How to Start a Limited Partnership in Wisconsin | A Step-by-Step Guide

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Start a Limited Partnership in Wisconsin

A limited partnership is an attractive business structure for those who want to start an LLC in Wisconsin. It combines the best of both worlds, offering limited liability protection for limited partners and the ability to manage the business for general partners actively. This article will outline the steps on How to Start a Limited Partnership in Wisconsin, covering everything from researching and preparing to registering your limited partnership with the Wisconsin government and beyond.

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

Steps in Starting a Limited Partnership in Wisconsin

What is a Limited Partnership?

A Limited Partnership (LP) is a business structure comprising two types of partners: general and limited. It is a legal entity distinct from its partners and combines certain features of partnerships and corporations.

General partners are responsible for the day-to-day management of the business, make decisions on behalf of the partnership, and have unlimited liability for the partnership’s debts and obligations. This means their assets can be seized to cover the partnership’s liabilities if necessary.

Limited partners, on the other hand, are passive investors who do not participate in business management. They provide capital to the partnership and receive a share of the profits in return. Their liability is limited to the amount they have invested in the partnership, meaning that their assets are generally not at risk for the partnership’s debts beyond their investment.

It is suggested that you speak with a legal professional before you begin setting up your limited partnership in Wisconsin. 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 partnership.

– WEBINARCARE EDITORIAL TEAM

Steps in Starting a Limited Partnership in Wisconsin

To form a limited partnership in Wisconsin, you must consider following the below guidelines that, include research and preparation, establishing the limited partnership structure, drafting the limited partnership agreement, registering the limited partnership, complying with additional Wisconsin requirements, and ongoing management and compliance and reporting requirements. 

Step 1: Research and Preparation

Before starting a limited partnership in Wisconsin, you must familiarize yourself with this business structure’s laws and regulations. In the United States, limited partnerships are primarily governed by the Uniform Limited Partnership Act (ULPA). However, each state has its laws and regulations, so it’s essential to know the specific rules that apply in Wisconsin.

While researching, consider whether a limited partnership is the most suitable structure for your business needs. Limited partnerships are ideal for businesses with one or more passive investors who want to avoid taking on the business’s day-to-day responsibilities. Consider alternative structures like Wisconsin Corporations if a limited partnership doesn’t seem right.

Step 2: Establishing The Limited Partnership Structure

Once you’ve determined that a limited partnership is the right choice for your business, the next step is to establish the structure of your partnership. This involves choosing a name, hiring a Registered Agent, and determining the roles of the partners.

Choose a Name for the Limited Partnership

The name you choose for your limited partnership is essential to your business identity. In Wisconsin, there are specific requirements that your limited partnership name must meet, such as including the words “Limited Partnership” or the abbreviation “LP.” Before settling on a name, conduct Wisconsin Business Name Search through the Wisconsin Department of Financial Institutions to ensure the name you’ve chosen is available and not already used by another business.

Naming requirements for a Limited Partnership in Wisconsin may include:

  • The name must be unique and distinguishable from other business entities registered in the state.
  • The name must include the words “Limited Partnership,” “L.P.,” or “LP.”
  • Certain words and phrases may be restricted or require additional approval from Wisconsin.

If the limited partnership 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 corporation 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 Wisconsin Secretary of State.

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

Hire a Registered Agent

A Registered Agent is a person or entity responsible for receiving legal documents and official notices on behalf of your LP. In Wisconsin, your Registered Agent must:

  • Be a resident of Wisconsin or a business entity authorized to do business in the state
  • Have a physical address in Wisconsin (P.O. boxes are not acceptable)

Choosing a reliable and responsible Registered Agent is essential, as failure to receive and respond to legal documents can seriously affect your business. 

You can serve as your own Registered Agent or appoint a friend or family member, or hire a professional Wisconsin Registered Agent Services. With that, we reviewed some of the best-registered agent services and provided features as an add-on with their formation packages for you to check out.

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Determine the Roles of the Partners

A limited partnership consists of two types of partners: general and limited. General partners are responsible for the day-to-day management of the business and have unlimited liability for the partnership’s debts and obligations. Limited partners, on the other hand, are passive investors who don’t participate in the management of the business and have limited liability up to the amount they’ve invested in the partnership.

