- An LLC is a limited liability company that has its own legal liability separate from its members,
- Registering an LLC in Wisconsin would require choosing a unique name and filing the Articles of Association with the Wisconsin Department of Financial Institutions.
- Certification from the state of Wisconsin is mandatory to apply for an EIN and other business permits and licenses.
- An operating agreement is not legally mandated. However, it may be beneficial in case of legal suits.
- Annual reporting with the relevant federal agencies is essential to stay compliant with the tax terms of the state and country,
What Is An LLC?
A Limited Liability Company or an LLC legally protects its owners from sustaining significant liability or debts. An LLC reduces the liability of its owners while borrowing many aspects of a partnership and a corporation. Because limited liability companies combine the characteristics of partnerships, corporations, and sole proprietorships, they are also called hybrid entities. For instance, there is a limited liability in an LLC which resembles the structure of a corporation. On the other hand, an LLC also boasts of flow-through taxation, which is a defining characteristic of a partnership.
All the owners of an LLC are called its members. The legal requirements for the functions of an LLC are different in every state in the US. LLCs are legal entities and hence have liability that is not transferred to its members. Many US states do not restrict who can be an LLC member. However, insurance companies and banks are prohibited from getting involved in the business of an LLC.
All the US states require an LLC to file its articles of association before it starts functioning legally. The Articles of Association delineate all the responsibilities, liability, and obligations of each member, note the business of the LLC and its members and state its business purpose. Even though there is a limited liability to the members, in case of fraud, creditors may have the legal right to go after the members of the company rather than the company itself. An LLC also has the choice not to report its federal taxes directly. Instead, the personal tax returns of the owners can be shown as the tax reporting for a limited liability company.
How To Start An LLC In Wisconsin?
There are particular prerequisites that any member would have to fulfill before registering their LLC in Wisconsin. After completing the steps, like naming the company and filing your articles of association, you can register your LLC and work towards building a business in the relevant market.
Choose the Right Name
Before initiating the registration, it is essential to find a name that has yet to be used in Wisconsin. In Wisconsin, the law also mandates the company name to include LLC. The website for the Secretary of State allows owners to check the availability of names for businesses that are not already functioning as LLCs in the state.
The application for reserving the title will cost $15 and will hold the chosen name for 120 days. The owners can register their LLCs with the state during this holding period. While selecting the correct name, choosing a web domain that is not already taken by someone else is also recommended. Getting a web domain will allow you to extend the reach of the business the moment the LLC is open for business.
Contact a Reliable Registered Agent
A registered agent will come in handy when it is time to register the LLC. An LLC is its own entity legally, and hence someone needs to act as a legal agent to receive and correspond in the company’s name. Any resident of Wisconsin of legal age or one of the members can choose to be the registered agent. For a new company, choosing one of the owners as the registered agent is more economical. If you plan on hiring an agent, they should be a part of a registered agency.
Create the Articles of Association
During the course of bsuiness, the Articles of Association is a document that would continue to outline the responsibilities and liabilities of each member. It also explains the extent of the operations of the LLC. The following is the essential information required in the articles of the association:
- The name that is kept on hold.
- The name, address, and contact information of the registered agent
- The names and contact information of the owners
- The location and contact information of the LLC
- The name of the drafter
- The management structure of the company
- The signature of the owners
After preparing the document, the registered agent can file it with the Wisconsin Department of Financial Institutions.
Registering Your Wisconsin LLC
The articles of association are the paperwork that can be submitted either online or offline. For physical or online filing of the Articles of Association, one can either have complete documentation or opt for filling out Form 502. If any foreign business wants to register an LLC in Wisconsin, the fee is $100 to submit the Certificate of Registration or Form 521. If the members wish to expedite the process, the state charges $25 as an additional fee.
The online process is cheaper by $40, while the physical submission costs $170.
Get the Certification from the State
After the Wisconsin Department of Financial Institutions reviews the articles, the LLC can function as a legal entity. After filing all the proper documents, the registered agent will then receive the certification classifying the company as an LLC. The certificate is a prerequisite because only after receiving it can the LLC get its Employer Identification Number (EIN), bank account, and business license.
