How to Incorporate in Wisconsin vs. How to Start a Wisconsin LLC

A Guide to Choosing the Best Business Entity in Wisconsin

When you’re ready to start your own business in Wisconsin, the first big decision you’ll make is which business entity is best for your company. The Limited Liability Company (LLC) and corporate entities are the most popular structures in the states, and have the most desirable elements from all the business entities, such as limited liability protection and flexible tax structuring options. This guide to Wisconsin LLC formation and incorporation will help you learn about both business structures, down to their basic elements. We’ll explore the details of starting both a Wisconsin LLC and a Wisconsin corporation, what to expect with their annual maintenance, and the advantages and disadvantages of the LLC and corporation.

Once we’ve figured out which business structure suits your needs best, your next step is hiring Active Filings to get you where you need to be in the quickest amount of time. Our starter package begins at $25 (plus state fees). Hire us and you’ll quickly understand why Active Filings is America’s most reliable business incorporation service.

 

Hire us to form your LLC or Corporation in Wisconsin!

LLCs vs. Corporations

There are basic elements in all LLCs and corporations that you can use to base your decision on:

  • Maintenance
    LLCs are known for their simple maintenance and user-friendly structure. LLCs will need only minimal paperwork, have flexibility when a decision is needed, and have low annual upkeep. An LLC is your best bet if you have a small to medium-sized business and can only handle a low amount of maintenance. Conversely, a corporation needs a high level of maintenance, both on a day-to-day and annual basis. Corporations have more legal formalities than an LLC, like electing a board of directors, holding shareholder meetings, and maintaining internal records such as meeting minutes and stock issuance.
  • Tax Structure
    LLCs are not a separate taxable entity apart from its owners, making it a pass-through entity. Income and losses pass through the business and onto the members to report on their individual income tax return. LLCs are the overall simpler and less expensive option in terms of time and paperwork for business owners during tax season. Corporations are more advanced for a business owner to take care of during tax season. A standard corporation defaults to a tax structure called a C corporation, and is known for what’s called double taxation, where a business’s net income is taxed initially by a corporate tax, and then taxed again on personal income, after shareholders receive their profits (dividends) and losses. C corporations are typically taxed at a lower rate on profits, and have opportunities for tax deductions such as health care and travel, and can retain its earnings to be reinvested into the company’s growth.
  • Prospective Investors
    Corporations are your best bet if you are depending on investors to grow your company. Investors are more likely to put their time and funds in a familiar and reputable business structure like a corporation. Entrepreneurs looking to expand their company in the future will most likely need investor funds, making the corporate entity the suitable choice. Investors are more comfortable investing their time and money in a traditional business structure that offers stock, like a corporation. Investors don’t have to worry about complicating their personal taxes when they invest in a corporation, and only get taxed on profits actually distributed to them, unlike an LLC. Investors view corporations as a dependable business structure that will provide them with a return on their investment. Having a corporate structure will profoundly impact the ability to raise investment money. Investors can still invest in an LLC by owning a percentage of that LLC. Owners of LLCs will have to pay taxes on their distributive shares, even if they haven’t received a distribution on those profits, and can’t issue stock, which is a turn-off for many investors. A corporation should be considered if you are serious about gaining investors.
  • Prestige
    A business starts with its appearance, and having the “LLC” or “Inc” title in your business name will provide your company with certain a level of prestige. These endings convey permanence and encourage trust from likely investors or clients, and show that you are serious about your business. While both entities provide a level of prestige, incorporating provides a higher level of prestige for your business, since the corporation is the oldest and most traditional entity type. It’s important to remember that LLC’s have surpassed corporations in popularity in most states, and an LLC’s prestige is continually growing.

 

WI LLCs vs. WI Corporations

After covering the basic elements that apply to all corporations and LLCs, next is to discuss the specific characteristics of what makes a Wisconsin LLC or Wisconsin corporation different from other states, bringing us to the final answer on which entity you should choose for your business. Each state has its own unique statutes and tax laws that govern the way its businesses operate, and these unique details must be considered when choosing your business entity.

Below, we’ve provided specifics for the Wisconsin LLC and the Wisconsin corporation.

