Start An LLC In Wisconsin
A limited liability company (LLC) is a corporate structure in which the company’s liability and debts are separated from the owner’s. Business owners who want to register their business can get complete information in this article.
We will teach you everything you need to know about starting an LLC in the state of Wisconsin.
First, let’s compare Wisconsin to its neighboring states as a place to start an LLC.
| State | Wisconsin | Minnesota | Illinois | Iowa | US Average |
|---|---|---|---|---|---|
| Population | 5,895,908 | 5,707,390 | 12,671,469 | 3,190,369 | 6,619,825 |
| LLC Filing Fee | $130 | $155 | $150 | $50 | $130.38 |
| LLC Annual/Biennial Fee | $25 (every year) | $0 (however, an information report must be filed every year) | $75 (every year) | $45 (every 2 years) | $89.34 (every year) |
| Corporate Tax Rate | 7.90% | 9.80% | 9.50% | 5.5-9.8% | 5.60% |
| Nominal GDP per capita | $62,065 | $72,187 | $74,052 | $68,849 | $64, 773.08 |
Before You Set Up An LLC In Wisconsin
The Wisconsin Department of Financial Institutions is an authority responsible for creating an LLC in Wisconsin. You can apply through both methods, i.e., online or through the mail.
How Much Does It Cost To Start An LLC In Wisconsin?
If you file Articles of Organization through the mail, it will cost $170. However, you can save $40 if you file online.
Steps To Start An LLC In Wisconsin
Forming an LLC in Wisconsin is an easy process. The steps you need to follow are as follows:
Choose A Suitable Name
This is the first and most important step to registering your LLC. You can choose any name that should be unique and not already taken by any business entity.
The name must contain any of three words LLC, L.L.C, Limited Liability Company, or Limited Liability Co.
You must not choose a name that has a link with any government agency.
You can check the availability of the name you picked to ensure the name isn’t already registered.
Appoint A Registered Agent
To form an LLC in Wisconsin, each entity must appoint an agent. A person or a company can act as an agent.
All communications with Wisconsin authorities are handled by the agent, who also receives paperwork on behalf of the LLC.
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Articles Of Organization
Article of Organization (Form 502) is a legal document that contains basic information about an LLC. It is the basic document that an organization must file with the appropriate authority to form an LLC.
Your Articles of Organization must be filed just once, but you must file an annual report every year after that. Articles of the organization include:
- Business Name and Address
- Information about registration agent
- Name and addresses of each owner
- Signature of owners
- Email address and Phone number
- Name of the drafter of articles
Operating Agreement
An operating agreement is an internal document. It is not a legal requirement from the Wisconsin authority. However, it increases the reputation of the entity.
The document is mainly concerned with the authority, powers, duties, liabilities, and obligations of members among themselves and to the LLC. In case members do not form a separate operating agreement, then articles will be considered as an operating document.
Employer Identification Number (EIN)
LLCs will get a 9-digit identification number from the Internal Revenue Service (IRS) department for tax identification after receiving clearance from the Wisconsin Department of Financial Institutions.
You may obtain an EIN from the IRS by email or online. To apply through mail, you need to file a form that you can download from Link. Additionally, you can apply online for EIN from IRS by clicking the link.
An EIN is very important, and it is required on various occasions like opening a bank account, managing federal and state taxes, and hiring employees for the job.
The Forms You Need To Register An LLC In Wisconsin
To register an LLC, you must file Form 502 “Articles of Organization limited Liability Company” with the Wisconsin authority through your agent.
You can search for other forms on the Wisconsin Department of Financial Institution’s website.
You can turn to the IRS website for all forms regarding LLC taxation.
LLC Taxes In Wisconsin
Types Of State Taxes In Wisconsin
Wisconsin primarily has three state taxes that must be paid.
1. State Income Tax
In Wisconsin, LLC passes its tax to members. By default, LLC does not pay income tax on its income. Therefore, members of LLC are responsible for paying income tax on their income from LLC. Depending on marital status, and LLC income, income tax rates range from 3.54 percent to 7.65 percent.
2. State Franchise Tax
However, after filing Form 2553 with IRS, LLC owners can elect to classify their business as a corporation. In this case, LLC has to pay a flat 7.9 percent tax on income and file income tax Form 4 to pay the tax. It is commonly known as a franchise tax.
