How to Start a Limited Liability Partnership in Wisconsin | 2024 Guide

Start a Limited Liability Partnership in Wisconsin

A Limited Liability Partnership (LLP) is a popular business structure offering the flexibility of a partnership while providing limited liability protection like starting an LLC in Wisconsin. LLP structure is ideal for attorneys, accountants, and consultants. If you’re considering starting a Limited Liability Partnership in Wisconsin, this comprehensive guide will walk you through the necessary steps, from researching and planning to ongoing compliance and reporting requirements.

Webinarcare Editorial Team will help you gain knowledge through thorough research and market study. Before starting your Wisconsin LLP, all the steps in this article must guide you.

What is a Limited Liability Partnership?

Forming an LLP is like starting an LLC as well. However, there are differences in terms of it. A Limited Liability Partnership (LLP) is a type of business structure that combines elements of partnerships and corporations. It allows multiple individuals, known as partners, to jointly own and manage the business while providing limited liability protection to each partner. This means that each partner’s assets are generally protected from the debts and liabilities of the business, and they are only liable for their investment in the partnership.

LLPs are popular among professional service providers, such as lawyers, accountants, and consultants, as they allow for flexible management structures and profit-sharing arrangements. The partners in an LLP can directly manage the business, unlike forming a Corporation in Wisconsin, where a board of directors typically handles the management.

Each partner’s liability is also limited to the extent of their investment, and they are not personally responsible for the negligence or misconduct of other partners. This is a key difference between an LLP and Wisconsin General Partnership, where partners have unlimited liability for the partnership’s actions and other partners.

It is suggested that you speak with a legal professional before you begin setting up your limited liability partnership. They’ll understand what’s best for you and your company. To safeguard your personal assets from business debts, you can always start an LLC rather than a limited liability partnership.

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Steps in Starting a Limited Liability Partnership in Wisconsin

To form a limited liability partnership in Wisconsin, you must consider following the below guidelines that include research and planning, choosing an LLP name, designating a Registered Agent, filing for Articles of Organization, drafting a partnership agreement, get an EIN, obtaining necessary licenses and permits, the opening of business bank account and maintain ongoing compliance and reporting requirements. 

Step 1: Research and Planning

Before forming an LLP in Wisconsin, you must familiarize yourself with the state’s laws and regulations governing LLPs. Conduct thorough research to determine if an LLP is the right business structure for your needs, and create a detailed business plan outlining your goals, strategies, and financial projections.

Step 2: Choose an LLP Name

Selecting a unique and appropriate name for your LLP is crucial. First, check the availability of your desired LLP name with the Wisconsin business registry. Ensure that your chosen name follows Wisconsin naming guidelines and requirements, which typically include the use of “Limited Liability Partnership” or “LLP” in the name. You can register and reserve the name with Wisconsin Secretary of State if desired.

Here are some guidelines you must follow while naming your LLP in Wisconsin- 

  • Be distinguishable from other businesses registered in your state
  • Include the words “Limited Liability Partnership,” “LLP,” or a similar abbreviation.
  • Not include words that are restricted by your state
  • Ensure that your chosen name does not infringe on any existing trademarks or intellectual property rights.

However, to check the availability of your desired LLP name, you can also search the Wisconsin Secretary of State business name database and Wisconsin Business Name Search. If the name is available, you may choose to reserve it for a specific period of 120 days by filing a name reservation application and paying the online name reservation fee of $15 and mail name reservation fee of $15. If your LLP plans to operate under a name other than its legal name, you may also need to register a fictitious or “Doing Business As” (DBA) name. 

The DBA filing can be done by two methods, by mail and in person, which costs around $15. In addition, the DBA’s validity in Wisconsin is ten years, which you can file in the Wisconsin Secretary of State.

You can check out how to file a DBA in Wisconsin for clearer understanding.

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Step 3: Designate a Registered Agent

In Wisconsin, you’ll need to designate a Registered Agent for your LLP. The Registered Agent is responsible for receiving the partnership’s important legal and tax documents. Choose a qualified individual or Wisconsin Registered Agent Services to serve as your LLP’s Registered Agent, ensuring that they meet Wisconsin requirements.

