“Where do I even begin?” That’s a common question many people have when researching the possibilities of starting a business. From navigating the legal complexities to finding the money, figuring out how to start a business in Wisconsin can be intimidating.

Fortunately, you don’t have to go about it by yourself. This handy guide breaks down the key steps to get your Wyoming business up and running.

Steps To Starting A Business In Wisconsin

Step 1: Choose a Business Idea

Starting a business in Wisconsin begins with a solid idea. You might already have one in mind, or you could be in the process of choosing. Either way, our collection of business ideas offers detailed industry insights, current trends, startup costs, helpful tips, and much more to guide your decision.

Of course, any business idea should be thoroughly researched and planned before making any significant investments, and here are a few things we recommend considering when doing your research.

Understand Your passion and strengths: Look for a business idea that aligns with your passion and where your strengths lie. Running a business requires commitment and hard work, and staying motivated is easier if you genuinely enjoy what you’re doing.

Analyze the market: Who are your potential customers? What are their needs and wants? Research your intended market and identify the existing businesses to see if there are any gaps or underserved niches.

Identify your competitive advantage: Determine what will set your business apart from existing businesses. This could be a unique product or service, a different business model, or superior customer service.

There is no guaranteed formula for success. It takes a combination of a sound business idea, hard work, determination, and a bit of luck. However, with careful planning and consideration, you can increase your chances of success.

Step 2: Write a Business Plan

Launching a business requires careful planning and preparation, and an important part of this process is crafting a business plan. This plan acts as a guide, assisting you in tackling the startup process by spotting potential challenges, establishing objectives, and formulating plans to reach your goals.

The Small Business Administration (SBA) reports that companies with a written plan are twice as likely to accomplish their objectives. In addition, businesses with plans tend to expand more rapidly and are more successful in obtaining financing from banks or alternative sources.

Related: How to write a business plan

Step 3: Find the Money

One of the major hurdles when launching a business is finding the money. In Wisconsin, entrepreneurs can choose from a range of funding options, each with their own advantages and limitations. Let’s explore some of the most common funding options:

Personal funds: Many entrepreneurs start by using their personal savings, credit cards, or borrowing from friends and family. This is often the most accessible and straightforward funding source, as it doesn’t require a lengthy approval process or collateral.

• Pros
  • Fast and easy access to funds.
  • No need for external approval or credit checks.
  • Maintains full control and ownership of the business.
• Cons
  • Difficulty obtaining financing: If you use all of your personal funds to start your business, you may have difficulty obtaining financing in the future.

Conventional bank loans: Various financial institutions in the state, like banks and credit unions, offer loan products for small businesses, such as term loans, lines of credit, and equipment financing. These loans typically require a solid credit history, collateral, and a detailed business plan.

• Pros
  • Potentially lower interest rates compared to other funding sources.
  • Builds credit history for future borrowing.
• Cons
  • Often requires collateral and a strong credit history.
  • Lengthy approval process.

SBA loan guarantees: The U.S. Small Business Administration (SBA) provides loan guarantee programs, such as the 7(a) Loan Program and the 504 Loan Program, which can help small businesses secure loans from participating lenders. These programs reduce the risk for lenders, making it more likely for small businesses to receive funding.

• Pros
  • Increased likelihood of loan approval, even with mediocre personal credit.
  • Lower down payments and longer repayment terms.
  • Access to larger loan amounts.
• Cons
  • Lengthy and complex application process.
  • Strict eligibility requirements.

Microloan programs: Microloan programs, such as those offered by the SBA or local non-profit organizations, such as the Wisconsin Women’s Business Initiative Corporation (WWBIC) and Kiva, provide small, short-term loans to small businesses that may not qualify for traditional bank loans. These loans are typically used for working capital, inventory, or equipment purchases.

• Pros
  • Easier qualification process compared to traditional bank loans.
  • May offer training and technical assistance.
• Cons
  • Limited funding potential.
  • Higher interest rates compared to conventional loans.

Investors: Small businesses can also seek funding from investors, such as angel investors or venture capitalists. These investors typically provide capital in exchange for equity in the company or a percentage of future profits. A few investor groups in the state include Golden Angels Investors, GENER8TOR, and Rock River Capital.

• Pros
  • Access to large amounts of capital.
  • Valuable mentorship and industry connections.
  • No repayment obligations like loans.
• Cons
  • Loss of control and ownership in the business.
  • Pressure to deliver high returns on investment.
  • Lengthy and competitive process to secure funding.

In conclusion, there are various funding options available to a new business in Wisconsin. Each option has its pros and cons, and the right choice will depend on your specific business needs, credit history, and risk tolerance.

Related: Understanding the different types of business funding

Step 4: Select a Business Structure

The next step to starting a business in Wisconsin is selecting a business structure.

The business structure, which is sometimes referred to as a business entity, refers to how a business is legally organized. There are four primary business entities: sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). A brief description of each is below.

A sole proprietorship is an individual who decides to go into business. This is the easiest and least expensive of the four entities to set up, as there is no state filing, though you may need to register a business name. The ease of startup is a big selling point; however, a major downside to the sole proprietorship is that the owner is personally responsible for all debts and actions of the company. If the business is sued, the owner’s personal assets are potentially at risk. Another potential downside is that the owner will pay self-employment taxes on all business profits, which may be more costly than some of the other entities.