  • Wisconsin Corporation Franchise Tax
    Wisconsin imposes the corporation franchise tax for the privilege of doing business in the state. This franchise tax rate is a flat 7.9%, and applies to all corporations. This tax is fairly expensive compared to most states, and should be discussed with a tax professional if you’re considering forming a corporation.
  • Wisconsin Economic Development Surcharge
    The Wisconsin economic development surcharge is a surcharge on gross receipts at the rate of 3%. This surcharge applies to corporations with gross receipts from all activities in the state of $4 million or more. The maximum surcharge is $9,800, with a minimum required of $25.As of 2013, LLCs aren’t subjected to this surcharge.
  • Wisconsin Personal Income Tax
    The Wisconsin individual income tax rate is a point of interest for LLCs, since the businesses income passes through the LLC and onto the members to report on their individual income taxes. Wisconsin taxes personal income at marginal rates, and currently has 4 tax brackets:

    Taxable Income Tax Rate
    $0 – $11,760 3.86%
    $11,760 – $23,520 $453.94 + 5.04%
    $23,520 – $258,950 $1,046.64 + 6.27%
    $258,950 +  $15,808.10 + 7.65%
  • Wisconsin LLC Protection From Creditors
    LLCs in Wisconsin have a strong level of protection against creditors (a person who is owed funds or assets by a debtor of an LLC). In other states, creditors can have the courts order a foreclosure on the LLC. In Wisconsin, creditors only have one remedy against the debtor of an LLC, which is a charging order that puts a lien on a debtor’s interest (funds and assets) and creditors then have a right to receive any distributions made to the debtor from the LLC, if the LLC makes a distribution. Often times, this leads to the creditor ending up with nothing, since creditors can’t order the LLC to make distributions (WI §183.0705).

 

Wisconsin LLC or Wisconsin Corporation? Final Answer.
Choosing either an LLC or a corporation as the structure for your company means considering the size of your business, priority of investors, level of maintenance you’ll need, and the most beneficial tax structure for the future of your business.

Starting an LLC in Wisconsin will be your best bet if you have a small to medium-sized business. LLCs in Wisconsin stay true to design in terms of easy formation and maintenance, simple management, strong flexibility in decision-making, and limited liability protection. If growing your company large with investors is not your top priorities, you’re looking for the least expensive and sophisticated taxes and annual maintenance, and you’re just needing limited liability protection for your business, form an LLC.

Incorporating in Wisconsin will be your best bet if you plan to grow your business big with the funds from investors, and you have the means for the amount of maintenance required. a Wisconsin corporation remains true to character in its substantial amount of paperwork, higher maintenance, and involved yet beneficial tax structure.

How to Incorporate in Wisconsin

If you’ve decided to incorporate in Wisconsin, you’ll need to file the Articles of Incorporation with the Wisconsin Secretary of State to make it official. You can download the Articles of Incorporation online at the Wisconsin Secretary of State website. Once your Articles of Incorporation are approved, your corporation is officially formed.

You can file the Articles of Incorporation in a few ways:

  • Online at the Wisconsin Secretary of State website
  • By postal mail

We recommend filing your Wisconsin Articles of Incorporation on the website since it’s the fastest, cheapest, most secure, and preferred method by the Secretary of State. The fee for filing your Articles of Incorporation costs $100 ($140 if filing by postal mail). The state of Wisconsin processes business formation documents submitted online in about 1 – 5 business days, and by postal mail in about 4 -7 business days. You can pay an extra $25 if you’d like 1-day expedited approval.

To complete your Wisconsin Articles of Incorporation, include the following information:

Enter your corporation’s name exactly as you would like it to appear. Your corporation name must include one of the following designations: “Incorporated,” “Corporation,” “Company,” “Limited,” or an abbreviation of one of those words.

Your corporation name can’t imply it is organized for a purpose other than what is mentioned in the Articles of Incorporation. The name can’t already be in use, and can’t sound similar to the name of any other company in Wisconsin.

State the number of shares your corporation is authorized to issue (most corporations start out with between 100 – 1,500).

A registered agent is a person or entity who resides in the state and receives service of process from the government on behalf of a business. List the name of your registered agent here.

A registered office is where your company receives service of process from the government on behalf of a business. Enter the street address of your registered agent office here.

If you have any additional limitations, modifications, or contingencies regarding your corporation or its purpose, list them here. For example, if you would like your official formation date to be different than the filing date, enter that here.

Enter the name and address of the incorporator(s) of these articles, followed by their signatures.

Enter the name of the person who drafted this document.

If you’d like to receive a filed copy of this document, enter that address here.

How to Form an LLC in Wisconsin

If you’ve decided to form a Wisconsin LLC, you’ll need to file the Articles of Organization with the Wisconsin Secretary of State to make it official. You can download the Articles of Organization online at the Secretary of State website. When your Articles of Organization is approved, your LLC is officially formed.

You can file the Articles of Organization in the following ways:

  • Online at the Wisconsin Secretary of State website (recommended)
  • By postal mail

We recommend filing your Wisconsin Articles of Organization on the website since it’s the fastest, cheapest, most secure, and preferred method by the Secretary of State. The fee for filing your Articles of Organization costs $170. The state of Wisconsin processes business formation documents submitted online in about 1 – 5 business days, and by postal mail in about 4 -7 business days. You can pay an extra $25 if you’d like 1-day expedited approval.

