Transforming your business concept into a legal entity in Wisconsin requires properly navigating the registration process. There are a lot of steps to cover when registering a new business, but this guide is available to simplify the process by breaking down the process. We outline the forms you’ll need, the agencies you’ll interact with, and the decisions you’ll make so you can move closer to opening your doors.
Related: Starting A Business In Wisconsin Checklist
Step 1: Business Structure
The first step to registering a business in Wisconsin is selecting a business structure, sometimes called a business entity, which refers to how a business is legally organized. There are four primary business structures: sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). A brief description of each is below.
Related: Comparison of Business Structures
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 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 downsides are 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 Wisconsin 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 ease of operation of a sole proprietorship. The LLC 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 2: Business Name
After choosing a business structure, selecting a business name is often the next step for many businesses.
For sole proprietors and general partnerships in Wisconsin, registering a business name is optional but can be helpful when dealing with vendors or banks that require proof of business ownership.
Trade Names and Firm Names are two options for sole proprietors and general partnerships in Wisconsin to register their business name. A Trade Name is a state trademark registered with the state’s Department of Financial Institutions, providing statewide recognition. No other business in the state can register the same name. To check availability, you can do a Wisconsin Trade Name search with the Wisconsin Department of Financial Institutions. A Firm Name, on the other hand, is registered with the Register of Deeds in the specific county where the business is located, but there is no protection from anyone else using the same name.
While both serve to establish a business identity, the choice between them depends on the geographic scope of the business and the level of name protection desired.
Corporations and LLCs can only register for a Trade Name, but typically won’t, as their unique entity name is established during formation, they might do so if they want to operate under an additional business or brand name.
To check Wisconsin Trade Name availability, sole proprietors, partnerships, corporations, and LLCs can use the Wisconsin DFI website’s trademark search tool. It’s important to note that certain words, such as those related to banking or insurance, have usage restrictions unless the business is appropriately licensed.
Register a Wisconsin Trade Name
Step 3: Federal Employer Identification Number
The Federal Employer Identification Number (FEIN) is a unique nine-digit identifier the Internal Revenue Service (IRS) assigns to businesses. Many companies require this number for various purposes.
You need an FEIN if:
- Your business employs workers
- Your business operates as a corporation, partnership, or multi-member LLC
Sole proprietorships or single-member LLCs without employees can use the owner’s Social Security number, though they may opt for an FEIN to avoid using personal identification on tax forms.
Step 4: Professional & Industry Licensing
In Wisconsin, various occupations and industries require specific licensing to operate legally. These licenses ensure that professionals meet the state’s standards for competence and safety in their fields. Some key areas requiring licensing in Wisconsin include:
- Trades and Construction: Electricians, plumbers, HVAC technicians, general contractors, and home inspectors need licenses. Some trades require apprenticeships or certifications through the Wisconsin Department of Workforce Development.
- Financial Services: Financial planners, accountants, and insurance agents must hold licenses issued by state or federal agencies. Real estate agents and brokers also need licenses through the Wisconsin Department of Safety and Professional Services.
- Cosmetology and Barbering: Hair stylists, barbers, estheticians, and nail technicians must be licensed by the DSPS.
- Food Services: The Department of Agriculture, Trade and Consumer Protection handles licenses for food-related businesses, including restaurants, food processors, and dairy plants.
- Healthcare Professions: Medical professionals like doctors, nurses, dentists, pharmacists, physical therapists, and optometrists must be licensed by the Wisconsin Department of Safety and Professional Services (DSPS).
The Wisconsin Department of Safety and Professional Services handles most professional licensing, but certain specialized fields are regulated by other state agencies. Be sure to carefully research the specific licensing requirements for their intended profession or industry to ensure compliance with state regulations.
Step 5: Business Tax Registration
Most Wisconsin businesses are required to register with the state for tax purposes, a registration known as Wisconsin Business Tax Registration. The registration covers various tax types, most commonly sales and use tax, withholding tax, and unemployment insurance.
Businesses must register if they:
- Make taxable sales (Seller’s Permit)
- Hire Wisconsin employees
- Operate as a corporation, partnership, or LLC
To register, businesses use the Department of Revenue’s One Stop Business Portal or by mailing in the BTR-101 Form.
Step 6: Sales Tax Exemption Certificate
After getting the Seller’s Permit, many businesses that purchase merchandise for resale often obtain a Wisconsin Sales Tax Exemption Certificate. This certificate allows these businesses to buy inventory without paying sales tax, as they will collect sales tax from the end customer during the final sale.
The certificate is particularly useful for:
- Retailers
- Wholesalers
- Manufacturers who resell their products
To obtain a Sales Tax Exemption Certificate, businesses must first register for a Seller’s Permit through the Wisconsin Department of Revenue. Once registered, they can generate the certificate through their online account or by filling out Form S-211.
Step 7: Business Licensing
Wisconsin has no statewide license requirement, but many local areas may require one. A few common types of local business licensees include:
- General Business License: Many Wisconsin cities require a general business license to operate within city limits. This license ensures businesses comply with local regulations. In Madison, the City Clerk’s Office issues the General Business License.
- Retail License: Some municipalities require a specific retail license for businesses selling goods directly to consumers. In Milwaukee, the License Division of the City Clerk’s Office handles Retail Licenses.
- Contractor License: Contractor licenses are often required for construction-related businesses operating within a city. The City of Green Bay’s Inspection Division issues Contractor Licenses.
- Food-based Business License: Restaurants and food service businesses typically need a food license. In Eau Claire, the City-County Health Department issues Food and Beverage Licenses.
- Other Specific Licenses: Depending on the municipality, certain types of businesses need specific licensing. For businesses dealing with used goods, the City of Waukesha’s Clerk’s Office issues secondhand dealer licenses.
Given that licensing varies significantly between cities in Wisconsin, each municipality may have its own set of required licenses, fees, and application processes. Business owners should always check with their local city or town government for specific licensing requirements.
Step 8: Local Building & Zoning Permits
Before establishing a business location in Wisconsin, it’s important to understand and comply with local building and zoning requirements. These regulations ensure that businesses operate in appropriate areas and that structures meet safety standards.
Zoning regulations determine where different types of businesses can operate within a community. Some areas also have specific ordinances or require special permits for home-based businesses. To confirm if a location is suitable for your business, check with the local zoning department or planning office.
Building permits are typically required for new construction, renovations, or changes in a building’s use. These permits ensure that any modifications or new structures meet local building codes and safety standards. The local building department or inspection office usually handles these permits.
Many municipalities in Wisconsin require a Certificate of Occupancy before a business can begin operations in a building. This document certifies that the structure complies with all building codes and zoning laws and is safe for occupancy.
It’s advisable to consult with local agencies early in the planning process to understand all applicable requirements. This can help avoid potential issues or delays when setting up your business location.
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