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Whether you make grilled cheese, cheese curds, or cheese heads, Wisconsin business owners should take advantage of the tax and liability benefits of forming a Wisconsin LLC.
QUICK SIMPLE WISCONSIN LLC FORMATION
- Select a Name
The name of every Wisconsin LLC must contain the corporate designator “Limited liability company”, although it can be abbreviated using single letters, “ltd.,” or “co.” The name you choose must be distinguishable from every other business name that is registered with the Department of Financial Institutions.
- Organize Your LLC
A Wisconsin LLC is formed by filing articles of organization and a $130 fee with the Department of Financial Institutions. The articles of organization for your LLC must include ONLY a statement that the LLC is organized under Chapter 183 of Wisconsin Law, the name of the LLC, the name and address of the registered agent, the name and address of the organizer(s), and whether the company will be managed by managers.
- Create an Operating Agreement
Wisconsin LLCs use operating agreements to govern themselves. These set out how members enter and exit the LLC, management, and a variety of other business components. Wisconsin requires that any Operating Agreement be in writing and executed by all members. While Wisconsin does not require an Operating Agreement, we would recommend having one that satisfies the statutory requirements.
- Run Your LLC
EIN: Any tax returns filed by employees or one of multiple members will need an EIN, which the LLC can obtain from the I.R.S.
Annual Report: In Wisconsin, LLCs must file annual reports every year to maintain their status. This report contains the name of the LLC, the name and address of the registered agent, the address of the principal office, and the names and addresses of managers (if any) with a $25 fee. Foreign companies must include the names and addresses of all members and pay a $65 filing fee.
WHY FORM AN LLC IN WISCONSIN?
Wisconsin Has a Growing Economy
Each year, Wisconsin forms over 28,000 new LLCs. Wisconsin has been ranked as the #4 state for tax environment for new firms.
- Advantages of Forming a Wisconsin LLC
The Wisconsin LLC Act expressly states its purpose is to give “maximum effect to the principle of freedom of contract and to the enforceability of operating agreements.”
The Act gives LLC members contractual freedom to customize their capital contributions and their shares of profits and losses. An LLC’s members can specify a method for allocating profits and losses in an LLC agreement that is greater or lesser than their portion of capital contributions. Section 183.0503 states: “The profits and losses of a limited liability company shall be allocated among the members in the manner provided in an operating agreement.” This gives members contractual flexibility to tailor their income and risks of loss to further their big-picture asset management plans.
In addition, an LLC agreement may establish classes of membership interests with different rights, powers, and duties, including voting and non-voting interests. Under section 17-7687, “[a]n operating agreement may provide for classes or groups of members having such relative rights, powers and duties as the operating agreement may provide, and may make provision for the future creation in the manner provided in the operating agreement of additional classes or groups of members having such relative rights, powers and duties as may from time to time be established, including rights, powers and duties senior to existing classes and groups of members.” This facilitates everything from complex, multi-million dollar business deals to succession planning in family businesses and estate planning by gifts of non-voting interests.
Preventing Unwanted Business Partners
The Wisconsin LLC Act allows members to protect their control of an LLC. An LLC agreement may prohibit members from assigning their membership interests. But if an LLC agreement does not prohibit it, an assignment does not dissolve the LLC or entitle the assignee to participate in management or to become a member. Instead, the assignee may receive only the distributions and allocations of profit and loss to which the assignor would have been entitled, and all the non-assigning members must consent to the assignee becoming a member.
Creditors Only Get Passive Rights, Not Control Rights
Section 183.0705 provides that if a judgment creditor of a member obtains a charging order against the member’s interest, “the judgment creditor has only the rights of an assignee.” That is, a charging order requires the LLC to pay the judgment creditor any distribution that would otherwise be paid to the judgment debtor. But the judgment creditor does not have a right to participate in management.
In addition, the Act states that unless an LLC agreement provides otherwise or all members give written consent, a person ceases to be a member of an LLC when the person makes an assignment for the benefit of creditors, files a voluntary petition in bankruptcy, is adjudicated insolvent or bankrupt, or fails to contest a petition seeking his or her reorganization, liquidation, dissolution, or similar relief. These events are considered “events of bankruptcy.”
- Wisconsin Registered Agent
A Wisconsin LLC must continuously maintain an agent for service of process in the state. A commercial registered agent service may act as a Wisconsin registered agent.
Because of the advantages of forming an LLC in Wisconsin, over 28,000 new LLCs are formed in the state each year.
Should you wish to have more flexibility and protection, you may instead form a Delaware LLC even if you operate in Wisconsin. What are the advantages of a Delaware LLC? (Delaware LLC Advantages). We can then help you file an application for registration to do business in Wisconsin with your Delaware LLC (Form Delaware LLC).
- Wisconsin LLC Act Statutory References
Section 183.0105 Section 183.0503 Section 183.0704 Section 183.0705 Section 183.0802 Section 183.1302
| Wisconsin vs. Delaware LLC's: Which State Is Better?|
|States||LLC Filing Fee||Required to Name Members or Managers||Report Frequency||Annual Fee?||Reduce Fiduciary Duties?||Series?||Charging Order as Exclusive Remedy||Maximum Freedom of Contract||Separate Equity Court?|
|Wisconsin||$170.00||Yes||annual||$25 Domestic $80 Foreign|