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Wisconsin Business Formation: Which Option is Right for Me?
Business owners invest a great deal of time and money into their companies, and they will want to be sure they are able to reap the rewards for their efforts. When forming a business, it is important to select the correct entity that will allow you to file taxes properly and address liability issues.
Common business entities in Wisconsin include the following:
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Sole Proprietorship – In this type of business, there is no separation between the owner and the company. Revenue generated by the company is taxed as part of the owner’s income, and the owner is personally liable for business debts.
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General Partnership – This type of entity is similar to a sole proprietorship, except that ownership of a business is divided between two or more partners.
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Limited Partnership – In this type of partnership, there are one or more general partners, as well as one or more limited partners who typically make a passive investment in the business. Limited partners are only liable for the amount of their investment.
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Limited Liability Company (LLC) – A LLC provides its owners with protection from being personally liable for business debts. This type of entity allows for pass-through taxation, in which profits or losses are reported on the owners’ individual tax returns.
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Limited Liability Partnership (LLP) - A LLP is similar to a general partnership, except that it provides partners with protection from liability for business debts.
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Corporation - This type of entity provides its owners, or shareholders, with protection from liability and it requires shareholders to elect a board of directors to manage the business. A business may be taxed differently depending on the type of corporation — C corporations are taxed at the corporate level, while S corporations use pass-through taxation.
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Service Corporation - In this type of corporation, all shareholders have obtained the professional licenses or certifications required to practice the business’s occupation. This type of entity is often used by professionals, such as attorneys or doctors.
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Statutory Close Corporation - In this type of corporation, shareholders may agree to operate without a board of directors and impose certain limitations, such as restrictions, on when ownership shares can be transferred. Statutory close corporations may have no more than 50 shareholders.
Contact a Milwaukee Business Law Attorney
Choosing the right entity for your business will help ensure you are able to realize the best tax benefits, protect yourself from liability, and address issues such as ownership shares and decision-making authority. Depending on your needs, you may wish to take advantage of the flexibility and protections provided by a LLC or the structure and investment opportunities provided by a corporation.
The attorneys of Gimbel, Reilly, Guerin & Brown, LLP can help you understand your options and work to ensure you have met your legal requirements when forming your Wisconsin business. Contact our Milwaukee, WI business formation lawyers at 414-271-1440 to schedule a consultation.
Sources:
https://openforbusiness.wi.gov/OpenMyBusiness
https://www.wdfi.org/corporations/Business_Entity_Types/business_entity_descriptions.htm