To complete the Wisconsin Articles of Organization, include the following information:

Enter your LLC name exactly as you would like it to appear. Your company name must include the words “Limited Liability Company,” “Limited Liability Co.,” or the abbreviations “L.L.C.” or “LLC.”

Your company name can’t imply it is organized for a purpose other than what is mentioned in the Articles of Organization. The name can’t already be in use, and can’t sound similar to the name of any other company in Wisconsin.

A registered agent is a person or entity who resides in the state and receives service of process from the government on behalf of a business. List the name of your registered agent here.

A registered office is where your company receives service of process from the government on behalf of a business. Enter the street address of your registered agent office here.

If all the members are owners and are involved in decision-making and day-to-day operations, the LLC is member-managed. If certain members are appointed as managers to make the decisions and run day-to-day operations, the LLC is manager-managed.

Check the appropriate box depending on whether your LLC will be member-managed or manager-managed.

Enter the name and complete address of the organizer of these articles, followed by their signatures.

If you would like your official formation date to be different than the filing date, enter that date here. This date must be within 90 days following the receiving day.

If you’d like to receive a filed copy of this document, enter that address here.

Wisconsin Annual Report

To keep your business in good standing with the state of Wisconsin every year, you must take care of a few annual maintenance tasks.

• File your annual report
• File your Wisconsin business tax returns

In this section, we’ll explain the basic instructions and resources you’ll need to help you take care of your tax-related upkeep and annual maintenance.

What is a Wisconsin annual report?
A Wisconsin annual report updates or confirms the records for your business, such as officer/member names and addresses or registered agent. This report lets your business remain in good standing with the state. Both LLCs and corporations that do business in the state are required to file annual reports with the Wisconsin Secretary of State.

How do I file my annual report in Wisconsin?
Corporations and LLCs in Wisconsin need to either file their annual reports online at the Secretary of State website (recommended), or by postal mail.

How much does it cost to file an annual report in Wisconsin?
For LLCs, the annual report fee in Wisconsin is $25, whether you file by mail or online.
For corporations, the annual report fee in Wisconsin is $25 for filing online, and $40 if you file by postal mail.

When are Wisconsin annual reports due?
Your Wisconsin LLC or corporation’s annual report is due at the end of your anniversary calendar year quarter:

Formation Date Annual Due Date
January 1st thru March 31st March 31st
April 1st thru June 30th June 30th
July 1st thru September 30th September 30th
October 1st thru December 31st December 31st

Wisconsin Business Taxes

The filings can get complicated and you may need the help of a tax service or CPA to complete these requirements, but regardless of your accounting skills, we’re here to help get you started.

Check out our Wisconsin Business Tax FAQ below:

What is the Wisconsin Corporation Franchise Tax?
Wisconsin imposes the corporation franchise tax for the privilege of doing business in the state. This franchise tax rate is a flat 7.9%, and applies to all corporations. This tax is fairly expensive compared to most states, and should be discussed with a tax professional if you’re considering forming a corporation.

What is the Wisconsin Economic Development Surcharge?
The Wisconsin economic development surcharge is a surcharge on gross receipts at the rate of 3%. This surcharge applies to corporations with gross receipts from all activities in the state of $4 million or more. The maximum surcharge is $9,800, with a minimum required of $25.

As of 2013, LLCs aren’t subjected to this surcharge.

What is the Wisconsin Personal Income Tax?
The Wisconsin individual income tax rate is a point of interest for LLCs, since the businesses income passes through the LLC and onto the members to report on their individual income taxes. Wisconsin taxes personal income at marginal rates, and currently has 4 tax brackets:

Taxable Income Tax Rate
$0 – $11,760 3.86%
$11,760 – $23,520 $453.94 + 5.04%
$23,520 – $258,950 $1,046.64 + 6.27%
$258,950 +  $15,808.10 + 7.65%

What forms do you file for your Wisconsin business taxes?
State Business Taxes:
For the Wisconsin corporation franchise tax, you will need to submit Form 4.

Federal Business Taxes:
For C corporations, submit Form 1120 federal income tax return.
For S corporations, submit Form 1120S federal income tax return for an S corporation.
For single member LLCs, submit Schedule C as part of your Form 1040 individual income tax return.
For multi-member LLCs, submit Form 1065 partnership income tax return along with Schedule K-1.

When are my Wisconsin business tax returns due?
Your Wisconsin corporation franchise tax return and economic development surcharge return and is due on the 15th day of the 4th month after the end of the fiscal year, or April 15th for calendar year filers.

Hire us to form your LLC or Corporation in Wisconsin!