Starting a Business in Wisconsin – A Comprehensive Guide

Beautiful picture showing Wisconsin's river front business districtHow to Start a Business in Wisconsin

Wisconsin is an excellent place to do it if you’re considering turning your business idea into a reality. The state offers a unique blend of resources, supportive communities, and a business-friendly environment that entrepreneurs can leverage. This blog aims to be a go-to guide for those eager to start their business venture in the Badger State, presenting the benefits and challenges of establishing a company here. We’ve gathered insightful tips, valuable data, and essential steps to ensure you comprehensively understand what lies ahead in your entrepreneurial journey in Wisconsin.

Top Two Benefits of Starting a Business in Wisconsin

  1. Supportive Business Environment:  Wisconsin is known for its proactive government initiatives to foster startups and small businesses. With various grants, low-interest loan programs, and tax incentives, entrepreneurs can find ample support to get their businesses off the ground.
  2. Strategic Location & Infrastructure:  Nestled in the heart of the Midwest, Wisconsin provides easy access to major markets across the U.S. This central location, combined with a robust transportation network, makes it simpler for businesses to distribute products and access a broad customer base.

Top Two Challenges When Starting a Business in Wisconsin

  1. Navigating Regulatory Requirements:  While Wisconsin provides a business-friendly environment, newcomers might find the array of licensing, permits, and regulatory requirements overwhelming. Understanding and adhering to these stipulations is crucial to avoid potential legal pitfalls.
  2. Talent Acquisition:  Like many states, Wisconsin faces the challenge of talent migration. Although the state boasts several top-notch educational institutions, retaining young professionals can take time and effort. Startups must be more creative and competitive in their recruitment strategies to attract and keep top talent.

Regulatory Factors and Taxes in Wisconsin

Understanding the tax landscape in Wisconsin is pivotal for entrepreneurs looking to establish or grow their businesses. One of the primary taxes businesses should be aware of is the state corporate income tax. Wisconsin has a corporate income tax rate of 7.9%, which applies to both C and S corporations. However, it’s worth noting that while C corporations pay this tax on their Wisconsin-generated income, S corporations pay it only if they exceed certain revenue thresholds.

Next on the list is the sales tax. Wisconsin has a state sales tax rate of 5%. However, counties have the option to levy an additional sales tax, commonly referred to as the county tax. This means that, depending on the location of your business within the state, the combined sales tax can range from 5% to as high as 5.6%.

Apart from these, Wisconsin also imposes a gross receipts tax on certain utility services, and businesses involved in these sectors need to be mindful of these specific tax obligations. While Wisconsin offers a favorable business climate, entrepreneurs must familiarize themselves with these tax rates and ensure compliance to foster smooth operations.

How do I Choose a Business Structure?

There are five primary types of businesses. Each type of business entity is described below.

Sole Proprietorship

A business owned and operated by one individual with no legal distinction between the business and the owner. The owner is personally responsible for all debts and liabilities of the business. Most small business owners in  Wisconsin use this business type.

Limited Liability Company (LLC)

A flexible business organization that combines the liability protection of a corporation with the tax benefits and simplicity of a partnership. Owners of an LLC are called members, and their assets are typically protected from the debts and liabilities of the business. You have the flexibility to define many aspects of how your business will work in your Articles of Organization.

S-Corporations

A type of corporation allows for pass-through taxation, meaning that profits and losses are passed through to the shareholders and reported on their tax returns. S-Corporations are limited to 100 shareholders and must meet specific eligibility requirements. An S-Corp can be particularly advantageous if the founders or investors have other income. If the business doesn’t generate a profit in any year, the shareholders can use the losses from a tax perspective.

C-Corporations

A separate legal entity from its owners (shareholders) means that the corporation can enter into contracts, own assets, and sue or be sued. C-Corporations are subject to double taxation, meaning that the corporation and the shareholders are taxed on profits.