Related: How to start a sole proprietorship in Wisconsin

General partnerships consist of two or more people conducting a business together. Like the sole proprietorship, there is no formal state filing. Also, like the sole proprietorship, the general partnership has unlimited liability. If the partnership were to be sued, the partner’s personal assets would be equally at risk. The partnership itself does not pay tax from business income. Instead, profits and losses are passed through to the owner’s personal tax return, and this income is subject to self-employment tax.

Related: What is a partnership?

A corporation is a business structure that is a separate entity from the individual. While corporations are more expensive and difficult to form than sole proprietorships and partnerships, the major advantage is that the corporation provides personal asset protection for the owners should the corporation be sued. The downside is the compliance requirements and administrative burdens of having a board of directors, annual meetings for directors and shareholders, taking minutes at the meetings, appointing a registered agent, and more.

Related: How to form a Wisconsin corporation

The Limited Liability Company (LLC) is a popular business entity choice because it provides the liability protection of a corporation with the sole proprietorship’s ease of operation. The Limited Liability Company does not have many of the corporation’s burdens and has the greatest tax flexibility of the four entities. Income can be taxed as a pass-through entity like the sole proprietor, partnership, or corporation.

Related: How to form a Wisconsin LLC

Step 5: Register a Business Name

Starting a business in Wisconsin involves several key steps related to licenses, permits, and registrations. Here are the main ones you may need to consider:

Business licenses: The state of Wisconsin doesn’t have a general business license; however, many cities may require a business license to operate.

Employer Identification Number (EIN): Most businesses will need to obtain an EIN from the U.S. Internal Revenue Service (IRS). This is essentially a social security number for your business and is needed for tax purposes. You can apply for an EIN directly from the IRS website. There’s no fee to apply, and the process can be completed online.

Seller’s Permit: Businesses selling products, leases, rentals, and certain services will need to register for a Seller’s Permit with the Wisconsin Department of Revenue. With the Seller’s Permit, they can also get a Sales Tax Exemption Certificate to not pay sales tax on the items they purchase to resell from wholesalers.

Professional licensing: Depending on the nature of your business, you may need to obtain professional licenses. Some occupations, such as barbers, home inspectors, interior designers, and manicurists, require licensing in Wisconsin. While this isn’t a license on the business, licensing is required to operate. Most licenses are issued by either the Wisconsin Department of Revenue, the Wisconsin Department of Natural Resources, or the Wisconsin Department of Health Services.

Related: What business licenses and permits are needed in Wisconsin?

Step 6: Open a Business Bank Account

Keeping your business and personal finances in separate bank and credit card accounts makes it easier to track the business’s income and expenses. Every bank is different, but in general, they will request:

• Sole proprietorship & partnership: Trade Name Certificate, EIN or SSN, and the owner(s) driver’s license.
• Corporation: Articles of Incorporation, bylaws, Certificate of Good Standing, EIN, and the owner(s) driver’s license.
• LLC: Articles of Organization, Operating Agreement, Certificate of Good Standing, EIN, and the owner(s) driver’s license.

Step 7: Hire Employees

Hiring employees is a complex process. There are multiple agencies to register with, starting with the Wisconsin Department of Revenue and the Wisconsin Department of Workforce Development.

Employers are responsible for reporting new hires, verifying employees are eligible to work in the U.S., and determining income tax withholding, unemployment insurance, unemployment taxes, and payroll withholding taxes, including Social Security and Medicare.

Related: Steps to hiring your first employee in Wisconsin

Step 8: Obtain Business Insurance

While some entrepreneurs believe insurance represents additional costs, proper coverage can save time, money, and peace of mind down the road. Business ownership comes along with risks and unforeseen events, such as accidents, natural disasters, legal disputes, or health emergencies, which can significantly harm the business and the owner’s finances.

Related: Types of insurance your business may need

Step 9: Track Income & Expenses

Setting up an accounting system for your business is an important part of running a business. Whether you use pen and paper, spreadsheet, accounting software, or hire a bookkeeper, you will need a way to track the money you earn and spend.

Incomplete or inaccurate financial recordkeeping can lead to penalties, fines, or increased scrutiny from tax authorities.

Related: Setting up accounting for a business

This material is property of StartingYourBusiness.com

Common questions when starting a business in Wisconsin

Wisconsin Small Business Resources

There are 457,769 small businesses in Wisconsin, which is 99.4% of all businesses in the state,¹ and 48.7% of Wisconsin employees work for small businesses.² Because of the economic impact of small businesses on the state, there are various business support resources to help businesses start, grow, and succeed in the state. Some of these resources include:

• State of Wisconsin Business Services: The Wisconsin One Stop Business Portal provides resources for businesses starting in Wisconsin.
• Service Core of Retired Executives (SCORE): SCORE provides business mentoring and guidance, drawing from a network of experienced retired executives in Wisconsin.
• Wisconsin Department of Financial Institutions: This department registers LLCs and corporations.
• Wisconsin Department of Revenue: Businesses can register online to file and pay state taxes.
• Wisconsin Economic Development Corporation: Organization offering programs and resources to support economic development throughout the state.
• Wisconsin Small Business Development Center: A statewide organization that supports Wisconsin’s small business owners with a range of beneficial services.
• Wisconsin Women’s Business Initiative Corporation: Focused on supporting women, minorities, and individuals with limited wealth, WWBIC assists those looking to start, strengthen, or expand their businesses in Wisconsin.

Sources

1. Small Business Administration ↩︎
2. Census Bureau ↩︎