Thinking of starting a business in Wisconsin? The Badger State has a highly rated education system but a relatively heavy burden of regulation compared to other states. The combination makes it an enticing but challenging place to start a business. If you’re thinking of starting a business in Wisconsin, here’s what you need to know.
Many financial advisors specialize in helping business owners with their finances. Find a financial advisor today.
Make a Business Plan
Successfully starting a Wisconsin business begins with planning. The first choice is of a product or service to offer. Most business owners select an offering that joins their skills or passions with market opportunity.
Wisconsin is known for three main industries: manufacturing, dairy products and recreation. Manufacturing is concentrated on the eastern side along Lake Michigan. The agricultural southern part of the state makes Wisconsin the nation’s top cheese producer. The northern part is a destination for tourists seeking unspoiled lakes and forests.
The sales and marketing portion of a Wisconsin business plan will recognize that its residents are overwhelmingly of Northern European extraction, including substantial populations of descendants of Scandinavian immigrants. The state’s high school students also have some of the highest median college entrance exam scores in the nation.
Wisconsin’s unemployment rate tends to be lower than the national average, and the percentage of labor force participation tends to be higher. A business that plans to employ workers needs to be prepared to offer a competitive package to attract prospective hires.
Ways of financing businesses include founder’s savings, loans and investments from friends and family, bank loans, venture capital and crowdfunding. In Wisconsin, a variety of tax incentives, credits and exemptions can help with financing a startup.
Choose a Business Structure
- Sole proprietorship. The simplest and most common structure offers no liability protection to the owners. Sole proprietors register with the state Department of Revenue.
- Partnership. When two or more people join to form a for-profit business, the partnership offers a simple structure that, like the sole proprietorship, provides little or no liability protection. Partners register with the Department of Revenue.
- Corporation. Corporations offer liability protection and make it easier to attract investors, at the cost of additional filing and regulatory burdens. In Wisconsin, corporations use the One Stop Business Portal to register with multiple agencies.
- Limited liability companies. LLCs protect owners from liability and also use the One Stop Business Portal to register.
- Limited partnership. These consist of general partners who manage the business and limited partners who are passive investors. They register with the One Stop Business Portal.
- Limited liability partnership. These offer some liability protection to the limited partners. They register with the One Stop Business Portal.
- Statutory close corporation. This is a corporation with caps on the number of shareholders and other limitations. Most statutory close corporations can file through One Stop Business Portal.
Register the Business Name
Businesses starting in Wisconsin register the name with the Department of Revenue before beginning operations. In addition, businesses can register the company with the register of deeds in the local county. Registering a name does not establish exclusive rights to the name or keep others from registering the name.
Get Tax ID Numbers
Businesses must set up tax accounts and obtain tax numbers for both federal and state governments.
Registering with the Internal Revenue Service provides a federal Employee Identification Number. The EIN lets employers withhold taxes on wages and salaries and file the business’s federal tax return.
Businesses that registered with the Department of Revenue will get their tax numbers then, allowing them to withhold payroll taxes and collect sales taxes. Others can register through the One Stop Business Portal.
How Businesses Are Taxed
Corporations also pay a franchise tax to the state. This comes to 7.9% of the corporation’s income.
Businesses with employees contribute to unemployment insurance and worker’s compensation programs. Information about tax rates for specific businesses is available from the Department of Workforce Development.
Obtain Licenses and Permits
Several different state agencies issue licenses and permits to Wisconsin businesses. The Department of Revenue provides information and links to agencies responsible for various permits and licenses.
Wisconsin isn’t the lowest taxed or most lightly regulated state, but the state’s one-stop online business registration portal simplifies the paperwork. And its diversified economy and well-educated population also burnish its appeal for startups.
For example, the state capital, Madison, was named one of the top three U.S. cities for untapped startup potential for 2020 by Fundera. Access to talent, cost of doing business and venture capital availability combined to put Madison at the top of the list.
Resources for Starting a Small Business
- Many financial advisors specialize in helping small business owners with their financial plan. If you don’t have a financial advisor yet, finding one doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Some parts of starting a small business are the same no matter where you plan to operate. Here are some of the basic requirements for beginning a new enterprise.
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