A Note About S-Corps and C-Corps

For both S-Corporations and C-Corporations, your business formation documents will include Articles of Incorporation, sometimes called a Corporate Charter.  The specific requirements and format of Articles of Incorporation can vary by jurisdiction. It is advisable to consult with a business attorney or online legal service such as Legal Zoom to ensure compliance with local laws and regulations when drafting and filing these documents.

Limited Liability Partnership (LLP)

A partnership that limits the personal liability of its partners. LLPs are typically used by professional service providers such as lawyers, accountants, and architects. Each partner is protected from the other partners’ wrongful acts, omissions, and negligence, but they may still be personally liable for their actions.

Distribution of Businesses

Business Type Percent of Businesses in  Wisconsin
Sole Proprietorship 55-60%
Limited Liability Company (LLC) 20-25%
S-Corporation 8-10%
C-Corporation 3-5%
Limited Liability Partnership (LLP) 1-2%

The distribution of the resources varies depending on the industry and location within the state. To obtain the latest and most reliable information, it is advisable to consult a legal counselor or a local business specialist.

What is an Employer Identification Number – EIN?

Definition of an EIN or Employer Identification Number

An Employer Identification Number (EIN) is a unique identifier consisting of nine digits the Internal Revenue Service (IRS) assigns to businesses operating in the United States. This number is crucial for business owners as it simplifies tax administration and is also commonly referred to as the Federal Tax Identification Number or the Federal Employer Identification Number.

Do I Need One to Start a Business in Wisconsin?

Obtaining an EIN is essential to start a business in Wisconsin. This vital number is required when establishing a business entity, hiring employees, obtaining business licenses, or opening a business bank account in Wisconsin. Failure to obtain an EIN can result in significant financial penalties and legal ramifications.

How Do I Get One?

To secure an EIN, you can visit the IRS website and complete the application process online. This method is quick and convenient, providing you with the number immediately after completing the application. Alternatively, you can submit Form SS-4 to the IRS via mail or fax. If you need additional assistance or require more information, you can reach out to the IRS at 1-800-829-4933 or visit their website at  https://www.irs.gov/businesses/small-businesses-self-employed/employer-id-numbers . It is important to note that an EIN’s application process is free of charge.

How to Start a Business in Wisconsin – Important Registrations

State capitol of Wisconsin where programs for starting a business are administeredRegistering My Business Name

To give your business a solid foundation in Wisconsin, you must register your business name with the Department of Financial Institutions. This is a key step to legalizing your business in the state. Contact the department at (608) 261-9555 or visit their website at  https://www.wdfi.org/ .

Registering a DBA (Doing Business As) If Relevant

If your business functions under a different name, you’ll need to register a DBA or “Doing Business As” in Wisconsin. The state is divided into 72 counties, each with local rules. To gain insights into these country-specific regulations, visit Wisconsin’s official website at  https://www.wisconsin.gov .

Registering for Payroll, State Payroll Taxes, and Unemployment Insurance

When handling payroll taxes and unemployment insurance in Wisconsin, businesses should create an account with the Wisconsin Department of Workforce Development. Their contact details are  https://dwd.wisconsin.gov/ , or you can reach them by phone at (608) 266-3131.

Registering for Worker’s Compensation Insurance

In Wisconsin, it’s also essential for businesses to have worker’s compensation insurance. You can get this insurance through any authorized provider in the state.. If you use a  payroll service , they should also be able to provide worker’s comp.

Registering for Collecting Sales Tax

Registering for sales tax collection is a must if you’re doing business in Wisconsin. This can be done via the Wisconsin Department of Revenue’s website:  https://www.revenue.wi.gov/ . Contact them at (608) 266-2776 for further details.

Registering for Income Tax

Wisconsin does impose a state corporate income tax. As discussed earlier, the rate stands at 7.9%. For tax submission and payment information, you should visit the Department of Revenue’s website at  https://www.revenue.wi.gov/ .

