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Small businesses play a huge role in Wisconsin's economy. Based on data from the US Small Business Administration, 99.4% of Wisconsin companies qualify as small businesses and 49% of Wisconsin employees work for a small business. The Wisconsin Department of Revenue offers easy-to-use online resources that make starting a business quite simple, lowering the barrier for startups.
If you’re considering launching a Wisconsin business, you’ll find yourself exploring four main business structures: a sole proprietorship, a partnership, a limited liability company (LLC), and a corporation. Many small business startups in the state choose to organize as a Wisconsin LLC because this business structure offers appealing personal asset protection, pass-through tax benefits, and streamlined annual requirements.
How to start an LLC in Wisconsin
- Choose a business idea for your LLC
- Name your Wisconsin LLC
- Create a business plan
- Get an employer identification number (EIN)
- File Wisconsin articles of organization
- Choose a registered agent in Wisconsin
- Obtain a business license and permits
- Understand Wisconsin state tax requirements
- Prepare an LLC operating agreement
- Examine business insurance options in Wisconsin
- Understand financial considerations
- Market your LLC
What is an LLC?
A limited liability company, or LLC, is a business entity owned and controlled by LLC members, who may run their company without oversight from a corporate board of directors. This makes an LLC different from a corporation, which must have a board of directors overseeing company operations. An LLC can have managing members, who actively involve themselves in company operations, and non-managing members, who hold an ownership stake but do not participate in on-the-ground decision-making. Wisconsin LLCs take two principle forms:
- Single-member LLC. This type of company has only one LLC owner, otherwise known as an LLC member.
- Multi-member LLC. This type of company has more than one owner.
Is an LLC right for you?
An LLC lets an entrepreneur conduct business with greater personal liability protection and tax benefits than they’d get from a sole proprietorship or partnership. Corporations (both S corp and C corp) provide their own tax benefits and personal asset protections, but with more organizational structure and reporting requirements. For business owners of small and medium-sized entities, the LLC business structure offers a happy medium thanks to its:
- Personal asset protection. Arguably the greatest upside to an LLC is that it shields its owners from personal liability if someone sues the company, which partnerships and sole proprietorships do not. In a worst-case scenario lawsuit or bankruptcy, the company may lose its assets and shut down, but the LLC owners will not see their personal finances eroded.
- No double taxation. The Internal Revenue Service (IRS) treats LLCs as pass-through entities, so annual profits or losses pass through to individual owners to report on their personal income tax returns. Corporations don’t enjoy this luxury, as they first pay corporate income tax on profits, and secondly, the owner pays personal income taxes on their company salary.
- Different membership classes.LLCs can have two types of owners: managing members, who both own and operate the business; and non-managing members, who only own the business (they don’t operate it on a day-to-day basis).
1. Choose a business idea for your LLC
Before officially forming a Wisconsin LLC, the first step is having a solid business idea. This stage is about understanding your LLC’s positioning in the Wisconsin business landscape. Questions to consider asking yourself to sharpen your idea include:
- Who is your customer?
- What will pricing look like?
- What is the break-even point?
- How many products or services will have to be sold before covering costs and making a profit?
Conducting a competitive market analysis of other businesses in your market will help bring your idea to fruition.
2. Name your Wisconsin LLC
You’ll also have to choose an LLC name as you embark on your entrepreneurial journey. A business name reveals a lot about your industry, product offerings, prices, and your general approach to commerce. As you hone in on LLC names, you’ll find yourself prioritizing certain items on your checklist, including:
- Uniqueness. A unique name can make your Wisconsin LLC stand out from the pack. In crafting a name, you might use alliteration, rhymes, puns, pop culture references, geographic allusions, and tap into other business name guidelines for insight.
- Formal registration. Many small business startups have faced disappointment when discovering an existing LLC has already snatched up a chosen name. The Wisconsin Department of Financial Institutions offers a Corporate Records Name Availability database so you can check available names. You can then reserve it with a name reservation application submitted through mail with a $15 filing fee.
- Considering a DBA. Not all LLCs conduct business transactions using their legal name. Some operate under a DBA, which stands for “doing business as.” For instance, a business legally named Hillhurst Blitzen Holdings LLC could conduct business as Hickory Village Apartments. To use a DBA in Wisconsin, you will file for a trademark with the state Department of Financial Institutions. The fee is $15, and registration lasts 10 years.
- Claiming an online domain name and social media handles. Maintaining an online presence typically requires having an online domain name linked to your official website and aligned with your industry, formal name, or DBA. Shopify’s domain name generator can help with this task. You may also choose to reserve social media handles that correspond with your domain, legal business name, or DBA (if applicable).