However, If you plan to become a Registered Agent of your own LLP, follow the steps below. Also, this applies a guideline in hiring your registered agent.

  • Research the requirements in the state where you want to offer your service. Each state has specific criteria, such as having a physical address and being available during normal business hours.
  • Obtain a physical address in the state(s) if needed.
  • Be familiar with the rules, regulations, and compliance requirements for businesses in your state.
  • Create a business plan outlining your services, pricing, and marketing strategy.
  • Register your business entity, such as an LLP, if required.

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Step 4: File a Certificate of Limited Liability Partnership

To officially form your LLP, you must file a Certificate of Limited Liability Partnership with the Wisconsin Secretary of State. Obtain the necessary forms and provide the required information, such as the LLP name, principal office address, registered agent’s name and address, names and addresses of partners, and management structure. Pay the required filing fee and submit the completed forms to the Wisconsin Secretary of State’s office.

Step 5: Draft a Partnership Agreement

A well-crafted partnership agreement is essential for governing your LLP and protecting the interests of its partners. This document should cover crucial provisions such as roles and responsibilities of partners, profit and loss sharing, decision-making processes, partner admission and withdrawal, and dispute resolution. Consider having the partnership agreement reviewed by an attorney to ensure its completeness and compliance with Wisconsin laws.

A partnership agreement should include the following:

  • Business name
  • Description of the business
  • Contact information of the business and its owners

Ownership of all business partners, decision-making, capital contribution, profits and distribution, death and disability, and withdrawal and addition of partners is one of the key factors to consider when forming or creating a partnership agreement. In this way, all business partners will understand what this is all about and how to proceed if the mentioned scenarios happen. 

Without a partnership agreement, your company will often be subject to the general partnership default laws of Wisconsin. The default laws in Wisconsin might not be appropriate for your requirements.

Step 6: Get an EIN

Your LLP must obtain Wisconsin Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The application of an EIN can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN, you can benefit in several ways. It will give your LLP the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 7: Obtain the Necessary Licenses and Permits

Depending on your specific industry, you may need to obtain Wisconsin Business Licenses and permits to operate your LLP. Research your business’s licensing and permit requirements and apply for them accordingly.

You can check out the United States Business License & Licensing Fee Resources for more information about the costs in Wisconsin.

Step 8: Open a Business Bank Account and Obtain Insurance

Maintaining clear financial records is crucial for any business, so open a separate bank account for your Wisconsin LLP. Additionally, obtain the necessary Wisconsin Business Insurance, such as general liability insurance, professional liability insurance (if applicable), and workers’ compensation insurance (if you have employees). 

Check the Best Bank for Small Businesses in Wisconsin to open a bank account.

Step 9: Maintain Compliance and Reporting Requirements

Stay informed about and comply with relevant laws and regulations to keep your LLP in good standing. File Annual Reports with the Wisconsin Secretary of State (if required), maintain accurate financial and operational records, and file and pay required taxes at the federal, Wisconsin, and local levels.

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Advantages of Forming a Limited Liability Partnership in Wisconsin

While the specific advantages of forming an LLP in Wisconsin can vary depending on the state’s unique laws and regulations, several public benefits associated with LLPs often apply across jurisdictions. Here are some advantages to consider when forming an LLP in Wisconsin:

  • Limited Liability Protection: One of the main benefits of an LLP is its limited liability protection to its partners. This means that each partner’s assets are generally protected from the debts and liabilities of the business, and they are only liable for their investment in the partnership.
  • Pass-through Taxation: An LLP typically enjoys pass-through taxation, which means that the profits and losses of the business are passed through to the partners, who report them on their personal income tax returns. This avoids the double taxation often associated with corporations.
  • Flexible Management Structure: Unlike corporations requiring a board of directors, LLPs allow for a more flexible management structure. Partners in an LLP can directly manage the business and make decisions without needing a formal board.
  • Profit-sharing Flexibility: The partnership agreement can outline the distribution of profits and losses among partners, allowing for a customized profit-sharing arrangement based on the partners’ preferences and contributions.
  • Easier Formation and Compliance: Forming an LLP is generally less complicated and expensive than forming a corporation. Ongoing compliance requirements may also be less burdensome than other business entities, depending on the specific laws and regulations in Wisconsin.
  • Professional Credibility: Forming an LLP can enhance your business’s professional credibility, as it demonstrates a commitment to a formal business structure and can offer reassurance to clients, customers, and potential investors.