Registering to Pay Property Tax

For specifics on property tax in Wisconsin, you’ll typically need to contact the local county’s tax office. You can find more information about Wisconsin’s property tax by visiting  https://www.revenue.wi.gov/Pages/PropertyTax/home.aspx

Permits for Starting a Business in Wisconsin

Do I Need a Business Permit to Operate a Business in  Wisconsin?

At the State Level:  Certain businesses require state-level permits or licenses to operate legally in Wisconsin. These can range from professional licenses (like for doctors or real estate agents) to specific business operation permits (like for a liquor store). The Wisconsin Department of Safety and Professional Services oversees many of these licenses and permits. It’s always recommended to check with this department to ascertain if your business requires a specific state. licensing. You can visit their website at  https://dsps.wi.gov/  or call them at (608) 266-2112 for more details.

Check With Your City:  Different cities within Wisconsin may have distinct permit or licensing requirements. For instance, if you plan to start a business in Madison, the local city hall or municipal building would be your go-to place to check for specific city business licenses or permits. Most cities will have an office or a department dedicated to issuing business licenses and permits. A quick visit to your city’s official website or a call to the city clerk’s office can clarify local requirements.

Check Federal Requirements.  On the federal level, certain industries or businesses, like those dealing with wildlife, firearms, alcohol, or aviation, need permits. The U.S. Small Business Administration (SBA) has resources for federal licensing requirements. It’s always a good idea to consult the SBA website at  https://www.sba.gov/  or contact them directly to ensure your business complies with federal regulations.

Check With Your County:  If your business in Wisconsin is involved in public health activities such as food service or waste disposal, it’s important to be aware of any specific permits or licenses required by your county. You can easily find out by contacting your local county clerk’s office or checking the official website of your county. Every county has its dedicated contact for this purpose. For example, for Dane County, you can visit  https://www.countyofdane.com/  for further information.

How do I learn about any special permits I need for my business?

When venturing into business, you must know if you need special permits. Beyond the general state, city, and county requirements, some companies may require additional permissions due to the nature of their operations. For example, those in agriculture or environmental sectors might need specific land use or environmental impact permissions. The University of Wisconsin Extension Service is a valuable resource in this context. They often provide insights and guidance on agricultural or environmental permits.

Trade associations and chambers of commerce specific to Wisconsin can also be valuable resources. Joining such organizations gives access to networking opportunities and offers guidance on specialized permits, industry trends, and regulations. The Wisconsin Chamber of Commerce, for example, provides support for various businesses in navigating their permit needs.

Lastly, consider engaging a local business attorney or consultant familiar with Wisconsin’s business landscape. Their expertise can help ensure you’re getting all the specialized permissions or licenses that could be pivotal to your business’s operations.

Financing Options for Entrepreneurs in Wisconsin

Many entrepreneurs might think of using personal assets or even maxing out credit cards when starting a new business. However, these methods can be risky, and you can only partially depend on them. Wisconsin offers a variety of financing options tailored to suit the needs of different business types.

Financing a New Business

Finding a reliable and credible funding source is paramount for any new business. Proper financial backing can propel a business to success, allowing it to navigate challenges and seize opportunities. Entrepreneurs can explore options such as grants or procuring investments from venture capitalists or angel investors. These sources can offer not just funds but invaluable mentorship and connections as well. Therefore, it’s paramount that businesses do their research diligently before settling on a funding source.

SBA Loans and Microloans

The Small Business Administration (SBA) assists small businesses by providing various loan programs. One of the significant offerings is the microloan program, which furnishes small companies and startups with short-term financial support. By availing microloans, businesses can access instant funds, giving them the necessary economic boost. For more details on the microloan program, visit  https://smallbusinessplans.com/sba-microloans-for-small-businessess-and-startups/ .