As you structure your partnership, carefully consider who will take on the roles of general and limited partners. Remember that general partners will have more responsibility and potential liability, so choose those individuals wisely.

Step 3: Drafting the Limited Partnership Agreement

With the partnership structure established, the next step is to draft a limited partnership agreement. This document sets forth the partnership’s terms and conditions and should be carefully crafted to ensure it meets all legal requirements in Wisconsin.

Include Essential Elements

A well-drafted limited partnership agreement should include the following essential elements:

  •  Name of the limited partnership
  •  Purpose of the limited partnership
  •  Duration of the limited partnership
  •  Names and addresses of general and limited partners
  •  Capital contributions of each partner
  •  Allocation of profits and losses
  •  Management and decision-making structure
  •  Process for admitting new partners

Address Optional Elements

In addition to the essential elements, it’s a good idea to address the following optional elements in your limited partnership agreement:

  •   Transfer of partnership interests
  •   Withdrawal or removal of partners
  •   Dissolution and winding up the process

To ensure your limited partnership agreement is legally sound and compliant with Wisconsin laws and regulations, it’s advisable to seek legal advice from a Business Attorney in Wisconsin with experience in limited partnerships.

Step 4: Registering the Limited Partnership

Once your limited partnership agreement is in place, the next step is to register your limited partnership with the Wisconsin government. This process typically involves filing a Certificate of Limited Partnership with the Wisconsin Secretary of State’s office.

Prepare and File the Certificate of Limited Partnership

To file the Certificate of Limited Partnership, complete the required forms, which can typically be found on the Wisconsin Secretary of State. Include all necessary information and signatures, and pay the filing fee of $130.

Obtain an Employer Identification Number (EIN) from the IRS

After registering your limited partnership with the Wisconsin government, you’ll need to obtain Wisconsin Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This number is used to identify your partnership for tax purposes and is required for filing federal and state tax returns.

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.

Recommended: If you would like to get your EIN easier, Legalzoom’s EIN services will obtain your tax ID number a breeze. Their knowledgeable team and easy-to-use platform allow businesses to quickly and confidently navigate the process. We recommend using –

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Register For Wisconsin Taxes

Depending on your business activities and location, you may need to register for certain Wisconsin taxes. Check with the Wisconsin Department of Revenue or a tax professional to determine which taxes apply to your limited partnership.

Step 5: Complying With Additional Wisconsin Requirements

In addition to registering your limited partnership with the Wisconsin government, there may be other requirements you need to meet to operate your business legally. These may include obtaining business licenses or permits, filing annual reports with the Wisconsin Secretary of State, and maintaining proper records and documentation.

Obtain Any Necessary Business Licenses or Permits.

Depending on the nature of your business, you may need to obtain various licenses or permits from state or local authorities. Check with the Wisconsin Department of Business and Industry or a licensing professional to determine which licenses and permits apply to your limited partnership. However, in Wisconsin, the costs of Wisconsin Business Licenses range from $50 – $300.

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

File Annual Reports 

Wisconsin require limited partnerships to file Annual Reports with the Wisconsin Secretary of State’s office. These reports typically include updated information about the partnership, such as the names and addresses of partners and any changes to the partnership agreement. 

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Maintain Proper Records and Documentation

As a limited partnership, it’s essential to maintain proper records and documentation, including copies of your limited partnership agreement, tax returns, financial statements, and any other relevant documents. These records should be kept in a safe and accessible location and may be required in the event of an audit or legal dispute.

Step 6: Ongoing Management and Compliance

Starting a limited partnership in Wisconsin is the beginning. To ensure the ongoing success of your business, it’s crucial to stay on top of management and compliance tasks. It is better to have regular meetings with your partners to ensure everyone is on the same page regarding the direction and performance of your business. These meetings can also help identify and address issues or concerns before they become more significant problems.

As a limited partnership, you must file annual tax returns and pay any required taxes at the federal and state levels. Consult with a tax professional to ensure you comply with all tax laws and deadlines.