3. Create a business plan
Many entrepreneurs wouldn’t dream of launching a new LLC without a business plan to guide them. A well-crafted business plan offers a roadmap for company success. It establishes your business structure, defines organizational objectives, states your expected revenue streams, names metrics for success, and sets goals for different stages of the company’s life. Shopify’s archive of business plan examples and business plan templates may even assist you in drafting your own business plan.
4. Get an employer identification number (EIN)
US law requires all LLC owners, regardless of residence, to obtain a federal employer identification number (EIN) through the IRS. An EIN serves as your business’s federal tax number. With an EIN, you can hire employees, open a business bank account, sell goods and services, and register with state agencies like the Wisconsin Department of Revenue and Wisconsin Department of Financial Institutions.
5. File Wisconsin articles of organization
All new Wisconsin LLCs must file articles of organization to legally establish themselves in the state. You do this through the state’s Department of Financial Institutions website. Details requested in the Wisconsin articles of organization include:
- LLC name. The legal name of the business.
- Registered agent name, address, and signature. A registered agent must maintain a physical address within the state and be able to receive correspondence on the LLC’s behalf.
- Name and address for each LLC organizer. Wisconsin requires the names and addresses of LLC founding members, called organizers, in the articles of organization.
- Management. You can choose to have all LLC members manage the business together, or split the ownership group into managing and non-managing members.
- Drafter of the document. The articles of organization must include the name of the person who drafted them.
- Contact information. This information is specifically related to matters involving the articles of organization. For other matters, the state will contact the LLC’s registered agent.
Wisconsin, like many states, allows LLCs to conduct business in the state even if its members don’t reside within its boundaries. However, it does distinguish between LLCs originally organized in the state (domestic LLCs) and those organized outside the state (called foreign LLCs). For domestic Wisconsin LLCs, the filing feeis $130 online, or $170 through the mail; for foreign LLCs, the filing fee is $100 (online only).
6. Choose a registered agent in Wisconsin
The LLC’s registered agent is required to be listed in your articles of organization. Registered agents maintain a physical street address within the state where they can accept tax documents or legal forms on behalf of the LLC. Some LLCs elect a registered agent from among their members; others enlist a professional registered agent service.
7. Obtain business licenses and permits
The state of Wisconsin offers a convenient one-stop business portal to get your Wisconsin-based LLC registered with various in-state agencies, including the Department of Workforce Development and the Department of Financial Institutions. If you have a non-Wisconsin-based LLC, or foreign LLC, you have to first register with the state Department of Revenue.
Depending on your profession, there may be additional licenses necessary to conduct business in Wisconsin. The Department of Safety and Professional Services maintains an interactive database that connects you to licenses by department.
8. Understand Wisconsin state tax requirements
Wisconsin LLCs must pay certain taxes and fees to the state. This comes in addition to the federal tax obligations that pass through the LLC to its members. Taxes and fees levied on Wisconsin LLCs include:
- Annual reports. Wisconsin requires that LLCs file annual reports that contain the most up-to-date information about the company. These annual filings must be done online, and they come with a fee. The cost is $25 for Wisconsin-based LLCs; $80 for foreign LLCs.
- Sales taxes. Wisconsin businesses must obtain a seller’s permit to conduct commerce in the state, and can apply through the Department of Revenue. Wisconsin’s state sales tax is 5% as of 2022. State law allows counties in Wisconsin to levy an additional sales tax that can be as high as 0.5%. All Wisconsin businesses must collect sales tax and remit it to state and local governments.
- Corporate taxes. Wisconsin LLC owners can choose to have their company taxed as a corporation. The state charges a 7.9% franchise tax on corporate profits, and LLCs can opt to pay this rate instead of passing LLC profits and losses to individual owners.
- Specialized and industry-based taxes. The Wisconsin Department of Revenue publishes a list of other taxes that businesses may have to collect and remit. They include an alcohol beverage tax, a motor fuel tax, withholding tax on employee income, premier resort area tax, and cigarette tobacco and vapor product tax.
9. Prepare an LLC operating agreement
An operating agreement establishes the highest-level functions of the company. While an operating agreement isn’t required to conduct business in Wisconsin, as a written document, it can help protect membership interests and provide structure to business operations.
A typical operating agreement includes sections regarding:
- Contact information. It will include a business’s mailing address and the designated registered agent, who communicates with the state on the company’s behalf.
- Ownership. The document names the LLC owners and indicates ownership percentage.
- Voting procedures. An operating agreement specifies what types of issues to vote on, from hiring employees and taking on investment or debt, to merging with other businesses or dissolving the company.
- Member expectations and responsibilities. The agreement establishes each member’s personal obligations to the LLC. These include company duties and personal conduct.
- Scope of operations. It establishes the general parameters of an LLC, including its industry and an outline of operations.
10. Examine business insurance options in Wisconsin
The Wisconsin Commissioner of Insurance publishes a Consumer’s Guide to Insurance for Small Business Owners. The state mandates two specific types of insurance for businesses: workers’ compensation insurance and commercial auto insurance. While the state does not require LLCs to carry other insurance, such as liability, most small business owners do have such policies to protect their company and assets.