SBA Microlenders in Wisconsin

Below are some SBA microlenders specific to Wisconsin:

Wisconsin Women’s Business Initiative Corporation        

Michael Hetzel

1533 N. Rivercenter Drive

Milwaukee, WI 53212

414-395-4562

info@wwbic.com

First American Capital Corp.        

Craig Anderson

10710 West Scharles Avenue

Hales Corners, WI ,53130

414-604-2044

info@aiccw.org

http://www.faccloans.com

CAP Services, Inc        

Laura West

2900 Hoover Road, Suite A, Stevens Point, WI 54481

715-343-7100

info@capmail.org

Northwest Wisconsin Regional Planning Commission        

Jeff Dietrich

1400 S. River Street,

Spooner WI 54801

715-635-2197

info@nwrpc.com

http://nwrpc.com

Advocap, Inc        

Kathy Doyle

19 W. First Street, PO Box 1108

Fond du Lac    WI 54936

920-922-7760

While these entities offer microloans and operate within Wisconsin, their availability and services may change. It’s always recommended to contact them directly or consult the SBA for the most current list of approved microlenders in the region.

State and Local Grants and Incentives

Wisconsin is committed to nurturing its small business ecosystem. The state offers various grants and incentives at local and state levels to help businesses either kickstart their operations or expand them.

Wisconsin Economic Development Corporation (WEDC) : This entity provides multiple grant programs tailored for different business needs. More details can be found on their website  https://www.wedc.org/ .

Wisconsin Innovation Grants (WIG) : Startups and small businesses can significantly benefit from grants that foster innovation. For more information, please visit  https://wedc.org/programs-and-resources/workforce-innovation-grant/

Angel Investor Groups

Angel Investor Groups are individuals or a collective of individuals who provide capital for business startups, usually in exchange for convertible debt or ownership equity. Their importance is manifold: they offer financial support and bring knowledge, industry connections, and mentorship opportunities. Wisconsin boasts a vibrant angel investing scene.

For entrepreneurs in Wisconsin, groups such as the Wisconsin Angel Network (WAN) can be an invaluable resource. WAN acts as a hub, connecting new businesses with potential angel investors. Another notable group is the Badger State Angels, which has played a pivotal role in many Wisconsin startups’ success stories. Connecting with these groups can give businesses the financial foundation they need and potentially open doors to industry insights and networking opportunities. New businesses can also attend angel investor meetups or seminars in Wisconsin to network and pitch their ideas directly.

Benefits of a Well-Structured Business Plan

Starting a business in the picturesque state of Wisconsin, with its flourishing industries ranging from dairy farming to manufacturing, requires more than just a good idea; it calls for a well-structured business plan. Such a plan is pivotal to navigating the state’s unique business landscape and tapping into its numerous opportunities. One of the immediate benefits of a thorough business plan is that it clarifies the local competition and market trends. Given the state’s competitive markets, like cheese production, craft brewing, and tourism, understanding the nuances can provide a significant edge.

Furthermore, Wisconsin offers numerous state-specific grants, loans, and business incentives. A well-detailed business plan can make accessing these resources smoother, as many funding organizations require a solid business strategy before they commit.

A comprehensive plan ensures entrepreneurs are better prepared to pitch their ventures to these institutions. Lastly, crafting a business plan involves setting measurable objectives and devising strategies. In the ever-evolving business landscape of Wisconsin, regular reviews and updates to the plan can ensure that the business remains adaptive and resilient. Entrepreneurs should consider seeking local expert advice, attending Wisconsin-focused business workshops, or using state-specific business planning tools to ensure their strategy is as robust as possible.

Meeting Lender and Investor Expectations

Meeting lender and investor expectations are vital for securing business funding. Lenders and investors are taking a risk on your business, so they need reassurances that their investment is worthwhile and the risk is manageable. This is particularly important in Wisconsin, which houses a dynamic blend of traditional and innovative businesses seeking financing.

