You cannot operate a business in Wisconsin without first registering it with the state government. While you can apply for a temporary permit, a more permanent method of doing business involves registering your company as either a Limited Liability Company (LLC) or Corporation.
How to Start a Business in Wisconsin
Step 1: Choose the Right Business Idea
Before starting any business, conduct thorough research to determine if the industry is lucrative enough that your efforts will be worth it.
It may sound repetitive, but first-time entrepreneurs often overlook this step; no matter how good an idea you think you have, it’s all for naught if there isn’t sufficient demand for your products or services.
Step 2: Plan Your Wisconsin Business
Name Your Business
Once you’ve decided upon a name, make sure it isn’t already taken by searching for the Wisconsin Department of Financial Institutions (DFI).
Your name must contain the word “Limited” if you’re registering an LLC or the suffix “Inc.” if you’re creating a Corporation.
Find a Business Location
Wisconsin law does not require a registered business to have a specific location.
However, if you’re going to be carrying your business out of your home, it’s recommended that you obtain the proper zoning permits from the local government before moving forward.
Conduct Market Research
Before starting your business, conduct some research to determine demand for your products or services.
This step can eliminate the possibility of financial loss before you get started.
Write a Business Plan
A business plan is not required when registering a business in Wisconsin, but it can be useful to help identify potential problems and their solutions.
Step 3: Get Funding
Registering a business with the State of Wisconsin does not require any sort of fee or registration fee.
However, you may need to pay certain fees for permits and licenses depending upon what kind of industry your business is in.
Explore Business Funding Options
- If you’re an average person seeking funding for your small business, look into crowdsourcing. Sites like Kickstarter and GoFundMe allow you to create a profile explaining more about your business and set a monetary goal of how much money you need to get started. People can make pledges online and receive special incentives for their contributions.
- If you already have the startup capital and want to finance your business’s growth, consider looking into merchant cash advance providers such as StreetShares or On Deck Capital; these companies will loan money against future credit card sales and offer financing plans that vary according to monthly revenue generated by your company.
Step 4: Choose a Business Structure
The easiest business structure to establish, sole proprietorships do not require registration with the state government.
However, you will be held personally liable for any financial or legal trouble your business encounters.
This means that if your business gets sued and has insufficient insurance coverage to meet court-ordered fines, your personal assets could be seized by a plaintiff.
While corporations are more difficult to establish than sole proprietorships, they do allow you to have individual personal asset protection from being compromised in case of a lawsuit.
Corporations also have “corporate personhood,” meaning that it is considered its own entity separate from its owners. An LLC can accomplish this same goal without going through the process of establishing a corporation first.
While registering a business as a partnership does not require submitting any documentation to state or federal agencies, it can be more difficult to dissolve than other business structures. Many businesses choose to operate as either corporations or LLCs because of this.
Limited Liability Corporation (LLC):
This is the most popular choice for small businesses. At the same time, an LLC also limits the liability of its owners in case of a lawsuit; an LLC will only protect assets up to what you contributed to the company.
The official name for a nonprofit is a 501(c)(3); these types of businesses do not generate any revenue as all contributions are tax-deductible.
Step 5: Register Your Wisconsin Business
Registering a business with the Wisconsin Department of Financial Institutions is easy and free. All you need to do is submit a Name Reservation Request Form, which requires your name, address, phone number, and email address. Once submitted, it usually takes 2-3 weeks for an approval letter to be sent back to you.
Once you receive approval from the state government, registering your business as a corporation or LLC typically only takes a few hours at most. It will cost anywhere from $75-$250, depending on the type of entity structure chosen.
Step 6: Set up Business Banking, Credit Cards, and Accounting System
Establishing business banking is just like establishing a personal bank account. You’ll need to go into a physical branch and bring along your driver’s license or another form of identification.
The process for establishing credit cards and accounting software is similar; you’ll need to physically visit the company in question with identification before you can set up an account.
1. Opening a business bank account:
Most banks will only require that you bring in your resale certificate along with ID to open up a business bank account
The requirements to obtain a resale certificate are as follows:
- A valid state collect sales tax exemption number, which can be obtained from the Wisconsin Department of Revenue at https://www.revenue.wi.gov/Pages/Services/ResaleCertificate/default.aspx
- A copy of the entity registration approved by the Wisconsin Department of Financial Institutions (this can take 2-3 weeks after filing for approval)
2. Setting up credit cards for your business:
Setting up credit cards for business is much easier than setting one up as a personal account.
All you have to provide is your resale certificate number, the business address and phone number, and an email address.
Step 7: Get Insured
Once your business is registered, and a bank account has been established, it’s time to purchase professional liability insurance.
Most business owners will need somewhere between 10-15 types of insurance policies depending on the type of company being established.
Most common types of business insurance needed for Wisconsin businesses:
- Property insurance: This will protect your business’s physical location and any equipment inside.
- Business vehicle insurance: This will help cover the costs of a car used solely for business use, such as a company car.
- General Liability Protection: This includes coverage for bodily injury, property damage, medical expenses for injuries to third parties, and legal fees/costs arising from lawsuits or criminal charges resulting from an accident involving a business vehicle.
