Wisconsin LLC Registration
A limited liability company (LLC) is a combination of a corporation and partnership. An LLC provides its owners with corporation-like protection against personal liability. This means that the owners’ personal assets can be seized to pay off LLC debts. The LLC is also similar to a partnership because it is treated like a non-corporate business organization for the purposes of tax filings.
State laws govern how an LLC is formed. Each state has a series of steps to take before an LLC is active. Starting an LLC in Wisconsin takes five steps:
1. Name Your Wisconsin LLC
2. Select a Registered Agent to Represent Your LLC
3. File Your LLC’s Articles of Organization
4. Draft Your LCC’s Operating Agreement
5. Apply for Your LLC’S EIN
Now that you’re ready to learn more about how to start an LLC in Wisconsin, it’s important to learn some terms you should know. For example, all owners of an LLC are known as members. The term “members” are similar to shareholders in a corporation because they own all or a percentage of a corporation.
A LLC in the state can be owned by you and/or you and other people. This is different from a corporation. If you are the only LLC member, you have a single-member LLC. If you plan to start an LLC with more than one person, then it is called a multi-member LLC. Ownership is expressed in one of two ways when multiple people own an LLC: by membership units and percentage. Membership units are similar to shares of corporate stock.
Regardless of what type of ownership you and your co-owners want, everyone will share two aspects of a multi-member LLC. The first is that you and your members have the right to vote on business decisions. The second is that you have the right to share the profits earned in the LLC.
Name Your Wisconsin LLC
Creating an LLC in Wisconsin doesn’t begin when you submit a form to the secretary of state. Instead, it starts with a Wisconsin LLC search. This is called a business name search. Selecting a business name is vital to creating an LLC in Wisconsin because it must be unique and not used by any other business in the state.
To choose a business name that complies with the state’s requires you must follow guidelines. These guidelines are:
- Pick a name which includes the phrase “limited liability company”, “L.L.C.” or “LLC.” This lets everyone know that your business is an LLC and not a partnership or a corporation.
- Avoid a name which includes restricted words. These words include, but are not limited to an attorney, bank or university. If you are a professional such as an attorney or doctor, additional paperwork is required. You’ll also need a license.
- Never include words that will easily confuse a government agency with your LLC. For example, you can’t include words like State Department, FBI or Treasury in your LLC.
Once you have a business name, make sure it’s available by conducting an Wisconsin llc lookup. An llc lookup Wisconsin is done by searching the name search database on the State of Winsonsin website. If search results return a match or a similar name, you must start at the beginning. This means creating another name that is more distinctive and unique.
The state of Wisconsin allows you to reserve your new business name for approximately 120 days. This will prevent anyone from obtaining the name before you can file your LLC application. To reserve your business name, complete a name reservation application and pay a filing fee. The department of financial institutions approves all name reservation requests. When completing and filing the form, be sure to include your name and address. Also, make sure it has a dated signature.
After you find the perfect name for your LLC, you should determine if your potential business name is available on the web. You may not plan for your LLC to own a website, but it is important to buy the web domain. This will prevent anyone else from acquiring it after you’ve set up your LLC.
Select a Registered Agent to Represent Your LLC
Your Wisconsin LLC registration includes the selection registered agent. A registered agent is an individual or a company elected to be your point of contact for legal matters. A registered agent sends and accepts legal documents on behalf of your LLC.
The state of Wisconsin has specific rules on who can represent your LLC as a registered agent. For example, a registered agent must be a resident of the state. If it is a corporation, the corporation must be authorized to do business in the state. Wisconsin has plenty of registered agent services that will act as your point of contact with the state.
If you choose a person to act as your LLC’s registered agent, make sure they are a resident. This means your registered agent must have a physical address in the state to act as your agent. The state doesn’t allow for a registered agent to have a post office box as a physical address. Also, make sure they are available during normal business hours to receive legal documents. Your LLC can’t afford to miss important legal documents such as lawsuits and notices. You can select yourself as your LLC’s registered agent. Just make sure to follow the rules such as residence requirements and being available during business hours. Business hours are traditionally 9 a.m. to 5 p.m. Monday to Friday.
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File Your LLC’s Articles of Organization
Starting an LLC in Wisconsin requires articles of organization document. You have the option of sending your document via mail or online. A filing fee is required at the time your file this legal document. Articles of organization is a legal document similar to articles of incorporation. It establishes your LLC as a legal entity.