Bear in mind that the advantages of forming an LLP in Wisconsin may vary based on the specific laws and regulations governing LLPs. Researching the applicable laws and consulting with legal or financial advisors is essential to fully understand the benefits and requirements of forming an LLP in Wisconsin.

Cost of Forming an LLP in Wisconsin

The cost of forming an LLP in Wisconsin may vary depending on the required filing fees and any additional services you may need. The filing fee for a Certificate of Limited Liability Partnership typically ranges from $50 to $200, depending on the state.

Can I Form an LLP in Other States?

You can form an LLP (Limited Liability Partnership) in other states. To form an LLP in a different state, you must follow that state’s specific registration requirements and filing procedures. This usually involves filing an application or certificate of registration, paying a registration fee, and obtaining any necessary permits or licenses.

Additionally, you may need to register your LLP as Wisconsin Foreign LLC if you plan to conduct business in multiple states. It is advisable to consult with an attorney or a business consultant familiar with the laws and regulations of the state where you plan to form your LLP.

Can an LLP Need to Have One Owner?

An LLP (Limited Liability Partnership) cannot have just one owner. By definition, an LLP is a partnership, which means it requires at least two partners to be formed. If you want a business structure with limited liability protection and only one owner, you may consider forming a Single-Member LLC in Wisconsin instead. An LLC can have one or more owners, known as members, and offers limited liability protection and pass-through taxation. The requirements for forming an LLC will vary by state, so consult your state’s laws and regulations.

