How to Form a LLP in Wisconsin

An LLP is a Limited Liability Partnership. This type of business entity provides limited liability to its partners in comparison to a corporation.

In most jurisdictions, and in the State of Wisconsin, an LLP must have at least two members. It is a type of business form typically used by professional service firms. Partners in an LLP are not personally liable for the debts and obligations of the business.

Why File An LLP in Wisconsin?

Wisconsin is one of only four states with a state-level bank secrecy law that protects information about Wisconsin customers and their account activity from access by divorce attorneys and other creditors.

The Bank Secrecy Act of Wisconsin is Wisconsin’s statutory version of the federal Bank Secrecy Act, which protects financial institutions operating in Wisconsin.

Wisconsin has a comprehensive LLP statute that allows Wisconsin LLPs to choose their own tax treatment. The entity will be treated as either a disregarded entity for income tax purposes or an S corporation for Wisconsin franchise tax purposes.

Wisconsin permits a variety of Professional Limited Liability Companies or “PLLC” structures that accommodate doctors, attorneys, and other licensed professions while maintaining the limited liability protection afforded by the LLP structure.

This helps professions by not forcing members to give up professional licensing advantages offered by separate state licenses available only to “disregarded entities”. Additionally, there is no maximum number of members restrictions on Wisconsin LLPs.

Wisconsin’s LLP is a “safe haven” for non-U.S. investors in the sense that Wisconsin has the 9th lowest combined average state and local taxes. Investors in Wisconsin companies benefit from Wisconsin’s favorable taxation of Wisconsin passthrough entities as well.

What Are The Requirements for an LLP in Wisconsin?

Wisconsin has a Uniform Partnership Act that governs the formation and operation of partnerships. Wisconsin law provides for two types of partnerships, general partnerships and limited liability partnerships (LLPs).

Wisconsin also recognizes the existence of foreign legal entities classified as corporations, limited liability companies, or other business organizations formed under Wisconsin law.

Partnerships are governed by Chapter 183 of the Wisconsin Statutes., which is known as Wisconsin’s Uniform Partnership Act.

General Partner Requirements: General partners have unlimited personal liability for all partnership debts and obligations unless they agree to limit their liability with a special agreement called a “general partner release.”

A person who becomes a general partner after the commencement of an enterprise may be liable for any prior debts incurred in connection with that enterprise if the person knew about the debts when becoming a partner.

Limited Partner (LLP) Requirements: A limited partner’s liability for partnership obligations is limited to the amount of money or other consideration that the partner agreed to contribute, plus any amount actually contributed.

Wisconsin has adopted section 181.0310(3), Wisconsin Statutes, which states in part: “A limited partner shall not become liable as a general partner unless

(a) The limited partner has knowledge of the fact that the enterprise is subject to Wisconsin law governing general partnerships; and
(b) As regards each act or omission of an enterprise by itself or through others, the act or omission constitutes a breach of Wisconsin law applicable to general partnerships.”

LLP Management Structure: A Wisconsin LLP has two classes of “partners” who are associated with the business—general partners and limited partners.

The general partner(s) have unlimited liability for all debts and obligations of the Wisconsin LLP. However, certain Wisconsin general partnerships can protect their insiders from unlimited personal liability.

The management structure for an LLP is determined by the Wisconsin LLP agreement, which must be in writing. Wisconsin law does not include any specific requirements as to the content of Wisconsin LLPs.

Wisconsin has adopted Wisconsin Statutes section 183.0402(1), which states that Wisconsin’s Uniform Partnership Act applies to limited liability partnerships; thus partnership provisions regarding management structure will likely apply equally to a Wisconsin LLP.

LLP Agreement Formalities: Wisconsin’s Uniform Partnership Act requires that the LLP agreement be in writing. However, Wisconsin law does not provide for specific requirements as to the form or content of an LLP agreement.

Wisconsin has adopted Wisconsin Statutes section 183.0402(1) which states that “The laws of this state relating to general partnerships apply to limited liability partnerships.”

Foreign Entity Requirements for Wisconsin: Wisconsin law does not mention foreign entities but Wisconsin is likely compatible with most other state LLC/LP statutes; consult with your legal counsel if you are considering forming a foreign entity (see discussion below).

State Tax Obligations: Wisconsin law does not mention foreign entities but Wisconsin is compatible with most other states’ LLC/LP statutes.

Wisconsin has adopted Wisconsin Statutes section 71.02, which imposes Wisconsin franchise tax on any Wisconsin business formed as a corporation, association, joint-stock company, or insurance company.

Termination: Generally speaking, under Wisconsin law, a Wisconsin LLP is self-dissolving when all the partners (including the last remaining general partner) die or otherwise cease to be entitled to participate in the management and control of the business enterprise; voluntarily dissolve, or earlier termination by written agreement among all partners (183.0701 Wis Stats).

Wisconsin LLC/LP Tax Obligations: Wisconsin General Partnership Tax Obligations: Wisconsin’s corporation franchise tax applies to general partnerships that are formed in Wisconsin and

What Paperwork Do I Need to Form an LLP?

In the state of Wisconsin, partnerships can be formed by two or more people who agree to do business together for profit.

There are no formal filing or registration requirements needed in order to create an LLP, but they must follow sound practices that ensure good governance and management with their ventures.

Here are some examples of ideal steps to take:

1. Choose a business name that is not already registered with the Secretary of State or otherwise trademarked. Wisconsin allows for the use of surnames of the partners as a business name. You can search the corporation registry to see if a fictitious name is available for use.
2. File for a trade name and any applicable servicemarks or trademarks. If you use a fictitious name or DBA (Doing Business As) for a business name that is not your surname, you will need to register the firm name with the state.
3. Apply for all necessary licenses and permits. Your business may need certain zoning permits or other types of business licenses. Check with the city you wish to use as your principal place of business to determine which licenses you may need.
4. Draw up the partnership agreement and sign it. A formal agreement between partners is helpful because it lists the duties and responsibilities of each partner.
5. Request an Employer Identification Number (EIN) from the IRS. For tax filing purposes every business is required to have an EIN.

Do I Need An Attorney For Filing An LLP In Wisconsin?

While the process may seem relatively straightforward, there are a number of important details that must be handled correctly in order to ensure a smooth and accurate filing.

It’s always a good idea to consult with a Wisconsin corporate lawyer to make sure you’re following all the necessary filing procedures and that your LLP is set up correctly. An attorney can also help you with other aspects of running your LLP, such as drafting and reviewing contracts, acting as your resident agent, and providing legal advice when needed.

An experienced attorney can help you avoid any potential problems and make sure your LLP is up and running quickly and smoothly.