Typical Wisconsin business insurance policies include:
- Workers’ compensation insurance. This is required if you employ people in Wisconsin. It provides benefits should those employees sustain a work-related injury.
- Commercial automobile insurance. Wisconsin requires all motor vehicles to be covered by an auto insurance policy. This applies to both commercial and personal vehicles. Commercial automobile insurance applies specifically to specialized work vehicles, such as delivery trucks.
- Commercial general liability insurance. Otherwise known as CGL, this policy protects LLCs from financial claims involving injury, property damage, false advertising, libel, and slander. A good CGL will cover monetary judgments from legal claims as well.
- Commercial property insurance. This type of policy can reimburse you for the loss or destruction of property your business owns, including real estate or even cash.
- Unemployment insurance. Wisconsin employers pay unemployment insurance, which is levied like a tax. Unemployment insurance funds support employees who lose their jobs through no fault of their own.
- Cyber liability insurance. This type of insurance covers against digital data breaches and is favored by companies that collect sensitive personal data such as credit card and Social Security numbers.
Another consideration is to get an umbrella insurance policy, which extends the maximum payouts of the policies you already hold.
11. Understand financial considerations
An LLC prepares for commercial transactions by setting up a business bank account at a bank or credit union. The financial institution may issue a business debit card that comes paired with your account. To purchase items on credit, you can apply for a business credit card. You may also choose to register with a payment processor, which allows you to accept payments from sources like credit cards, mobile wallets, and buy now, pay later (BNPL) services.
Your Wisconsin LLC may also require investment capital to gain its footing. The Wisconsin Economic Development Corporation and the Wisconsin Small Business Development Center can help connect business owners to the kind of grants, bond programs, and traditional financing options a startup needs to thrive. Another resource is the US Small Business Administration. It has two Wisconsin offices—in Madison and Milwaukee. You can also connect with lenders and investors through a merchant service like Shopify Capital.
12. Market your LLC
At this stage, you may find yourself itching to spend time building your brand. You’ll do this, in part, by embarking on marketing initiatives including:
- Organic marketing. Organic marketing, sometimes called awareness content, includes search engine optimized (SEO) articles, informational videos, blog posts, newsletters, and podcasts. It helps your brand turn up in organic search results and develop a following among users.
- TV and radio ads. TV and radio ads, while costly, are traditional marketing tools that help a business reach a wider audience.
- Pay-per-click web ads. Typically more affordable and precisely targeted than a TV or radio ad, pay-per-click campaigns pop up during web videos, in sponsored search results, on websites, and in social media feeds.
- Social media influencer campaigns. Social media influencers can reach younger audiences who rarely engage with traditional TV and radio. Companies pay them to showcase their products and services as part of their social media feeds.
Resources like Shopify’s small business marketing guide can help in developing a marketing plan. The lessons learned will apply regardless of whether you partner with Shopify or another sales platform.
How to start an LLC in Wisconsin FAQ
How much does it cost to start and maintain an LLC in Wisconsin?
In Wisconsin, you must file articles of organization with the Wisconsin Department of Financial Institutions for $130. On top of that, every LLC must have a registered agent to receive legal documents on behalf of the company. The cost of a registered agent service ranges from around $50 to $300 per year. Each year, you'll also be required file an annual report via Department of Financial Institutions. The cost to file an annual report is $25.
What are the pros and cons of establishing your LLC in Wisconsin?
The filing fee for LLCs in Wisconsin is relatively low compared to other states, making it an affordable option for business owners. LLCs in Wisconsin also offer limited liability protection, which means that the personal assets of the business owner are generally not at risk in the event the business is sued or incurs debt. Another pro is that LLCs in Wisconsin have a flexible management structure, allowing the business owner to choose whether the LLC will be managed by the owners (called "members") or by a board of directors.
As for the cons, members of LLCs in Wisconsin are required to pay self-employment tax on their share of the profits earned by the LLC. Tax reporting is also complex; LLCs in Wisconsin are subject to state and federal income taxes, which can be complex to navigate for business owners who are not familiar with tax laws.
How long does it take to start an LLC in Wisconsin?
In Wisconsin, it typically takes about 2-3 weeks to start an LLC, although the exact time frame may vary depending on the workload of the Wisconsin Department of Financial Institutions (DFI) and other factors.
How do state taxes work for LLCs in Wisconsin?
LLCs in Wisconsin are subject to state and federal income taxes. The amount of tax you will pay as an LLC in Wisconsin depends on the type of business you operate and the profits you earn. LLCs in Wisconsin are subject to state income tax at the same rates as individual taxpayers. The state income tax rate in Wisconsin ranges from 4% to 7.65% depending on your income level.