FAQs

How do I form a limited liability partnership in Wisconsin?
To form an LLP in Wisconsin, you must file a Certificate of Limited Liability Partnership with the Wisconsin Department of Financial Institutions.
What is required in a Certificate of Limited Liability Partnership filing in Wisconsin?
A Certificate of Limited Liability Partnership must include the name of the partnership, the business address of the partnership, the name and business address of each general partner, and a statement of the partnership’s purpose.
Is there a fee to file a Certificate of Limited Liability Partnership in Wisconsin?
Yes, there is a fee to file a Certificate of Limited Liability Partnership in Wisconsin.
How long does it take to form an LLP in Wisconsin?
The processing time varies depending on how the filing is made, but expect it to take around one week.
Does Wisconsin require a registered agent for an LLP?
Yes, Wisconsin requires an LLP to appoint and maintain a registered agent in the state.
What is a registered agent?
A registered agent is a person or entity authorized to receive business and legal documents on behalf of a company.
Can an LLP in Wisconsin have foreign partners?
Yes, an LLP in Wisconsin can have foreign partners.
What types of activities are limited liability partnerships in Wisconsin restricted from engaging in?
LLPs in Wisconsin cannot engage in banking, insurance, and other high-risk industries as defined by law.
How is a limited liability partnership agreement created and filed in Wisconsin?
A limited liability partnership agreement is created by the partners and must be retained at the LLC’s principal office address. Under Wisconsin law, it is not required to be filed.
Does the state of Wisconsin require an LLP’s financial records to be audited?
No, Wisconsin does not require LLP financial records to be audited, but it must be maintained and available upon request by a state audit.
What are Wisconsin’s tax implications for an LLP?
An LLP in Wisconsin is considered a pass-through entity and is not subject to corporate income tax. However, each individual partner may have to pay individual income tax on his/her share of the LLP’s income.
Can a limited liability partnership convert to another entity in Wisconsin?
Yes, a limited liability partnership in Wisconsin can convert to either a corporation or limited liability company (LLC).
Are there any annual LLP filing requirements in Wisconsin?
Yes, each year, an annual report, along with its associated filing fee, must be filed for an LLP within Wisconsin.
Can an LLP in Wisconsin have one member?
No, Wisconsin law does not permit a single-member limited liability partnership; it must have at least two partners.
Is a limited liability partnership in Wisconsin required to carry insurance?
Wisconsin law does not require an LLP to carry insurance, but it is generally advised.
What happens if a partner dies or leaves the LLP in Wisconsin?
If a partner dies or leaves the LLP, the partnership will typically continue, but the departing individual will be removed as a partner.
Is an LLP in Wisconsin liable for the actions of its partners?
Yes, an LLP in Wisconsin is generally considered a separate legal entity, but it will still be held liable for the actions of its partners.
How can I find assistance when starting an LLP in Wisconsin?
You can consult with legal counsel or, if in doubt, seek support from the state’s business registration agency or secretary of state office.
How will I know if a proposed LLP name is available in Wisconsin?
You can search for your proposed registration name on the Wisconsin Department of Financial Institutions’ (DFI) online database of existing business names.
Can I reserve a limited liability partnership name in Wisconsin?
Yes, a name reservation request can be made by using the DFI’s online database, speaking to their storefront office, or via mail.
Are out of state entities able to create LLPs in Wisconsin?
Yes, under most circumstances, out-of-state entities can create limited liability partnerships in Wisconsin.
What if I need an additional office or want to move the current administrative office of my registered LLP?
You must file a change of agent/office form with the Wisconsin Department of Financial Institutions and update your LLP agreement accordingly.
Can a limited liability partnership in Wisconsin be managed by non-partners?
Yes, an LLP in Wisconsin can have non-partner managers or officers who help oversee the partnership’s operations.
What exit provisions do I need to include in the agreement when creating an LLP in Wisconsin?
You should develop or hire professional service to develop adequate resolutions for altering or exiting the LLP without input from all participating members.
Is a member managed or manager managed LLP the way to go?
The right form of management structure will depend on the unique ambitions, management style, and chosen service focus of all involved partners.
Can an LLP in Wisconsin make guaranteed payments to both its active and non-active partners/partners share distribution interest?
Yes, in Wisconsin, these individual parties may obtain guaranteed profit shares to receive their share of the profits provided by the LLP depending on prearrangement and terms.
Can an LLP operate as a professional entity in Wisconsin?
Professional entities in Wisconsin are only authorized to be registered as professional corporations.
Can LLPs in Wisconsin be incorporated with any other partner with any other person other than a professional licensee filing as a Professional Limited Liability Partnership (PLLP)?
LLPs in Wisconsin cannot incorporate with anyone and are considered standalone business entities unless he or she meets certain exemptions for PLLPs.
What if an LLP discontinued operation? Will the demand of continually submitting the yearly report continues?
Annual report duties persist until the necessary papers for officially terminating LLPs in Wisconsin have been correctly carried out.
What is a limited liability partnership (LLP)?