Key Considerations After Registering for an LLC in Wisconsin
After getting the prerequisites out of the way, the LLC can get its Employer Identification Number along with all the permits and licenses to start a business. Preparing legal and operative documents is useful in case of future predicaments.
Create an Operating Agreement
After getting a state certificate, the primary consideration is creating an Operating Agreement. Unlike other states, it is not mandatory to have an Operating Agreement in Wisconsin. However, much like the articles of association outlines the responsibilities of the members, an operating agreement outlines the daily operations and guidelines for settling disputes, especially in case of possible litigations. However, since it is not mandatory in Wisconsin, the articles of association can function as an operating agreement. The operating agreement is what the court of law would consider while settling legal disputes and hence is recommended for every new LLC.
Typically, an operating document has the following information:
- Name and contact information of the LLC as registered
- Duration of function
- Name and other information of the registered agent
- Details about the Articles of Organization
- Details about the members and their function
- The operation of the business
- The distribution scheme of the profits and losses
- Procedure for accepting and letting go of members
- The management structure of the company
- Liability clauses and indemnity structure
Obtain the EIN and Licenses
The certificate from the state qualifies the LLC to apply for its own Employer Identification Number or EIN. It is mandatory to apply for an EIN because it registers the LLC with the Internal Revenue Service for taxes at the federal and state levels. Without an EIN, a company would not be an employer and hence cannot hire employees. Additionally, they would need help to file taxes or open a business bank account to manage their finances.
At the time of applying for EIN, you can also check the website of the Wisconsin Department of Safety and Professional Services to apply for any relevant business licenses. Registering with the Wisconsin Department of Revenue (DOR) is also necessary. It is only required for businesses planning on selling any merchandise and thereby receiving sales tax. All you will need to do is complete the business tax registration form BTR-101 online.
Follow Up With Annual Reporting
After registering an LLC, one has to continue with all the legal regularities to keep their business well-managed. One of the ways is to file taxes as and when required. In addition to it, it is also necessary to submit an annual report online to the Department of Financial Institutions. The LLC has to submit the annual report on the last day of the quarter that follows the month of the anniversary of the LLC’s formation.
For instance, if the LLC were established on the 10th of October, the members would have the end of December to submit the annual report. Therefore, the due date is the last day of each quarter of the financial year. The Department of Financial Institutions will contact your LLC to assist with filing. A foreign LLC has to pay $80 for the filing procedure, while it costs $25 for domestic companies.
Frequently Asked Questions
What are the advantages of operating an LLC?
The primary reason why members opt for an LLC while doing business is because of the limited liability. It helps in the case of any legal dispute and does not involve the owners directly, as the LLC is a separate legal entity. Additionally, forming an LLC also offers flexibility when it comes to taxation and management structure of the business which can be preferable to many owners compared to a sole proprietorship.
How much can I expect to spend while forming an LLC in Wisconsin?
The physical and online submission of documents has different fees. To reserve a name for 120 days, one would have to spend $15 for the application. To file the Articles of Association, one would have to pay $170 for the physical documents and$130 to file it online. An additional $25 is added for the expedited process.
Does an LLC need to have multiple members?
In Wisconsin, an LLC can function even if it has just one member. It is optional to have more than one member while registering an LLC. The registration and establishment process would remain the same, and the LLC would be treated as a separate legal entity in both cases. Unlike a sole proprietorship, the owner of an LLC would enjoy limited liability.
Can an LLC operate without an Operating Agreement?
In Wisconsin, it is not legally mandatory to have an Operating Agreement. In place of an Operating Agreement, the Articles of Association are considered the Operating Agreement. However, it is recommended for new LLCs to have an Operating Agreement for ease of resolving potential disputes and financial misunderstandings.
Creating an LLC is advantageous as it is a hybrid mode of conducting business between a partnership and a corporation. Having a unique name and web domain is crucial when registering the company. The articles of association and the operating agreement protect the members and allow them to enjoy limited liability in case of any potential financial dispute. It is also vital to stay compliant with existing and future rules of the state of Wisconsin to keep the business legally sound. Maintaining the finances and filing the taxes are essential aspects of the function of the company and should be looked into with utmost care.
Learn more with us
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- How to start an LLC in Virginia?
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