How to start a business in Wisconsin in 8 steps
Founding a startup is a dream for many. Still, residents of Wisconsin often find that this dream can become a reality fairly easily. Rated 7th highest in the nation when it comes to funding help from the Small Business Association, Wisconsin is an ideal place to start your small business. Sales taxes can be quite low, and as the process of forming a company is pretty straightforward, many business owners have a bright future here.
While it’s exciting to take the first step toward entrepreneurship, it’s important to remember that there are certain guidelines to follow to lay a solid foundation for your company. Wisconsin businesses will need to think about several elements before officially opening for business, but thankfully, none of the work ahead of you is terribly difficult. Let’s take a closer look at how to start the business you’ve been dreaming of in The Badger State.
1) Think about the type of business you want to start
Starting a new business is an appealing idea for Wisconsin residents, but it doesn’t come without a lot of planning. Before you embark upon any other action step listed below, you’ll want to take time to think about all that running a business entails. Ask yourself some hard questions and make sure you’re ready for the expenses and stress you may face sooner rather than later. If you’re still on board, then it’s time to get started!
There’s no doubt that your business will be unique and offer better goods and services than your competition, but that doesn’t mean you should turn a blind eye to others in your industry. A little research can go a long way and help you avoid common obstacles that other companies have faced and provide you with insight into how you can find success faster.
Once you have the basics of your business idea figured out, it’s smart to write everything down and create a business plan. It doesn’t need to be incredibly formal at first, but as your business grows, you’ll want to include details about future products, management and operations expectations, and a lot more. Most banks will want to see a solid business plan when you apply for funding, so if you have lofty aspirations, you may as well handle this step now.
2) Set up your legal structure
The State of Wisconsin offers an array of choices when it comes to the legal structure of your new business. Depending on your current needs, you may find that one of these options will work best:
- Sole proprietorship: Based on your chosen industry, forming a sole proprietorship might be your new company’s only logical business structure. Many enjoy the ease of running a sole proprietorship, as there are no formal documents to file or maintain, and your business taxes are filed personally. It’s important to note that sole proprietors do not have any sort of liability protection, so if a customer or client sues them, they will be held personally responsible.
- Partnership: Doing business with your best friend or family member can be a great way to expand your creativity and share the workload, making a partnership the perfect legal structure for some Wisconsin residents. Both profits and losses are shared equally in a partnership, but, like a sole proprietorship, neither party’s personal assets are protected should things go south.
- Limited Liability Company (LLC): Considered to be one of the most popular options among small business owners, an LLC provides security with the ease of a simple business structure. Your LLC won’t necessitate much in the way of paperwork and often provides ideal income tax scenarios, all while protecting your personal assets. While it’s an appealing selection, make sure that forming an LLC will meet your business needs before moving forward with this structure.
- Corporation: Larger companies tend to find that a corporate structure is best equipped for their complex obligations, as this structure completely protects business owners and managers from litigation. Several formal documents are required at the outset of starting a corporation, and the business must adhere to a range of administrative tasks, including board meetings and annual reports.
- Nonprofit: If most of your income is donation-based, a nonprofit structure might be your best bet. Check with the Wisconsin Department of Financial Institutions for more details and see if you qualify for this type of designation.
Remember, at the end of the day, you get to choose how to structure your business entity. While certain structures may seem cut and dry for some, other companies may question which option they should select. Keep in mind that while this decision is important, you can likely change your legal structure down the line as your company grows and changes.
3) Name and register your business
Operating a side hustle out of your apartment is one thing, but it’s something entirely different to name and register a business. This step is important and can be pretty fun, as business owners have the opportunity to get their creative juices flowing. When thinking about a business name, consider using a moniker that’s unique and memorable, and one that won’t easily be confused with your competition.
The process of registering your business will look a bit different from one structure to the next, so it’s important to fully understand what’s needed. Both sole proprietorships and partnerships don’t technically need to register their name or any organization documents with the state, but there is one small catch. Should you decide to use a trade name, also termed a DBA (doing business as), you’ll need to contact the county you operate in to file a Registration of Firm Names with the Register of Deeds.
A Wisconsin LLC will need to complete several steps to register its company formally. You’ll need to file Articles of Organization with the Department of Financial Institutions and appoint a registered agent in the event someone in your company needs to receive legal paperwork. It’s also recommended, though not required, that you develop an operating agreement to give your LLC a little more structure. When all is said and done, you can submit your documents to the DFI along with a $130 filing fee.
