Starting a business is a great venture, but rarely an easy one, given how many formalities it usually involves. However, this shouldn’t be that daunting. With our detailed guide covering the important stages of forming a series LLC in WI, you’ll have a much easier time.
In this article, we’ll answer all of the popular questions, including “what is a series LLC”, “how to form an SLLC in Wisconsin”, and “what advantages an SLLC offers”, so you can weigh all pros and cons and decide if this is the type of business entity you need.
In addition, you’ll receive assistance with the next steps after setting up an SLLC, which will give you peace of mind knowing that your company is authorized and operating to the best standards. Ready to jump in? If so, keep on reading.
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In general, the process of forming a series LLC is not much different from the process of forming a traditional LLC, which is good news. The catch is, not all states are a good place to create one and, unfortunately, Wisconsin is one of them.
Why is it not a great place? The reason is that Wisconsin, just like North Dakota, is one of those states whose law isn’t particularly clear as to what happens if one of the child series is held in contempt of court.
All we know is that they don’t provide separate liability protection, which means there’s a high risk your entire series will be affected if any of the cell LLCs is sued. If you’re willing to take the risk, follow our guide to learn how to get a series LLC in WI.
First, you need to choose a company name before moving to anything else. A name you want should be distinguishable, easy to remember, and relevant to your brand. In addition, it must meet the state naming rule requirements, which are:
In case you register an SLLC but you’d rather run a business under a different name, you have the opportunity to file the assumed name application (known as DBA) with the Department of Financial Institutions through an online portal. The filing fee is $15.
Should you have a great company name, but you’re not ready to file an SLLC, you can make a name reservation. To do so, simply go to the same online portal, download a form, and file it by mail or in person for a fee of $15.
Next, you need to appoint a registered agent (RA). Who is an RA? It’s a point of contact between your SLLC and the government that every business entity, regardless of its structure, is required to have.
Despite its somewhat elaborate name, a registered agent can be pretty much anyone, as long as they are at least 18 years old and have a physical address in the street in WI where they can be easily reached during standard business hours.
Here are a few examples:
As you can see, even you can act as your own statutory agent in the state of Wisconsin. However, whether or not it’s worth it is a question to answer. The majority of small business owners choose to hire a professional agency and here are the reasons why:
Once you’re ready to make your SLLC official, it’s time to file the Articles of Organization. This document serves as evidence of your company formation and makes you an official business owner in Wisconsin. Preparing this document is quite easy, though.
To file the Articles of Organization, it must contain the following details:
Once the document is prepared, it can be filed to the Department of Financial Institutions either online or by mail. If you choose to file your document online, you’ll pay a fee of $130, while a mail filing fee will be $170.
The time it takes to process formation documents in WI is usually 5 business days, but if you need to have your documents approved faster, expedited processing is available, too.
Unlike the Articles of Organization, which must be filed to open a Wisconsin SLLC, an operating agreement isn’t a required document. However, it’s better to have it anyway.
For one, you can use it to outline your business strategy and obligations of each SLLC member so they can consult it should any questions arise. This can be useful in resolving disputes related to the non-fulfillment of certain duties.
And for another, it’s a great way to make your business venture noticed by authoritative figures, like investors, who’ll be more inclined to join you if they see a clear business plan with potential for return.
Whether you plan to hire employees or not, it’s recommended to get a taxation number (known as EIN). Meant for tax reasons first and foremost, this number is also needed when opening a bank account and/or for hiring people.
The EIN is quite easy to get by completing an online application on the IRS website. There’s no filing fee to pay. Once you apply, it will be assigned to you in a maximum of one hour.
Note, though, that for the series LLC business structure, each child LLC must have a separate EIN.
Forming an SLLC in WI is relatively cheap compared to other states. Even so, the cost to open a series LLC may vary. This is because RA rates can be from as low as $39 up to $300 per year, plus you may use some additional services.
In general, there are two types of payments:
Let’s take a closer look at what Wisconsin SLLC cost includes:
|Articles of Organization||$130 if ordered online$170 if ordered by mail|
|Name reservation (optional)||$15|
|DBA name (optional)||$15|
|Certified copies of documents||$3 for the certification + $1 per page|
|Certificate of Good Standing (optional)||$10|
|Articles of Amendments (optional)||$40|
|Articles of Dissolution (optional)||$20|
You don’t need to obtain a Certificate of Good Standing from the get-go, but at some stage, your SLLC may need it to prove its legal status and compliance with state law. Usually, it’s requested when applying for a loan or when opening a new LLC overseas.
If the list of SLLC members changes - you let go of some asset holders or accept new members - you’ll need to file the Articles of Amendments with the Department of Financial Institutions of the state and pay a filing fee of $40.
When you get the approval of your Articles of Organization, it means your SLLC is created and set up to legally operate in WI. That said, it’s not enough to just set up a company. To make it a success, it’s necessary to accomplish a few more steps.
Managing finances can be quite a strenuous task, especially for someone who doesn’t have a relevant background, therefore, the best thing to do is entrust this job to an accountant.
The responsibilities of an accountant are much more diverse than just paying wages to employees. Not only will you have confidence that all of your books are kept in good order and wages are paid in due time, but you’ll get so-much valuable financial advice.
Accountants can analyze the performance of your business and give you an insight into the service or product that generates the most outcome, so you can cut out unneeded expenses and focus on those that drive the revenue up.
Next, it’s essential to open a separate bank account for each child LLC. Even though Wisconsin doesn’t make it clear how the series LLC is going to be treated in case of a lawsuit, it’s still better to play it safe.
To open a bank account in WI, you’ll need to provide your Articles of Organization, EINs, and an operating agreement if you have one.
Finally, you need to get workers’ compensation insurance. This insurance is a must for all business entities that have employees, providing wages replacement and medical coverage in situations where an employer is unable to work due to a job-related accident or illness.
Though not mandatory, general liability insurance is another type of insurance your SLLC may benefit from. It provides protection to your business from claims involving property damage or bodily injury resulting from your service or product.
It goes without saying that you also need to get all the permits and licenses that are necessary to run a business in the state. If you don’t know what permits are required, make sure to contact a local lawyer or state department.
To avoid penalties and dissolution of your SLLC in WI, it’s crucial to keep the company compliant. With this in mind, you may either delegate this task to an RA or, if you decide to be your own statutory agent, keep track of all reports yourself.
There are two types of reports to file in Wisconsin:
In WI, annual reports must be submitted by the end of the quarter in which your SLLC has been formed. The goal of these reports is to keep the DFI updated on the business information of your SLLC. The form can be filed online or by mail, and the fee is only $25.
You will also need to file income reports (known as financial reports). These reports must show your income (or losses) and expenditures incurred during the year.