How To Start an LLC in Wisconsin 2024: Step-by-Step Guide

Featured Image

Vault’s Viewpoint

• An LLC is the right business entity for owners who want to protect their personal assets from liability related to company debts while also enjoying the tax flexibility of a sole proprietorship or partnership.
• To start an LLC in Wisconsin, you need to choose an available name, appoint a registered agent, file your Articles of Organization, obtain an EIN and file your BOI report.
• Although drafting an operating agreement is not a state requirement in Wisconsin, it is a highly recommended best practice for starting an LLC anywhere. 

How To Start an LLC in Wisconsin 2024: Step-by-Step Guide

See Offers

See Offers

See Offers

Is an LLC Right for Your Business?

Picking the right type of business entity—also referred to as business structure—is critically important when starting a new business. This choice has an enormous effect on how your business operates—from the amount of taxes you pay to whether or not you are able to attract investors.

An LLC is a good choice for a business owner who wants to keep their personal assets separate from their business. LLCs offer limited liability protection, meaning the owner’s personal assets are generally protected from the debts or legal obligations of the LLC.

LLCs are also a good choice for business owners who want tax flexibility. LLCs enjoy pass-through taxation like a sole proprietorship (if there is only one member) or like a partnership (when there are two or more members). They can also elect to be taxed as a corporation.

However, LLCs do have some downsides—such as requiring more paperwork and taking more time to set up than sole proprietorships and partnerships. LLC filing fees also tend to be higher, especially if you pay extra to expedite the processing of your paperwork.

If you want to start your business quickly with the least amount of expense, you might want to use a sole proprietorship or partnership business structure. If you want more liability protection or plan on expanding your business rapidly, seeking investors, or going public, then you will be better off starting a corporation.To get the best of both worlds, going with an LLC may be the best option.

How To Start an LLC Business in Wisconsin in Five Steps

Below are the five sequential steps you need to take to start an LLC business in Wisconsin.

Step One: Choose a Name for Your Wisconsin LLC

The name for your business needs to meet certain requirements set by the state of Wisconsin, including:

• Your LLC’s name must be unique and distinct from any business name that is already registered or reserved with the Wisconsin Department of Financial Institutions. Wisconsin does not consider differences in punctuation or using “limited liability company” instead of “LLC” distinct-enough differences when distinguishing your LLC’s name from another’s.
• The name must include the phrase “limited liability company” or “limited company” or an acceptable abbreviation including “LLC” or “LC.” “Limited” can be abbreviated to “Ltd.” and company can be abbreviated to “Co” as well.
• Your LLC’s name cannot include terms or phrases that might mislead people to think your LLC is part of a governmental or regulatory body, such as “federal,” “treasury” or “CIA.”

The Wisconsin Department of Financial Institution provides a tool you can use to search registered business names in Wisconsin and determine if your name ideas are available.

Reserving a Name

If you have confirmed your LLC’s name is not already in use but you’re not ready to file paperwork yet, you might want to reserve the name so it’s still available once you’re ready. LLC names can be reserved for 120 days in Wisconsin, and you can do so by filling out a name reservation application. It’s not currently possible to file for a name reservation online. Instead, mail your application to:

State of WI—Dept. Of Financial Institutions

Box 93348

Milwaukee, WI 53293-0348

If you are sending your application by priority mail or express, use the following address instead of the address above:

State of WI—Dept. Of Financial Institutions

Division of Corporate and Consumer Services

4822 Madison Yards Way, 4th Fl., North Tower

Madison, WI 53705

Note: Be sure to include a $15 check payable to the Department of Financial Institutions with your application to pay the nonrefundable filing fee.

Step Two: Appoint a Registered Agent

Also referred to as a resident agent, a registered agent is an individual or a business entity that receives official mail—including legal and tax documents—on behalf of your LLC. The individual may be yourself, another member of your LLC or anyone else who is a Wisconsin resident with a registered, physical office or street address (PO boxes do not count).

