Wisconsin LLC Advantages and Disadvantages
A Wisconsin LLC
meets the state statutory requirement necessary before permitting you to legally operate within Wisconsin. Having met that necessary condition a Wisconsin LLC now attracts all the privileges and protections afforded under Wisconsin Business law. Foremost amongst these protections is the matter of a Wisconsin LLC members receiving shielding of their personal assets, such as real property, veheicles and bank accounts, from the actions a future liabilities of a Wisconsin LLC, in the course of its business. In other words, A Wisconsin llc corporate creditors cannot touch members and attempt to lien or attach in satisfaction of a court judgment against a Wisconsin LLC.
Should I form a Wisconsin LLC?
An Wisconsin LLC satisfies a necessary condition of your business planning developement in that it meets the requirement that you establish a legal form of organization in order to gain the statutory benefits and protection available in Wisconsin to your LLC. Your Wisconsin LLC establishes a legal presence within the state, which you can use either as a platform for in-state operations or by registering your Wisconsin LLC via your agent's physical address in order to meet the purely statutory requirement for tax and filing purposes absent an in state operation.
Advantages and Disadvantages of a Wisconsin LLC
Advantages of LLC
- Limited Liability: Owners of a LLC have the limited liability protection of a corporation.
- Flexible Profit Distribution: Limited liability companies can select varying forms of distribution of profits. Unlike a common partnership where the split is 50-50, LLC have much more flexibility.
- No Minutes: Corporations are required to keep formal minutes, have meetings, and record resolutions. The LLC business structure requires no corporate minutes or resolutions and is easier to operate.
- Flow Through Taxation: All your business losses, profits, and expenses flow through the company to the individual members. You avoid the double taxation of paying corporate tax and individual tax. Usually, this will be a tax advantage, but circumstances can favor a corporate tax structure.
Disadvantages of LLC
- Limited Life: Corporations can live forever, whereas a LLC is dissolved when a member dies or undergoes bankruptcy.
- Going Public: Business owners with plans to take their company public, or issuing employee shares in the future, may be best served by choosing a corporate business structure.
- Added Complexity: Running a sole-proprietorship or partnership will have less paperwork and complexity. A LLC may federally be classified as a sole-proprietorship, partnership, or corporation for tax purposes. Classification can be selected or a default may apply.
By Wisconsin and other state law in order to proceed with forming a llc, you need to prepare a written abstract detailing your llc purpose, the names of your initial Wisconsin LLC members, the name and address of your Wisconsin registered agent, the details of which will be introduced into the body of your LLC operating agreement and related Wisconsin LLC formation documents assembled for application to the state of Wisconsin.
Wisconsin's 2008 Business Tax Climate Ranks 39th
Wisconsin ranks 39th in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: Iowa (45th), Minnesota (42nd), Michigan (29th) and Illinois (28th).
Wisconsin's Individual Income Tax System
Wisconsin passed the nation's first personal income tax in 1911. Now its personal income tax system consists of four brackets with top rate of 6.75%, kicking in at an income level of $142,650. This top rate ranks the state 18th highest among states levying personal income taxes. Wisconsin's 2005 individual income tax collections were $989 per person, which ranked 12th highest nationally.
Wisconsin's Corporate Income Tax System
Wisconsin's corporate tax structure consists of a flat rate of 7.9% on all corporate income. Among states levying corporate income taxes, Wisconsin's rate ranks 18th highest nationally. In 2006, state-level corporate tax collections (excluding local taxes) were $145.45 per capita, which ranked 24th highest nationally.
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