Your LLC’s articles of organization must include several things that describe how it operates and is financed. What’s needed in your articles of organization includes:
1. The name of your LLC
2. Name and addresses of all members
3. Name of the individual organizing your LLC
4. Name of your LLC’s registered agent
5. Your LLC’s duration. This is how long it will be in operation.
6. Purpose of your LLC such as restaurants, coffee shop, store, etc.
7. LLC’s membership structure
8. LLC’s management structure
The articles of organization is a legal document where you’ll let the state know what type of LLC you have. For example, you will list whether your LLC is a single member or multi-member LLC. You’ll also inform the state whether your LLC is member-managed or manager-managed.
A member-managed LLC is operated and run its owners. This is the simplest LLC structure. Every LLC member has the authority to make decisions on behalf of the company. This means that you and your co-owners are involved in the day-to-day operations of the LLC.
The other option is a manager-managed LLC. In a manager-managed LLC, you and your co-owners are passive members of the LLC Wisconsin. You hire a manager to run the day-to-day operations. This means you’re similar to an investor in a company because you’re not making the decisions. The manager can be you, an employee or the registered agent.
In addition to outlining the structure of your LLC, the secretary of state wants to know whether your LLC is domestic or foreign. A domestic LLC refers to an LLC formed in Wisconsin. This is the type of LLC you’ll form in the state. A foreign LLC is formed outside the state. Thus, the LLC is already operating in another state. You want to expand the LLC into Wisconsin and do business there.
If you are a foreign LLC, you must register your LLC with the state’s department of financial institutions. You must go through the same steps as a domestic LLC. This means you must check the business name database and select a registered agent for your service of process for legal documents.
There is a change that your business name isn’t available. If your LLC’s business name is already in use in Wisconsin, you must pick another business name. Even though your existing business was formed in another state, you still need to registered agent who lives in Wisconsin. If you choose a professional service, it must be authorized to conduct business in the state.
When you registered as a foreign LLC, you’ll file a Foreign Limited Liability Company Certificate of Registration Application. This form is called Form 521. You can mail the application by mail or online. You’re required to pay a fee.
Draft Your LCC’s Operating Agreement
An operating agreement is a legal document that explains the outlines the ownership, financing and operating procedures. An LLC operating agreement Wisconsin isn’t a document the secretary of state requires to form your LLC. However, it is a vital document to draft when you’re starting a limited liability company. This document is a comprehensive picture of your company. An operating agreement ensures all LLC owners are on the same page when it comes to operating and financing the company. It reduces the risk of future conflicts for single- and multi-member LLC.
The following information should be in your LLC operating agreement:
- When the LLC was officially formed
- The names of all members and addresses
- The name of your registered agent
- How the ownership is divided
- How the LLC will be managed by members
- Voting procedures
- The amount of money each member has invested in the LLC
- How LLC capital is raised in the future
- How profits and losses are divided among members
- The role of each owner
- How ownership is transferred if a member sells, leaves or dies.
- The process of buying out the existing owners or replacing members
- How the LLC will dissolve. This is where you create a hypothetical process of dissolving your LLC. In this process, you outline how the company will end.
Why You Need an Operating Agreement for Your LLC
Regardless of what type of LLC you have in Wisconsin, you want to create an operating agreement. The following are just some of the reasons why you need an operating agreement:
1. The agreement is recommended by the state. According to state statute 183.0102(16), all LLC members may enter into this type of agreement to regulate all the internal affairs of the business.
2. An operating agreement protects your limited liability status. If you are a sole owner of an LLC, an operating agreement helps you keep your personal finances separate from LLC finances. For example, if you are ever sued, court officials will investigate your LLC. Without an operating agreement, you may appear to have a sole proprietorship. This will dissolve your LLC status. Also, this will add credibility to your LLC.
3. The agreement prevents potential conflicts with other business partners. If you are starting a multi-member LLC, you want to prevent misunderstandings among owners. With an agreement, you set clear expectations regarding each owner’s responsibilities and role in the LLC.
Remember, the terms, policies and rules listed in your operating agreement can change as your business grows. You’re allowed to amend or change the terms, policies and rules in your operating agreement. This is another reason why it’s important to have an operating agreement.
Your LLC isn’t active until you submit your articles of organization to the secretary of state along with the filing fee. The filing fee is non-refundable. The state takes about five days after receiving your articles of organization documents to approve or deny your LLC. Unfortunately, this can take longer if the state has a lot of people filing LLC documents.
It’s important to note that your articles of organization could be rejected for several reasons. For example, if another business has your LLC name already, your documents will be rejected. Also, if there are problems with your articles of organization documents, the state may reject your LLC. Your registered agent will receive information regarding the approval or rejection of your articles of organization.