Wisconsin corporations must follow a similar path, although they will need to file Articles of Incorporation and select a registered agent. Again, while not legally stipulated, it’s advised that you develop company bylaws to guide those who will be running the corporation daily. The DFI charges a $100 filing fee when corporations submit their paperwork.
4) Apply for licenses and permits
Business owners won’t need to worry about securing any state business licenses or permits as Wisconsin doesn’t require these documents; however, the type of industry you’re in may change that. Restaurants, for example, will need to secure health and safety permits, while electricians or hairstylists may have their own set of requirements to meet.
Additionally, any organization that will sell goods needs to contact the Wisconsin Department of Revenue to secure a Seller’s Permit. If you have employees, you’ll also need to register for employer withholding taxes. You can easily accomplish both of these tasks by visiting the Department of Revenue’s One Stop Business Portal.
5) Choose a location
If you ask a room full of entrepreneurs what it was that first got them excited about opening a business, a few will say they saw an awesome retail space available and had dreams of working out of that location. There’s no denying that finding a storefront is critical for many business owners, but it’s something that you shouldn’t rush.
Remember, you cannot legally operate your business in Wisconsin until you’ve registered your business and secured all licenses and permits necessary for your industry. If you found a retail space and leased it months ago, unfortunately, you’ll be on hold before you can fully utilize it, so make sure you have your ducks in a row before you sign on any dotted line.
When searching for a location, keep a few things in the back of your mind, including how affordable the lease is, what the surrounding area is like, and how much foot traffic you can expect. A gorgeous retail spot is certainly a plus, but if it doesn’t help to propel your success, beauty will only get you so far.
6) Open a bank account and prepare for future taxes
You’re definitely in the home stretch when it comes to opening your Wisconsin business, yet some of the next few steps may be the most important. Unless you are a sole proprietor and plan on using your Social Security Number when filing your federal taxes, it’s advised that you obtain an Employer Identification Number. Provided by the IRS at no cost, it’s required when you have employees and makes it easy to differentiate any personal tax returns from your business taxes.
Many entrepreneurs also like to open a business bank account to make it even more simple to keep your finances organized. You may also find that a business credit card makes sense for you down the line, and having an EIN in both of these scenarios will make the application process far more straightforward.
Managing federal and state taxes can be a daunting task, so now may also be a good time to hire a bookkeeper or CPA. Some business types, like S corporations, will have specific tax guidelines that they must follow. Rather than trying to learn all there is to know about taxes, you might want to hand this important task over to a professional.
7) Purchase business insurance
After all of the time you’ve spent getting things in order, the last thing you’d want to do is risk the wellbeing of your company, right? All business owners, independent of industry or company size, should enroll in small business insurance before opening for business. Ultimately, it can be risky to own a company, and if something unexpected happens, you’ll want to make sure you’re protected.
Huckleberry makes it easy for entrepreneurs with small business insurance options specifically for Wisconsinites. Whether you need basic liability insurance, coverage for your professional services, or you need to enroll in workers’ compensation insurance as soon as possible, you’ll have a wealth of options at your fingertips. Huckleberry can provide business owners with a free quote in just a few minutes and helps take the worry out of running a business.
8) Create a marketing plan, hire employees, and more
Congratulations on reaching the final step of starting a business in Wisconsin! You probably feel as if you just ran a marathon, and while you’ve certainly completed most of the heavy lifting required, now comes the time to open your business doors. If you feel you need support during this time, both the U.S. Small Business Administration and the Wisconsin Small Business Development Center can help.
Don’t feel pressured to officially launch your business just yet, as you get to decide what comes next. Some entrepreneurs may want to create a strong social media presence first, while others want to flesh out their marketing plan a bit more. You may be in the position of needing to figure out your product line a bit more, or you’re already setting up interviews to hire your first employees.
No matter where your business takes you, make sure to enjoy the journey that’s in store. While you’re busy admiring your hard work, it’s important to have the peace of mind that comes from small business insurance.
Huckleberry can help Wisconsin business owners save time and money, offering free quotes in just a few minutes with products that protect your business no matter what happens. Take the time to enroll in small business insurance today and feel confident knowing that nothing can stop you from success.