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Editorial 6 MIN READ

Wisconsin in late 2022: the fee schedule, the annual report, and a statute about to be replaced

$130 to form, $25 a year to keep, and a brand-new Chapter 183 that starts running on January 1

The Editors
Staff, Incorporator.org
6 min read Updated
Contents 5 sections
  1. The current fee schedule
  2. What 2021 Act 258 actually does
  3. The tax picture
  4. Who Wisconsin actually makes sense for
  5. Sources

Wisconsin LLC costs $130 to form online, $170 if you insist on paper, and $25 a year to keep. Those three numbers have not moved in years, and they will not move when the statute underneath them is replaced on January 1.

The statute itself is the more interesting news. On April 15, 2022, Governor Evers signed 2021 Wisconsin Act 258, a full repeal and replacement of Chapter 183. It takes effect on January 1, 2023, forty five days from this dateline. Anyone forming a Wisconsin LLC in November is forming under the old Chapter 183 and waking up on New Year's Day inside the new one.

The current fee schedule

The filing you care about is Form 502, Articles of Organization for a domestic LLC. The Department of Financial Institutions charges $130 for the online submission and $170 for paper. The surcharge for paper is not punitive relative to other states, but it is enough to push almost every formation through the online system. Filings submitted online are typically processed within a business day. Paper filings are worked in the order received and can take a week or two during the spring filing rush.

Foreign LLCs registering to do business in Wisconsin pay $100 for the Certificate of Registration (Form 521). Name reservations run $15 online. Reinstatement after administrative dissolution is $100. Expedited service is available at $25 per document for next business day processing, which is worth the money the one time in twenty you need it and otherwise ignorable.

Maintenance is a flat $25 annual report, due by the end of the calendar quarter in which the LLC was organized. An LLC formed in February owes its report by March 31 of each subsequent year. An LLC formed on November 15 owes it by December 31. DFI sends a postcard reminder to the registered-agent address a few weeks out. Miss the deadline and the LLC goes delinquent; sit in delinquent status long enough and DFI administratively dissolves the entity, after which you are paying the $100 reinstatement plus any back reports to bring it current.

What 2021 Act 258 actually does

Act 258 rewrites Chapter 183 to track the Revised Uniform Limited Liability Company Act, which most states adopted in some form over the past decade. The headline changes a Wisconsin formation lawyer will care about fall into a few buckets.

Default management moves cleanly to member-managed unless the articles or operating agreement say otherwise, and the Act is more explicit than the prior chapter about how a manager-managed LLC is actually designated. Fiduciary duties, which the old Chapter 183 handled in a sparse and somewhat ambiguous way, are spelled out: loyalty, care, and good faith and fair dealing, with specified carveouts that the operating agreement may and may not waive. The Act codifies what an operating agreement can override and what it cannot, which will reduce the amount of staring-at-the-statute that Wisconsin practitioners currently have to do when drafting.

The Act also modernizes the rules on oral and implied operating agreements, on charging orders, on the economic rights of transferees, and on dissociation. Existing LLCs are brought under the new Act automatically on January 1, 2023, with a limited window in which an entity formed before that date can elect to remain governed by the old rules for a period. For most operating businesses, the right answer is to let the new Act apply and update the operating agreement at the next convenient moment.

For a formation filed today, none of this changes the paperwork. You still file the same Articles of Organization, still pay the same $130, still pick a registered agent with a Wisconsin street address. The substantive law the entity lives inside changes underneath it on New Year's Day, and your operating agreement should be reviewed with that in mind before the spring.

The tax picture

Wisconsin taxes corporations at a flat 7.9% under Wis. Stat. § 71.23. There is no separate franchise tax in the Delaware or California sense; the 7.9% is the corporate income and franchise tax, assessed on income from business transacted in Wisconsin. An LLC that has not elected corporate taxation is a pass-through and reports its income on the members' returns.

The interesting Wisconsin-specific lever is the pass-through entity tax election. 2017 Wisconsin Act 368 added § 71.21(6) for partnerships (including LLCs taxed as partnerships) and a parallel provision for tax-option S corporations, letting the entity elect to be taxed at the entity level at 7.9% on income attributable to Wisconsin. Members then exclude that income from their individual Wisconsin returns. The point of the election, once the SALT cap landed in 2018, was to convert state income tax that an individual member would otherwise cap at $10,000 of federal deductibility into a fully deductible business expense at the entity level. The IRS blessed the structure in Notice 2020-75, and Wisconsin was one of the earliest states to have the mechanics in place. Whether the election helps a given LLC depends on the members' individual Wisconsin tax posture and on whether their federal itemized-deduction math is actually being pinched by the cap. For a profitable Wisconsin-source LLC with high-bracket individual members, the election is usually worth running the numbers on.

Wisconsin conforms only partially to the federal Internal Revenue Code on § 199A. The 20% qualified business income deduction is a federal-only item; Wisconsin does not allow it in computing state taxable income. A member of a Wisconsin LLC who takes a 199A deduction on the federal return still pays Wisconsin tax on the full pass-through amount, subject to the usual state-level adjustments. This is worth knowing before you model an after-tax return assuming 199A flows through to state.

Who Wisconsin actually makes sense for

Wisconsin is a reasonable and quiet place to form if the business is operating in Wisconsin. The filing fee is in line with the national median, the annual report is among the cheapest in the country, the corporate rate is flat and predictable, and the new Chapter 183 will bring the LLC statute up to modern drafting without any of the novelty risk of a state trying to be clever.

It is not a haven state. If you are shopping for privacy, Wisconsin publishes the registered agent and the organizer on the public record and will not hide members or managers, but it also does not make them part of the Articles in the first place; the annual report asks for a principal office and officers or managers depending on type. If you are shopping for case-law depth, Delaware is still Delaware. If you are shopping for no-income-tax, Wyoming and South Dakota are over there.

The useful thing about forming in your operating state, which Wisconsin is for a great many readers of this site, is that you skip foreign qualification. An out-of-state LLC doing business in Wisconsin has to register as a foreign LLC and pay $100 plus an annual report anyway, so the Delaware-premium math that works for a venture-backed company rarely works for a Milwaukee contractor.

If you are forming before year-end and the business is plainly a Wisconsin operation, file this month under the current Chapter 183 and plan to revisit the operating agreement in Q1 once the new Act is the law. If the formation can wait two months, waiting lets you draft directly against the statute your LLC will actually live under for the rest of its life.

Sources

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