Apply for Your LLC’S EIN
The last step in forming your LLC is applying for your Employer Identification Number (EIN). This is not obtained through the secretary of state’s office. Instead, you must obtain your LLC’s EIN via the U.S. Internal Revenue Service (IRS).
Applying for an EIN is important because the number works essentially like your Social Security Number because you can:
- Use the EIN to open a business bank account for your LLC
- Obtain a line of business credit for your LLC
- Hire employees to work for your LLC
You also need an EIN for local, state and federal tax purposes. This is how you file taxes for your LLC.
Apply for an LLC for your EIN in two ways: mail or online. There’s no charge for getting an EIN. If you choose to apply for an EIN online, go to the IRS website. Keep in mind the IRS keeps online business hours. For example, you can’t apply for an EIN at midnight.
When applying online for your EIN, you’ll need to answer some questions. These questions are the same on the paper form that you mail to the IRS. You will need an SSN if you’re applying for an EIN online. However, if you don’t have an SSN, you must complete the paper application. This application form is IRS Form SS-4.
Once Your LLC is Formed Protect LLC and Personal Assets
As an LLC owner, keep your personal and business assets separate. When business and personal accounts are mixed, bad things happen. Personal assets include your bank accounts, car and home. When accounts are mixed, you are piercing the corporate veil. Piercing the corporate veil refers to the protection you have as an LLC owner. An LLC provides a veil to protect your personal finances from your business assets. This means that if you are sued, your personal assets cannot be used to pay the plaintiffs.
Setting up an LLC doesn’t protect your personal assets from business debts. You must keep them separate. If you don’t, it means you pierced the corporate veil and now have commingled personal and business assets. Thus, creditors may obtain your personal assets to pay off your debts when you’ve pierced the corporate veil and:
- Your LLC is severely underfunded
- Your LLC and owners haven’t maintained separate business and personal assets
- Your LLC participated in wrongful or fraudulent actions
Obtain Business Insurance for Your LLC
Business insurance is just as important to your newly formed LLC as opening business accounts. The insurance reduces the risk of lawsuits and other negative things that can occur in business. More importantly, business insurance allows you to focus on growing your LLC. The type of business insurance you need depends on your industry and profession.
General liability insurance is a board insurance policy that protects your LLC from lawsuits. Professional liability insurance is more specific. It provides business professional service provides coverage against malpractice claims and other types of business errors. Workers’ compensation insurance coverage protects an employer against employees’ job-related injuries, illnesses or even death. In Wisconsin, a company with three or more workers must have workers’ compensation insurance. One of the three employees can’t be an owner.
Wisconsin Businesses Licenses and Permits
Depending on your LLC’s products or services, you may need a business license or permit to conduct business in Wisconsin. This means to operate a business in the state, your LLC must comply with local, state and federal government regulations. These government regulations include building, signage and health permits.
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Tax Requirements in Wisconsin LLCs
Tax requirements depend on the nature of your business. For example, your LLC is required to pay sales tax if you’re selling a physical product. Sales tax, also known as “Sales and Use Tax” is required by municipalities, states and counties for any type of business transaction involving the exchange of services and goods that are taxable. This means you must register for a sellers permit via the Wisconsin Department of Revenue. You’ll receive a certificate. This certificate allows you to collect sales tax on all taxable sales.
Your LLC Must Pay Employer Taxes
This section is for any LLC which has employees. Wisconsin requires you to sign up for unemployment insurance via the Wisconsin Department of Workforce Development. In addition, you must register for employee withholding tax. You can sign up for withholding tax through the state’s department of revenue.
Forming an LLC in Wisconsin
It’s important to familiarize yourself with Wisconsin LLC laws and legal obligation. For example, the state requires your LLC file yearly reports. These reports are filed by mail or online. Your registered agent will receive a mailed notification when your LLC’s annual reports are due. Typically, all LLCs are due each year by the end of their filing anniversary quarter. The required fee must be paid to the department of financial institutions when filing your reports.
Forming an LLC in Wisconsin takes a lot of work. However, an LLC is worth it. An LLC offers benefit protection so you can run your business without working about your personal finances being used to pay off business debts. Before taking on this huge task, it’s important to consider a professional service to make the process of forming an LLC easier and stress free.
An LLC formation service handles all the work of forming your LLC in Wisconsin for you. This will give you peace of mind that you won’t spend a long time working on and submitting LLC forms that the secretary of state rejects. Thus, before you start filing out forms, pick a professional service to help you. You should also visit our Wyoming LLC page.