Advantages of Limited Partnerships in Wisconsin

Here are some key advantages of forming a limited partnership in Wisconsin:

  • Limited Liability for Limited Partners: One of the main benefits of a limited partnership is that limited partners enjoy limited liability protection. This means their assets are generally not at risk for the partnership’s debts and obligations beyond their investment in the partnership. This limited liability can be attractive for investors who want to participate in a business venture without taking on the same level of risk as general partners.
  • Pass-through Taxation: Limited partnerships are typically subject to pass-through taxation, meaning the partnership’s profits and losses flow to the partners’ individual tax returns. This structure avoids double taxation, as the partnership is generally not subject to federal income tax. Instead, each partner is responsible for paying taxes on their share of the partnership’s income at their individual tax rate.
  • Flexibility: A limited partnership allows for flexibility in the management structure. General partners have the authority to make decisions and manage the business, while limited partners can remain passive investors. This division of responsibilities and decision-making power can appeal to both parties. It allows general partners to maintain control over the business operations and limited partners to invest without being involved in day-to-day management.
  • Ease of Formation: A limited partnership is typically less complicated and expensive than a corporation. Limited partnerships generally require filing a Certificate of Limited Partnership with the state and creating a limited partnership agreement, which is less complex than the documentation required for a corporation.
  • Attracting Capital: Limited partnerships can attract capital from investors who want to participate in a business venture without taking on the responsibilities and risks of being a general partner. This structure can help businesses secure funding while allowing limited partners to benefit from the partnership’s profits.
  • Continuity of the Partnership: In Wisconsin, limited partnerships can continue to exist even if one of the general partners dies, withdraws, or is replaced, as long as there is at least one remaining general partner. This continuity can provide stability and help ensure the ongoing success of the partnership.

Can a Foreign Limited Partnership Do Business in Wisconsin?

Yes, a foreign Limited Partnership can do business in Wisconsin by registering as a foreign LP with the Wisconsin Secretary of State or appropriate state agency. The foreign LP must provide a certificate of good standing from its home state and pay any required registration fees.

What are the Tax Implications of Forming a Limited Partnership in Wisconsin?

Limited Partnerships are generally considered pass-through entities for tax purposes, meaning that the profits and losses of the business are passed through to the individual partners, who report them on their personal income tax returns. However, specific tax implications may vary depending on the state and the nature of your business. It is recommended to consult with a tax professional to determine your specific tax obligations.

