Wisconsin Startup
If you're considering a new Wisconsin startup business, you have an important choice
to make: the type of business you're going to form. This decision will have an impact
on your taxes and your personal liability, so it's extremely important to select
the business structure that's right for your industry and your specific needs and
priorities.
Our Wisconsin Startup page will give you an overview of the major types of businesses
you can form in the state. We hope that it gives you a good starting point! Of course,
be sure to discuss your options with your lawyer or accountant before you register
so you know you're taking everything into consideration.
Wisconsin Trade Name
Unlike in some states, Wisconsin
trade names are registered with the County Clerk's office of the county
in which the business is located.
Wisconsin trade name owners have no limited liability protection against debts or
obligations of the business, making them better suited for some industries than
others.
Incorporate in Wisconsin
Forming a corporation, on the other hand, provides personal liability protection
to its owners. When you
incorporate in Wisconsin, you create a new entity that can enter into contracts,
take out loans, and perform other activities available to legal "persons."
To form a corporation in Wisconsin, you will submit Articles of Incorporation to
the Department of Financial Institutions.
C Corporation
One type of corporation, the
C corporation, allows you to have as many shareholders as you would like.
These shareholders may consist of individuals (whether or not they are US citizens)
or other business entities themselves (corporations or LLCs).
S Corporation
An
S corporation, on the other hand, is limited to 100 shareholders, and these
shareholders must be US citizens or legal aliens; they cannot be business entities.
However, S corporations provide tax benefits, as they are considered "pass-through"
entities, taxed only at the individual level when corporate profits are distributed
to the shareholders.
Wisconsin Foreign Corporation
A Wisconsin
foreign corporation is a filing available to corporations that have already
registered in another state but wish to do business within Wisconsin.
If the legal corporate name is not available in the state for use with your Wisconsin
foreign corporation name, your corporation must register for a Fictitious Name for
use in the state. This can be done simultaneously with registering as a Wisconsin
foreign corporation—which is an excellent reason to do your research and determine
if your legal name is available before submitting the form.
Wisconsin LLC
An LLC is formed
by filing Articles of Organization, which also go through the Department of Financial
Institutions. Rather than shares, owners have percentages of ownership in the company.
Unlike with a corporation, where individual shares correspond to the percentage
of profits distributed, an LLC's individual owners may receive whatever percentage
of profits specified in the Operating Agreement; this does not need to correspond
with the initial ownership contributions.
Wisconsin Nonprofit Corporation
A 501c3
nonprofit corporation is a special kind of nonprofit, one that has been accepted
by the IRS as a tax-exempt organization based on its purpose. Not every Wisconsin
nonprofit corporation is exempt from taxes; only upon acceptance by the IRS as a
501c3 can an organization accept tax-deductible donations and other federal benefits.