If your registered agent is an entity, it must be approved to do business in Wisconsin. You cannot name your LLC as its own registered agent. The registered agent should be available to accept mail, documents and legal correspondence at their address during regular business hours.

It may seem logical to designate a family member or friend as your registered agent, but keep in mind that this person will receive and hold legal documents that require compliance and discretion. In many cases it’s worthwhile to hire a registered agent service that specializes in this kind of work to avoid noncompliance and privacy issues.

Step Three: File Articles of Organization

You’ll now need to file your Articles of Organization with the Wisconsin Department of Financial Institutions, which you can do online. Under “Available Online Filings,” find form number 502 and click the link labeled “Articles of Organization – Limited Liability Company.” There is a nonrefundable fee of $130 when filing online.

You may also file your articles of organization by mail. Fill out the Form 502 and mail it to this address:

State of WI—Dept. of Financial Institutions

Box 93348

Milwaukee, WI 53293-0348

If you send your application either by priority or express mail, send it to the following address instead of the address above:

State of WI—Dept. of Financial Institutions

Division of Corporate and Consumer Services

4822 Madison Yards Way, 4th Fl., North Tower

Madison, WI 53705

There is a nonrefundable filing fee of $170 when filing by mail. Be sure to include a check for this amount payable to the Wisconsin Department of Financial Institutions with your application.

For either filing online or by mail, you may pay an additional $25 fee for expedited service. This ensures that your documents will be processed by the end of the first business day after they’re received.

Step Four: Get Your Employer Identification Number (EIN)

If you plan to hire employees to work in your LLC, you are required to have an EIN. You can acquire your EIN easily and for free using the IRS website.

Single-owner LLCs are not technically required to have an EIN. Instead, owners are allowed to use their Social Security Number for filing taxes. It may make sense, however, to consider getting an EIN instead. This can make it easier to apply for business bank accounts, credit cards and more. Additionally, it can help keep your personal Social Security Number safe while also clearly delineating the line between business and personal activity.

Step Five: File a Beneficial Ownership Information (BOI) Report

All LLCs in the United States must file a BOI report with the Financial Crimes Enforcement Network (FinCEN). This new law came into action as of January 1, 2024. New LLCs formed before January 1, 2025 have 90 days from formation to file the report. LLCs that were formed prior to January 1, 2024 have until January 1, 2025 to file. New LLCs formed after January 1, 2025 will have 30 days to file after forming their company.

The intention of the new law is to disrupt bad actors from using LLCs as shell companies that can be used for illicit activities. Noncompliance can result in big fines and even criminal penalties like jail time. You can get more information and file your free report on FinCEN’s dedicated BOI page.

Step Six (Optional): Create an Operating Agreement

Wisconsin does not require you to draft an operating agreement when you start an LLC. However, it’s considered a best practice for most new businesses—especially LLCs. Your operating agreement is like your business’ blueprint and rulebook that establishes voting procedures, rules for buyouts, the rights and powers of your members, management structure and much more.

You and other members of your business will refer to the operating agreement for guidance and stipulations on how to resolve challenges. Most importantly, your operating agreement can also prevent legal and financial issues in the future.

Frequently Asked Questions

What Is an LLC?

A limited liability company (LLC) is a business entity that provides its members with limited personal liability protection and pass-through taxation as the default tax status. LLC owners are considered separate legal and tax entities from the LLC, which can protect their personal assets from seizure as a result of the LLC’s debts or bankruptcy.

Do I Need a Lawyer To Form an LLC?

No, you do not require any assistance from a lawyer to start an LLC. You do need to prepare and file the Articles of Organization, and you should be aware of the requirements imposed on LLCs by the state. If you want to form an LLC while doing the least amount of work, consider looking into the best LLC services that handle all the paperwork for you at a cost.

What Is the Main Advantage of an LLC?

The primary advantage of an LLC is that it legally separates members’ personal assets from the business. Members’ personal assets, like savings accounts or homes, are protected from fulfilling the LLC’s debts or legal obligations.

The post How To Start an LLC in Wisconsin 2024: Step-by-Step Guide first appeared on Newsweek Vault.