FAQs

What is a limited partnership in Wisconsin?
A limited partnership in Wisconsin is a type of business structure where there are two types of partners – general partners and limited partners.
How many partners are required to start a limited partnership in Wisconsin?
A minimum of two partners are required to start a limited partnership in Wisconsin.
What are the filing fees for starting a limited partnership in Wisconsin?
The filing fee for starting a limited partnership in Wisconsin varies depending on the type of filing, but ranges from $100 to $300.
What documents are needed to start a limited partnership in Wisconsin?
To start a limited partnership in Wisconsin, you need to file a Certificate of Limited Partnership with the Wisconsin Department of Financial Institutions.
Do limited partnerships need to be registered with the state of Wisconsin?
Yes, limited partnerships in Wisconsin need to be registered with the Wisconsin Department of Financial Institutions.
What is the process for starting a limited partnership in Wisconsin?
The process for starting a limited partnership in Wisconsin involves filing a Certificate of Limited Partnership with the Wisconsin Department of Financial Institutions and paying the required fee.
Can I start a limited partnership in Wisconsin online?
Yes, you can register your limited partnership in Wisconsin online through the Wisconsin Department of Financial Institutions’ website.
Do I need to have a registered agent for my limited partnership in Wisconsin?
Yes, you must have a registered agent for your limited partnership in Wisconsin.
Can I be both a general partner and a limited partner in a Wisconsin limited partnership?
Yes, it is possible to be both a general partner and a limited partner in a Wisconsin limited partnership.
What are the liability protections offered to limited partners in Wisconsin?
Limited partners in Wisconsin are not personally liable for the debts and obligations of the limited partnership beyond their agreed-upon contribution.
Can a non-resident be a partner in a Wisconsin limited partnership?
Yes, non-residents can be partners in a Wisconsin limited partnership.
What taxes will my Wisconsin limited partnership be subject to?
Wisconsin limited partnerships are not required to pay state income tax, but may be subject to other taxes and fees.
Can I change the name of my Wisconsin limited partnership if I want to?
Yes, you can change the name of your Wisconsin limited partnership by filing the appropriate paperwork with the Wisconsin Department of Financial Institutions.
Is the name of my Wisconsin limited partnership searchable online?
Yes, the name of your Wisconsin limited partnership will be searchable in the Wisconsin Department of Financial Institutions’ online database.
Can I have multiple Wisconsin limited partnerships under the same name?
No, each Wisconsin limited partnership must have a unique name.
What is a limited liability partnership in Wisconsin?
A limited liability partnership in Wisconsin is a type of partnership where all partners have limited liability for the debts and obligations of the partnership.
Are there any annual reports or filings required for Wisconsin limited partnerships?
Yes, Wisconsin limited partnerships must file an annual report with the Wisconsin Department of Financial Institutions, along with paying the required fee.
Can I use my Wisconsin limited partnership to conduct business in other states?
Yes, your Wisconsin limited partnership can be used to conduct business in other states, but may need to register as a foreign entity in those states.
Do I need to hire a lawyer to start a Wisconsin limited partnership?
No, you do not need to hire a lawyer to start a Wisconsin limited partnership, but you may choose to do so for legal advice.
Can I transfer my ownership in a Wisconsin limited partnership?
Yes, you can transfer your ownership interest in a Wisconsin limited partnership, but it must be done in compliance with the partnership agreement.
How can I dissolve my Wisconsin limited partnership?
You can dissolve your Wisconsin limited partnership by filing a Certificate of Dissolution with the Wisconsin Department of Financial Institutions, along with paying the required fee.
What happens if a partner withdraws from a Wisconsin limited partnership?
If a partner withdraws from a Wisconsin limited partnership, it may affect the partnership agreement and the liabilities and responsibilities of the remaining partners.
Can I add new partners to a Wisconsin limited partnership after it has been formed?
Yes, new partners can be added to a Wisconsin limited partnership in compliance with the partnership agreement.
What happens in a partnership dispute in Wisconsin?
Partnership disputes in Wisconsin can result in legal action, including mediation, arbitration, or litigation.
Can I convert my Wisconsin limited partnership into another type of business entity?
Yes, you can convert your Wisconsin limited partnership into another type of business entity, such as a corporation or LLC.
What is a foreign limited partnership in Wisconsin?
A foreign limited partnership in Wisconsin is a limited partnership formed outside of Wisconsin but registered to do business in the state.
What documents are required for a foreign limited partnership to do business in Wisconsin?
To do business in Wisconsin, a foreign limited partnership must file an Application for Certificate of Authority with the Wisconsin Department of Financial Institutions.
Can a foreign limited partnership also be an LLC?
No, a foreign limited partnership is a distinctly different type of business entity than an LLC.
What is a limited partnership?
A limited partnership is a type of partnership where the business has at least one general partner who manages the business and is personally responsible for its debts, and one or more limited partners who contribute capital but only face limited liability.
Can I start a limited partnership in Wisconsin?
Yes, you can start a limited partnership in Wisconsin.
How do I start a limited partnership in Wisconsin?
To start a limited partnership in Wisconsin, you must file a Certificate of Limited Partnership with the Wisconsin Department of Financial Institutions.
What information needs to be included in the Certificate of Limited Partnership in Wisconsin?