An LLP is a type of business entity that provides protection to its partners from personal liability for the company’s obligations.
Can an LLC be converted to an LLP in Wisconsin?
Yes, an LLC can be converted to an LLP in Wisconsin provided the requirements set in Chapter 178 of the Wisconsin Statutes are followed.
How many people do I need to start an LLP in Wisconsin?
At least two people are required to start an LLP in Wisconsin.
Do I need to file for a certificate of authority to start an LLP if I’m not a Wisconsin resident?
Yes, if you are starting an LLP in Wisconsin and you do not live in Wisconsin, you will have to file for a Certificate of Authority.
Can an out-of-state LLP do business in Wisconsin without physically being present?
Yes, an out-of-state LLP can do business in Wisconsin without having a physical presence.
What are the benefits of starting an LLP over other business entities?
An LLP provides protection to the partners from personal liability for the company’s obligations, while still allowing them to participate in its management.
How is the taxation for an LLP in Wisconsin?
LLPs are not taxed on a corporate level in Wisconsin and the profits pass-through directly to the partners’ personal tax returns.
How do I register an LLP in Wisconsin?
You can register an LLP in Wisconsin by filing formation documents with the Department of Financial Institutions.
What documents do I need to file to form an LLP in Wisconsin?
You need to file Certificate of Limited Liability Partnership form with the Department of Financial Institutions in order to form an LLP in Wisconsin.
What’s the cost of registering an LLP in Wisconsin?
The registering fee for an LLP in Wisconsin is $100.
Is a registered agent required for an LLP in Wisconsin?
Yes, an LLP in Wisconsin is required to have a registered agent to operate in the state.
What’s the role of a registered agent for an LLP in Wisconsin?
A registered agent receives and forwards all legal documents, notices, and reports issued on behalf of the LLP.
Can the registered agent of an LLP be changed later after registering in Wisconsin?
Yes, the registered agent of an LLP can be changed to a different agent at a later date using the change of agent form in eCorp.
What is the purpose of a partnership agreement for an LLP in Wisconsin?
A partnership agreement outlines the roles, responsibilities, and requirements of the partners in the LLP.
Is the partnership agreement for an LLP required in Wisconsin?
Yes, despite not being mandatory in Wisconsin, it’s advisable to have a partnership agreement for an LLP.
Apart from the partnership agreement, what other documents should I have to start an LLP in Wisconsin?
The other important documents to have to start an LLP in Wisconsin include an initial resolution, partner’s contributions, and Operating Agreement.
What is an Operating Agreement for an LLP and how important is it?
An Operating Agreement is an LLC-like document that indicates the company’s structure, rules for decision-making and partner admission.
What rights does a limited liability partner have in an LLP in Wisconsin?
Limited liability partners in an LLP have the right to participate in the company management, an equal share of distributions and liability protection for the LLP debts.
How long does the registration process of an LLP in Wisconsin take?
It takes minimal time between 3-4 working days to process an LLP registration application in Wisconsin.
Can I request expedited LLP registration when forming a new entity in Wisconsin?
Yes, it’s possible to request for an expedite registration of your LLP by paying a Faster Fee.
When starting an LLP in Wisconsin, must I choose a principal office address?
Yes, as per the Wisconsin Statutes, an initial registered address must be filed with the statement of formation.
Can an address be used to establish a registered agent service for an LLP in Wisconsin?
Yes, the same address used to serve as a registered agent for an LLP in Wisconsin.
Can I change the principal office address for my LLP after registration?
Yes, you can change your LLP’s principal office address by re-submitting the Statement of Information form with new details.
How can an LLP qualify for the Wisconsin Tax Index Number and why necessary?
All Wisconsin business entities, including LLPs, can obtain an identification called Wisconsin Tax Index Number to be used when paying Wisconsin business taxes.
Can members of an LLP in Wisconsin be held personally liable if the company doesn’t comply with legal obligations?
No, provided the LLP is properly set up and managed, individual partners shouldn’t be in charge of illegal or non-compliant of the LLP in Wisconsin.
Are LLPs subject to both federal and state taxes?
LLPs in Wisconsin are not subject to corporate taxation, but rather the profits pass-through directly to the personally attributable members, making the entity subject to only federal taxation.
Is there a difference in naming an LLP in Wisconsin compared to regular corporations?
Yes, to form organic subchapter structure type tax and assess the fee, LLP must end with “LLP”, “Limited Liability Partnership”, “L.L.P.”, or “LLP” somewhere in its name; commonly known tax-assessment is $13 per partner for the first four partners then additional $5 per partner after that.
Are there state-specific rules governing compliance and regulation of LLPs in Wisconsin?
Yes, Wisconsin uses a state-level administrative agency called the Wisconsin Department of Financial Institutions to register and regulate firms, including LLPs that are based in the state.

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Conclusion

Starting an LLP in Wisconsin may seem daunting, but you can successfully establish and run your business with thorough research, planning, and compliance with legal requirements. Feel free to seek professional assistance from legal or financial advisors when needed to ensure your Limited Liability Partnership’s smooth operation and growth in Wisconsin.

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