How to Incorporate in Wisconsin (May 2024 Update)

Incorporating a business in Wisconsin can provide your company with valuable benefits like liability protection, tax advantages, and credibility. This process does involve navigating various legal and compliance requirements. This comprehensive guide will walk you through all the key steps for incorporating in Wisconsin, from choosing a business structure to holding your first shareholder meeting. We’ll also compare incorporations to forming limited liability companies (LLCs). Read on to learn everything you need to successfully launch your Wisconsin corporation.

Reasons to Incorporate in Wisconsin

There are three main advantages to incorporating in Wisconsin rather than simply operating as a sole proprietorship:

Limited Liability Protection

Incorporating creates a legal separation between your business and personal finances, unlike sole proprietorships or partnerships. If the corporation faces a lawsuit or bankruptcy, your personal assets like your house and cars are shielded. As a corporation owner, your liability is limited to the amount you’ve invested in the company. Without the corporate veil, creditors could seize your bank accounts, investments, and other possessions.

Tax Advantages

Corporations provide more options for reducing tax liability than pass-through entities. S-Corporations avoid the double taxation issue of standard C-Corporations. At the federal level and in most states, S-Corp owners only pay income taxes on corporate profits passed to them personally. This often results in savings for small business owners. Wisconsin does still charge corporations a 7.9% flat entity-level tax. But incorporated businesses may deduct items individuals cannot, like health insurance, meals/entertainment, and transportation.

Credibility

Incorporating lends extra legitimacy with banks, investors, partners, and customers. The “Inc.” in your company name indicates your business is established as a legal entity, which builds trust. This stability often helps attract outside financing from creditors who may be hesitant about lending to less formalized structures. The corporation structure also makes ownership transfer smoother through share sales.

Requirements and Steps for Incorporating in Wisconsin

Now that you understand why incorporating makes strategic sense, let’s walk through each requirement for forming a Wisconsin corporation:

Choose a Business Structure

You have two main options: C-Corporations and S-Corporations. These refer to how your business income gets taxed at the federal level. Your corporation will default to a standard C-Corp unless you elect S-Corp status with the IRS after incorporating.

Some key differences:

• C-Corps face double taxation - Once on corporate income and again on dividends. But they offer the most flexibility for ownership structure and drawing funds.
• S-Corps avoid double taxation by passing income directly to shareholders to report personally. But they have limitations like 100 max shareholders and one class of stock.

Check Name Availability

You’ll want to research potential corporation names and verify availability before filing articles of incorporation. Wisconsin offers an online business entity search and name reservation service through the Department of Financial Institutions.

Your name must abide by certain requirements, like containing a word like “Corporation” or “Incorporated” and not being deceptively similar to existing names.

Appoint a Registered Agent

A key step with Wisconsin incorporation is designating a registered agent – This is a person or business authorized to receive legal/tax documents like service of process lawsuits on your corporation’s behalf. The agent’s contact information must be listed when you file the articles of incorporation to create your company.

Your registered agent must have a physical address in Wisconsin available to receive deliveries during normal business hours. You can act as your own agent, but it’s normally advisable to appoint a lawyer or specialized service provider. This adds an extra layer of legal protection and privacy.

File Articles of Incorporation

The “articles of incorporation” serve as Wisconsin’s formation document for new corporations. You’ll submit this filing to the state’s Department of Financial Institutions to legally create your business. Several key details must be included:

• The corporate name
• Incorporation statute citation (Chapter 180 for Wisconsin)
• Number and type(s) of stock shares
• Registered agent info
• List of incorporators (those establishing the corporation)

You can submit your articles by mail or electronically through Wisconsin’s online filing system. Fees are $100 by default, taking 1-2 weeks for approval. But you can also expedite processing to just 1 day for $25 more.

Obtain Licenses and Extra Registrations

Depending on your particular business activities, your new Wisconsin corporation may need to apply for additional regulatory licenses or seller’s permits at the local, state, or federal levels. For instance, companies selling products in Wisconsin must register with the Department of Revenue to collect sales tax. If hiring employees, you’ll also need both state and federal employer identification numbers.

Create Corporate Bylaws and Organizational Minutes

While not legally required, drafting corporate bylaws is highly recommended next. Bylaws form the operating rules and procedures for your internal governance. You’ll outline details like shareholder rights, director duties, officer titles/elections, meetings, issuing stock certificates, and more. Signed organizational minutes from your first Board of Directors meeting prove you’re abiding by the bylaws.

Hold Shareholder and Board Meetings

Speaking of meetings – Wisconsin corporations should hold an initial shareholder meeting to nominate/appoint directors and conduct other voting business right after incorporating. You must also organize regular meetings for shareholders and directors elected to set overall policies and make major decisions. Keep detailed meeting minutes as formal records showing compliance.

Ongoing Wisconsin Corporation Compliance

Even after completing all the steps to initially create your corporation, meeting a few Wisconsin regulatory requirements is essential for maintaining proper standing:

File Annual Report

You must submit an annual report to the state each year by the last day of your company’s incorporation anniversary quarter. So if you incorporated on August 10th, your report deadline would be September 30th. You can file this form through Wisconsin’s online portal to maintain compliance.

Pay Taxes

Incorporated businesses in Wisconsin are subject to a 7.9% state income tax on profits. Any owners receiving dividend checks from the corporation must also declare these investment earnings on their personal returns. You may need to make estimated quarterly tax payments to avoid penalties. On the federal side, C-Corps and S-Corps report earnings differently.

Keep Records

Maintain detailed accounting statements plus copies of all Wisconsin regulatory documents, meeting minutes, company contracts/legal records, and other formal papers. These provide proof to state regulators and tax authorities that you are operating legally and legitimately.

How Does Incorporation Compare to Forming an LLC in Wisconsin?

A brief rundown of the key differences between these two common business structures in Wisconsin:

• Formation Requirements – Filing articles of incorporation to incorporate is more complex than submitting articles of organization to launch a Wisconsin LLC. More ongoing legal formalities exist like issuing stock certificates, holding shareholder meetings, etc.
• Ongoing Maintenance – Corporations have more paperwork and recordkeeping demands than LLCs to stay compliant with state statutes and regulations. Expect higher accounting fees and legal costs.
• Tax Treatment – As mentioned earlier, LLCs default to pass-through taxation where owners pay personal income tax on their percentage share of company profits. Corporations face entity-level taxes on earnings before distributions to shareholders.
• Investor Appeal – The corporation structure offers greater fundraising potential thanks to unlimited ownership shares that are easily transferable to investors. LLCs can add new members but don’t issue formal equity stakes.

Conclusion

That covers the major steps for incorporating a business in Wisconsin, from initially choosing between S and C Corporations to handling ongoing compliance duties like franchise taxes and annual reports. Just remember that incorporating involves more legal complexities compared to LLCs. But the corporate structure offers unique advantages like limited liability protection, advantageous tax deductions, and flexible investor ownership opportunities in exchange. Connect with an experienced business lawyer if you still have questions!