wisconsin LLC requires filing the Articles of Organization with the Wisconsin Department of Financial Institutions. But it’s necessary to handle a few things before and after we deal with the Articles of Organization for a Wisconsin LLC.
1. Naming Your WI LLC
Naming is a very important part of successfully setting up your Wisconsin LLC. Wisconsin requires that the name chosen be unique and clearly distinguishable from other entities in the state. So you’ll have to put in some extra effort to see if your chosen name is available.
Remember, names aren’t available even if they’re similar to your chosen name. Additionally, WI LLC names shouldn’t be misleading to the general public. The name can’t be similar to names of government agencies or departments either.
Keeping these requirements in mind, you can check for name availability at the Wisconsin Department of Financial Institutions business name database. A quick search should give you a good idea of the name availability.
It’s also worth recommending that you run a search on the USPTO website to ensure that your chosen name doesn’t run foul of any trademarks.
Wisconsin LLC Designators
Every LLC name must end with a designator that identifies it as a Limited Liability Company. LLC name designators allowed in Wisconsin are:
- Limited Liability Company
- Limited Liability Co.
As you probably know already, LLC is the most commonly used name designator.
Reserving An LLC Name (Optional)
Name reservation for your LLC is a handy tool. You’ll have to fill and submit a Name Reservation Application (Form 1). If the chosen name is available, the state reserves it for your use. This reservation lasts for 120 days.
2. Getting A Registered Agent In Wisconsin
Every LLC in Wisconsin must have a Registered Agent. The primary role of this agent is to receive service of process on behalf of your LLC. Service of Process involves receiving legal documents like lawsuits in case your LLC is sued.
Other documents like summons, subpoenas, notices, can also be delivered to your LLC’s registered agent. Your Wisconsin LLC registered agent may also receive general correspondence.
A registered agent is a person or entity that agrees to fulfill the above role. They’ll receive these documents/lawsuits on behalf of your LLC and forward them to the relevant person in your company.
Wisconsin requires that the Registered Agent have a physical street address in the state. PO Box addresses or similar mailing services aren’t accepted. If the role is being fulfilled by a person, they should be an adult and legal resident of the state. For an entity to serve as the registered agent, it must have permission to do business in Wisconsin.
So technically, you, someone you know, or a commercial registered agent can take on this role. Commercial agents are often preferred simply because of the convenience and ease of handling this role.
3. How To File Articles Of Organization For Your Wisconsin LLC
Creating a Wisconsin LLC requires filing Articles of Organization (Form 502) with the Wisconsin Department of Financial Institutions. It’s possible to file the form online or via mail.
Filing Articles of Organization Wisconsin online is often recommended because of the convenience and lower filing cost. The online form filing fee is $130.
Filing via mail requires downloading and completing Form 502. Once you’ve completed the form, you can mail it along with the $170 filing fee to:
State of WI – Dept. of Financial Institutions
P.O. Box 93348
Milwaukee, WI 53293
The payment can be made via check or money order. Credit cards are acceptable for online payments.
4. Creating An Operating Agreement For Your Wisconsin LLC
Operating Agreements for LLCs are not required by Wisconsin law. But they are highly recommended and every LLC should get one. These agreements are important for your LLC and can come in handy at several points for the business.
Your LLCs operating agreement is an internal document. It doesn’t have to be filed with any government agency. However, each member of the LLC should keep a copy with them.
This agreement can spell various important facets of your LLC. It may include things like the ownership of the LLC for each member, approach to taxation and hiring, distribution of profits, roles, responsibilities, and dispute resolution mechanisms.
Single member LLCs too shouldn’t take the agreement lightly. While they may not have to set rules for members, they should still consider operation parameters for the company.
5. Federal Tax ID (EIN)
Your LLC needs a federal tax ID for smooth operation. This 9-digit ID is commonly called EIN (Employer Identification Number). You should apply for the EIN only after your LLC has been approved.
Getting an EIN is free. All you have to do is file a form with the IRS. In most cases, this can be done online.
However, if you’re unable to file for EIN online, you’ll have to download and fill Form SS-4. This is applicable for people who don’t have an SSN or in situations where the LLC is owned by another company/entity.
Form SS-4 can be filed via mail or fax. The latter works faster and you’ll receive your EIN within days. Submissions via mail are slow for processing and can take several weeks.
Having an EIN doesn’t just simplify taxation, it also opens other avenues for your business. This includes getting a bank account, hiring employees, and getting credit cards.
6. Filing Annual Reports
Every LLC in Wisconsin must file Annual Reports with the Department of Financial Institutions. The report is due every year at the end of the calendar quarter of the month of the LLC’s formation.
For example, An LLC formed in July 2020 must file its annual report before the end of September 2021. Meanwhile, an LLC formed in June 2020 must file its annual report before the end of June 2021.
The report can be filed online. The filing fee for domestic LLCs is $25, while foreign LLCs have to pay $80. It’s worth remembering that a ‘domestic’ LLC is a company native to Wisconsin. Foreign LLCs include companies formed in other states.
7. Licenses, Permits, And Taxation For Wisconsin LLCs
Your LLC might need business licenses and permits for conducting its business. These are fairly specific and can depend on the location (city/county) of your business. Additionally, the state may also require specific licenses or taxes from companies operating in a specific industry/sector.
Taxation too has to be considered on three levels. This includes taxation by your local city/county, the state, and federal taxation.
State taxation can include things like sales tax.
Federal taxes for LLCs are pass through by default. This means that your LLC doesn’t specifically file taxes, but its profits/losses can show up in your personal tax returns.
If necessary, you may choose to have your LLC taxed as a C-corp or S-corp. This will require structuring your business and tax requirements slightly differently, as compared to conventional LLCs.
Your Wisconsin LLC must stay on top of the requirements for licenses, permits, and taxation. More often than not, it is worthwhile to hire a professional to ensure things go smoothly.