3. State Sales Tax
Sales tax is charged on the supply of physical goods or services. In Wisconsin, LLCs who have obtained sale tax registration numbers serve as withholding agents for sales taxes. As a result, LLCs must collect sales tax and remit it on a periodic basis to the Wisconsin Department of Revenue (WDR). LLC has to file Form ST-12 on paper or online to WDR along with payment of sales and use tax.
Types Of Federal Taxes In Wisconsin
In Wisconsin, the following federal taxes are applicable to LLCs.
1. Federal Self-Employment Tax
Self-employment tax must be paid by all LLC owners, managers, and anyone who is taking profit from the LLC’s earnings. The Federal Insurance Contributions Act (FICA), which supports Social Security, Medicare, and other benefits, is in charge of collecting this levy. It applies to all of the money you take out of your LLC. Currently, the self-employment tax rate is 15.3%.
Furthermore, if an LLC is registered as a corporation with the IRS and files Form 2553, you can lower your tax rate by deducting some money as a salary and profit from the LLC.
How Long To Form An LLC In Wisconsin?
In Wisconsin, you are required to file Articles of Organization through your agent. It can be filed through mail or online. The charge for submitting online is $130, while the fee for filing by mail is $170. It usually takes about 4 to 7 days to register an LLC.
How Much Does It Cost To Run An LLC In Wisconsin?
Registration expense is a one-time expense on the formation of an LLC. The registration costs between $130 and $170.
However, there is also a recurring expense to running an LLC in Wisconsin, and LLC needs to keep some amount as a recurring expense. These expenses may also include government costs. For example, Wisconsin’s annual filing report filing fee is $25.
What To Do After Formation?
The formation of an LLC is only the first step. There are still things you need to do before you open for business once your new company is officially registered. These things are as follows:
1. Create A Logo
The logo is mainly a visual sign of an LLC. Most LLCs use logos on their letterhead, business cards, signatures, or emails. A logo must be attractive and eye-catching to capture customers’ attention.
2. Build A Website
A business website is very important for both large and small LLCs. There are a lot of prospective buyers looking for things on the internet. So, if an LLC does not have a website, it is missing out on growth potential. As a result, how the LLC presents itself on the internet is critical. Most LLCs do not have an internal website creation system due to technological reasons. Many website builders, such as GoDaddy Website Builder, have made it simple to create a website for a limited liability company.
3. Open A Bank Account
As the limited liability company is separate from its owners. Therefore, a separate bank account is essential for the prevention of mixing the owner’s assets or liabilities with an LLC. An LLC must use its bank accounts for sale, purchase, and payment of expenses.
4. Get Business Insurance
Insurance helps the LLCs from unexpected risks and manage the risks. There are many types of business insurance like workers’ compensation insurance, professional liability insurance, commercial property insurance, commercial auto insurance, and business owner’s policy insurance coverage is available from a variety of insurance companies.
5. File Annual Reports
Filing documents is essential for LLCs in Wisconsin. It must be filed with the Wisconsin Department of Financial Institutions. This annual report includes information about the registered agent, his address, and LLC’s business email address.
6. Hire An Accountant
An accountant is necessary to overlook the LLC’s financial matters. It must be a qualified and competent person. The hiring of an accountant will prevent the LLC from penalties, fines, and overpaying taxes. Moreover, the accountant will also be responsible for bookkeeping, payroll management, and fund management.
Resources To Start A Successful LLC In Wisconsin
To start a successful LLC in Wisconsin, you must have the resources for it. These resources include a business idea, a business plan, a business structure, funding, and licensing.
You can find a lot of information about starting a business on the following pages:
Start Marketing Your LLC In Wisconsin
You can read our best tips on marketing an LLC in the ultimate guide to business marketing that we created.
The guide will take you through the steps needed to start marketing your company on the right track.
Make sure you set the right strategy and pick the right marketing channels to give your campaigns the best chance of reaching your target audience.
How To Dissolve An LLC In Wisconsin?
If the LLC’s owners decide they no longer desire to continue the business, the LLC can be dissolved.
The LLC’s dissolution will insulate them from tax liabilities, penalties, and other legal issues. You can dissolve LLC by closing your business tax account and filing Articles of Dissolution. The fee for the filing of this document is $20.
Conclusion
We went through the step-by-step process of starting an LLC in Wisconsin. You have all the information you need to start a successful company.
Make sure you file the correct forms when registering the LLC. Keep your company compliant and make sure you pay your taxes.