The Certificate of Limited Partnership in Wisconsin must include the name and address of the partnership, the name and address of each general and limited partner, the name and address of the registered agent, and the principal business office address.
What is a registered agent in Wisconsin?
A registered agent in Wisconsin is a person or entity designated by the partnership to receive legal and tax documents on its behalf.
Can a person serve as the registered agent for a limited partnership in Wisconsin?
Yes, a person can serve as the registered agent for a limited partnership in Wisconsin.
Do I need to have a business address in Wisconsin to start a limited partnership in Wisconsin?
No, you do not need to have a business address in Wisconsin to start a limited partnership in Wisconsin.
Can I be both a general and limited partner in a limited partnership in Wisconsin?
Yes, you can be both a general and limited partner in a limited partnership in Wisconsin.
Is there a minimum number of partners required for a limited partnership in Wisconsin?
A limited partnership in Wisconsin must have at least one general partner and one limited partner.
Is there a maximum number of partners for a limited partnership in Wisconsin?
There is no maximum number of partners for a limited partnership in Wisconsin.
How is a limited partnership in Wisconsin taxed?
A limited partnership in Wisconsin is considered a pass-through entity, which means that the partnership itself does not pay taxes on its income. Instead, the income is passed through to the partners and is taxed as personal income.
Do I need a lawyer to start a limited partnership in Wisconsin?
You are not required to have a lawyer to start a limited partnership in Wisconsin, but it is always a good idea to consult with one.
Can a foreign limited partnership start a business in Wisconsin?
Yes, a foreign limited partnership can start a business in Wisconsin if it is registered with the Wisconsin Department of Financial Institutions.
What are the benefits of forming a limited partnership in Wisconsin?
The primary benefit of forming a limited partnership in Wisconsin is that it provides limited liability protection to the limited partners, without placing restrictions on the general partner’s management abilities.
What are the disadvantages of forming a limited partnership in Wisconsin?
Some potential disadvantages of forming a limited partnership in Wisconsin include the possibility of disputes between partners, difficulty raising capital, and the requirement to file annual reports and pay associated fees.
Is there a fee to file a Certificate of Limited Partnership in Wisconsin?
Yes, the fee to file a Certificate of Limited Partnership in Wisconsin is $130.
Can I change the name of my limited partnership in Wisconsin?
Yes, you can change the name of your limited partnership in Wisconsin by filing an amendment to your Certificate of Limited Partnership with the Wisconsin Department of Financial Institutions.
Is an operating agreement required for a limited partnership in Wisconsin?
While an operating agreement is not required for a limited partnership in Wisconsin, it is highly recommended to have one in place.
What should be included in an operating agreement for a limited partnership in Wisconsin?
An operating agreement for a limited partnership in Wisconsin should include how profits and losses will be distributed, how partners will be compensated and how issues will be resolved.
Can I add new partners to my limited partnership in Wisconsin?
Yes, you can add new partners to your limited partnership in Wisconsin by filing an amendment to your Certificate of Limited Partnership with the Wisconsin Department of Financial Institutions.
Can I dissolve my limited partnership in Wisconsin?
Yes, you can dissolve your limited partnership in Wisconsin by filing a Certificate of Cancellation with the Wisconsin Department of Financial Institutions.
Will I be personally liable for the debts of my limited partnership in Wisconsin?
If you are a limited partner in a limited partnership in Wisconsin, you will not be personally liable for the business’s debts beyond your capital contribution, while general partners are personally responsible for the debts of the business.
Do I need to register my limited partnership in Wisconsin if I plan to only do business in other states?
If you are planning to do business in states other than Wisconsin, you may need to register your limited partnership in those states as well. It is recommended to consult with a lawyer to determine the specific requirements.
Can a limited partnership in Wisconsin merge with another business?
Yes, a limited partnership in Wisconsin can merge with another business by filing the required documents with the Wisconsin Department of Financial Institutions.
Can a limited partnership in Wisconsin convert to another type of business entity?
Yes, a limited partnership in Wisconsin can convert to another type of business entity, such as a corporation or a limited liability company.
Do I need to file an annual report for my limited partnership in Wisconsin?
Yes, a limited partnership in Wisconsin must file an annual report with the Wisconsin Department of Financial Institutions and pay an associated fee.
When is the annual report due for a limited partnership in Wisconsin?
The annual report for a limited partnership in Wisconsin is due by March 31st of each year.
What happens if I don’t file an annual report for my limited partnership in Wisconsin?
If you don’t file an annual report for your limited partnership in Wisconsin, your business may be administratively dissolved or your authority to do business in Wisconsin may be revoked.

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Conclusion

Starting a limited partnership in Wisconsin can be a rewarding experience, providing you with the benefits of limited liability protection for passive investors and the opportunity to manage your business actively. By following the steps outlined in this article and staying on top of ongoing management and compliance tasks, you can establish a successful limited partnership and enjoy the benefits of this unique business structure.

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