Getting Your Business Started in Wisconsin

The inspiration to start a small business can be really exciting. You have an idea for a service or product, and you’re ready to make the leap and start taking concrete steps. There are a lot of choices and many decisions to be made. Being a small business owner in Wisconsin is very achievable, but you need to set things up correctly in order to be in compliance with the law and create a foundation for your success.  

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In order to start a business in Wisconsin, you need to have a plan. In order to streamline the process and make sure you are getting off on the right foot, it is always advisable to consult with an experienced Wisconsin business law attorney. This article will provide some essential tips in order to help you achieve your goal of starting a small business in Wisconsin. Read on for more information on getting your business started in Wisconsin.  

Types of Wisconsin Business Entities

After you have figured out what you want to sell, you need to decide on a legal structure for your business. The legal structure of a business is typically referred to as a “business entity.” Here are the most common and valuable forms of business entity available in Wisconsin.  

Sole Proprietor

A sole proprietorship is one of the simplest possible “entities” that you can have if you want to do business in Wisconsin. A sole proprietorship is essentially an unincorporated business owned and operated by one person. The sole proprietor can have employees. In order to establish a sole proprietorship in Wisconsin, you need a business name, a filed trade name, any licenses, zoning clearances or permits, and an employer identification number. You will need to register with the Wisconsin Department of Revenue before you start a sole proprietorship.  

Limited Liability Company

A limited liability company, or LLC as is commonly known, it is a very common small business entity. It is actually considered a hybrid type of entity. The LLC combines the size of a sole proprietorship, and it protects you like a shareholder in a company. In other words, you have a high degree of control while your liability is limited to the share you have in the LLC. You can also have a limited liability corporation. An LLC can be domestic or foreign (formed in another state). You will need to register any LLC with the Wisconsin Department of Revenue.  

Partnership

If you and someone else want to run a business together, you can always opt for a partnership. That way, it is not just two or more people working together but two or more partners who have a written partnership agreement and a definite, legal arrangement that provides directions and legal protection to each partner. Read our article for more information on Resolving Business and Partnership Disputes in Wisconsin  

Getting Your Paperwork Figured Out:

Depending on what type of business entity you decide on, you will have to complete and file the associated paperwork with the State of Wisconsin. Here are some of the most common forms that you could use in forming your small business.  

1-Articles of Incorporation

If you are forming an LLC, you will need to complete and file the Articles of Incorporation. The Wisconsin law governing the formation and operation of a limited liability company will be changing as of January 1, 2023. Previous to January 1, 2023, the article of incorporation form was pretty strict about what you could and could not include when forming your LLC. After January 1, 2023, you will have a great deal more flexibility when setting up the articles of incorporation for your LLC.  

2-Written Operating Agreement

If you have an LLC with more than one member, you should have an operating agreement. The operating agreement is a document that governs how the company functions, what the company will do if certain situations occur and how the company will handle its finances. Any time there is more than one person involved in an LLC, it should have rules laid out from the start that everyone agrees to abide by; that’s the operating agreement. As described above, the law in Wisconsin governing LLCs will change on January 1, 2023, and the operating agreement could be oral, implied, or constructed out of the company records, but it is still not a good substitute for a clearly written operating agreement that all parties understand and agree to.  

3-Partnership Agreement

If you elect to have a partnership, you should absolutely have a partnership agreement. The agreement will define what the purpose of the partnership is, what the duties of the partners are, how the partnership will handle certain situations that occur, and how (this is important) the partnership will end if one or more partners want out. The partnership agreement will also state what powers of authority the partners have in relation to acting as an agent of the partnership. Of course, the partnership agreement will also dictate how the partnership spends its money, which is always a critical point and best to have in written form in case of disagreement.  

4-Statement of Authority

If you have an LLC with members or managers, you will want a statement of authority. With the new Wisconsin LLC law taking effect, the courts will no longer recognize what is referred to as “apparent authority.” In other words, it will no longer be enough to be the member or manager of an LLC in order to take action on the LLC’s behalf, and you must be included in the LLC’s statement of authority that is filed with the state. The Statement of Authority can give any combination of powers to any LLC member or can restrict them to specific approved actions. The statement of authority will need to be filed with the state in order to be effective and does require a small fee, but the clarity in regard to the power an agent of the LLC has makes the work well worth it.  

5-Amendments and Addendums

At some point, you may want to change a document that was filed in regard to your business. You could use an amendment or addendum, depending on your wants and needs. If you want to change your document, you can do it with an amendment, which will change one part or several. An addendum, on the other hand, does not really change a part of the existing document; it adds to it. You can use these tools to alter existing documents but be careful; a conflicting or contradictory amendment or addendum can create many problems.  

6-Various Licenses and Permits

Depending on what type of service your business will be providing, you may need specific licenses or permits to conduct that business. Remember that not only will you need to procure these permits and licenses, but you will also be responsible for keeping them current.  

Next Steps:

Once you have identified what kind of business entity you want and the paperwork needs to create it, it’s time to go ahead and start running your business. The issue here now is to maintain the documents that you filed with the state. You are also required to maintain adherence to the laws that Wisconsin has in place governing the operation of a small business. You will need to file an annual report if you have an LLC. You will also ideally have a separate business bank account used to handle the finances of your business and only your business. Do not combine your personal funds with your business bank account. If you use your business bank account or credit cards for personal things, you run a genuine risk of the business assets being viewed by a court as personal assets if a lawsuit is filed against you or your business.  

A smart Wisconsin small business owner keeps business, and personal finances separate stays on top of whatever state filings and renewals are required to continue to operate their business, and always stays on top of changes in the law that applies to running their business. A few simple precautions will make being a Wisconsin small business owner a lot easier and, from a legal standpoint, safer for you.  

If you are considering starting a small business in Wisconsin or currently have a business that you would like to bring up to date, you should make an appointment to speak with an experienced Wisconsin business law attorney who can evaluate your individual situation and advise you on how to reach your legal goals. Feel free to give O’Flaherty Law a call, and we would be happy to help you.  

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