- Worker’s compensation: In order to employ anyone in Wisconsin, you will need to obtain workers’ compensation insurance to protect both employees and employers alike.
- Cyber/data liability insurance: If your company deals with confidential information about your business online (such as credit card numbers) or stores sensitive data on computers or servers, this is required
- Director and officer insurance: If you have a board of directors or executives in your company, the D&O policy will protect them from lawsuits
Step 8: Obtain Permits and Licenses
The next step is to obtain the necessary permits and licenses for doing business in Wisconsin. Most of these are obtained at the local level, but the state government will issue some.
- Permit to solicit business: This is required in order to communicate with potential customers about your products or services.
- City/county business license: Most cities in Wisconsin require a separate license in addition to federal registration. For example, Milwaukee requires any business operating within their city limits to have a municipal license.
- State tax ID number: This can be applied online through the WI DOR website
Step 9: Hire Employees
In order to hire employees for your company, you’ll need to have a set of D&O policies. Since most individuals will require health insurance, unemployment insurance, and worker’s compensation, these should be purchased in conjunction with hiring someone full-time.
The process in Wisconsin is very easy: You can apply online through the WI Dept. of Workforce Development website.
Step 10: Define Your Brand
One of the most important steps in starting a business is to define your brand. This can be done by:
- defining your company’s values
- building a professional website that will provide information about your business and the services you offer
- using social media to reach out to potential customers
There are many different ways to spread awareness of your brand online, with the most common being Facebook, Twitter, Google+, LinkedIn, YouTube, Pinterest, etc.
These platforms allow businesses and individuals alike to share content about their products/services and build relationships within their target market.
As a business owner or executive, it’s important for you to share interesting articles/videos that relate back to your industry and engage with your target market to build a relationship.
Step 11: Build Your Business Website
A website is one of the most effective ways to market your company and build a brand online.
If you want to be taken seriously as a business owner, it’s important that you have a professionally built website with informative content.
Please note: it’s best if a web developer/designer builds your site rather than doing it yourself. This way, there shouldn’t be any errors in coding or formatting.
Pros and cons of registering a business in Wisconsin
- The state has relatively low startup business costs
- The labor market is strong, which makes it easier to find employees
- You can run your company from anywhere within the state as long as you have a physical address. This means living in another state or country isn’t an issue
- The state has a great number of resources available online to help new businesses along the way
- The laws governing starting a business in Wisconsin are straightforward and easy to understand
- The corporate business income tax is fairly high, which makes it more expensive for those working from home or outside the state
How much does it cost to start a business in Wisconsin?
The cost of starting a company in the state of Wisconsin varies from industry to industry, but typically speaking, it costs around $1,000-$2,500.
Numerous resources online provide detailed information on what you can expect to pay based on your startup type and location within the state.
Use the following resources when planning out your budget:
- WEDC interactive Starting a Business tool
- CityTownInfo.com guide about how much it will cost to start a business in Wisconsin
- The Startup Company Handbook “How To Start A Company In Any State!”
How to Qualify as a Foreign Business in Wisconsin?
If you are from a country outside of the United States, there might be certain requirements you have to meet in order to obtain a license.
In Wisconsin, foreign businesses can apply for an “alien registration number” through the WI DOR website if they plan on conducting business within the state.
This must be done before filing any other official paperwork.
How to Get a Small Business License in Wisconsin?
If small business owners plan on hiring employees within the state of Wisconsin, it’s important that you apply for a state business license through the WI DOR.
A business license is also required if you plan on using your company name in any capacity when getting public attention, such as marketing or advertising with signage/flyers.
You can find more information about this process by visiting the WI DOR website.
What is a Registered Agent, and what do they have to do?
A registered agent is an individual or company that accepts legal papers on your behalf if you are unable to accept them yourself. This can be any person within the state of Wisconsin who is 18 years or older.
You can also use a legal business entity such as an LLC or Corporation. It’s important to note that even though you are using a registered agent, it’s still recommended that you keep all of your official documents (financials, operating agreements, etc.) at your place of business in case the WI DOR ever performs an audit.
What are the ongoing costs for running a business in Wisconsin?
It’s important to research ongoing requirements and fees that might come up while you run your company.
Most of these fees will vary depending on your industry type, but there are some general ongoing fees that all businesses should consider here:
- Bookkeeping services
- Office supplies/equipment (computers, printers, etc.)
- Local permits (permits might also need to be obtained from outside parties depending on what kind of work or sales you plan on doing)
- WI DOR fee ($195/year)
How do I get a FEIN number?
A Federal Employer Identification Number is used to identify your business with the Internal Revenue Service (IRS). This number is different than a tax ID or social security number, and it can be obtained online through the WI DOR website. Before applying for this number, you will need formal documentation to prove that you are an active company within Wisconsin.
At the end of the day, starting a business in Wisconsin is not impossible by any means, and it just takes careful planning and research to get all of your “ducks in a row” before you make your move.
All things considered, Wisconsin has many positives going for it when it comes to starting a new business! Use the resources above to help make sure you don’t miss anything along the way.