Firstly, demonstrate a clear understanding of your business model, market, and how your product or service fits that market. Lenders and investors will want to see that you’ve done your homework, understand your competitors, and have a clear plan for reaching your target audience. Providing detailed and realistic financial projections is also crucial. This should include revenue forecasts, expense budgets, cash flow statements, and balance sheets. These elements of a business plan reveal your business’s profitability potential.

Secondly, exhibit your management team’s ability and commitment to the business. When deciding to invest, lenders and investors will often consider your management team’s experience and track record. Show that your team has the necessary skills and expertise to execute your business plan. Also, transparency is critical. Be open about potential risks and your strategies to mitigate them. Remember, trust is a critical component in any financial relationship. You can build lasting relationships to help your business grow and prosper in the long run by meeting and exceeding lender and investor expectations.

Where Can I Find a Mentor to Help Me Succeed?

Wisconsin’s rich entrepreneurial ecosystem makes it a thriving hub for business ideas. Yet, even the most innovative ventures can benefit from the guidance of seasoned mentors familiar with Wisconsin’s diverse industries. With their vast experience, these mentors can provide insightful advice, hands-on strategies, and essential knowledge tailored to Wisconsin’s business landscape.

Wisconsin has a dynamic array of organizations committed to bolstering the achievements of its entrepreneurs. Here are some standout options that entrepreneurs can explore:

Wisconsin SCORE:  A part of the broader SCORE initiative affiliated with the U.S. Small Business Administration (SBA), Wisconsin SCORE is renowned for offering free business mentoring, workshops at competitive rates, and a myriad of resources suited to businesses at all stages.

Phone: (414) 297-3942

Website:  https://www.score.org/sewisconsin

Wisconsin SBDC Network:  A cornerstone for budding and established businesses, the Wisconsin Small Business Development Centers (SBDC) offers many services, from crafting business plans to financial consultancy.

Phone: (608) 263-7680

Website:  https://wisconsinsbdc.org/

Wisconsin Women’s Business Initiative Corporation (WWBIC):  Catering especially to women entrepreneurs, WWBIC offers business education, tailored counseling, and networking opportunities designed to empower and guide.

Email:  info@wwbic.com

Website:  https://www.wwbic.com/

Gener8tor:  A key player in the entrepreneurial space, Gener8tor’s accelerator programs in Wisconsin foster innovation and catalyze business growth through unique mentorship opportunities and events.

Phone: (414) 502-8882 Website:

https://www.gener8tor.com/

Startup Wisconsin:  Championing Wisconsin’s spirited startup ecosystem, Startup Wisconsin bridges entrepreneurs to valuable learning avenues and helps them forge crucial business connections for continued success.

Email:  contact@startupwi.org

Website:  https://www.startupwi.org/

Harnessing these institutions’ expertise, Wisconsin entrepreneurs can acquire the vital understanding and mentorship necessary to chart a successful business trajectory in the state.

The Economy of Wisconsin

Wisconsin has a strong business and agriculture economyWhen starting a business in Wisconsin, being well-versed with the state’s economic indicators is crucial. The economy offers valuable insights into potential consumers’ purchasing behaviors and financial health, thus directly influencing a business’s possible success and challenges.

Economic Overview

Average Household Income

The median household income in Wisconsin is approximately $67,080. This figure places Wisconsin near the national average, indicating a substantial middle-class population. For businesses, this suggests a steady market with consistent purchasing power.

Average Level of Education

In Wisconsin, about 91.9% of individuals aged 25 and over have completed high school, and 21.5% hold a bachelor’s degree or higher. Such statistics indicate a well-educated population, providing businesses with a skilled workforce and a discerning consumer base.

Consumer Spending per Capita

Consumer spending per capita in Wisconsin is roughly $45,165. This metric underscores a healthy consumer market with the capability and willingness to spend, indicative of consumer confidence in the state’s economy.

To conclude, understanding Wisconsin’s economic parameters is essential for businesses. It offers insights into market dynamics, potential challenges, and opportunities, ensuring companies operate effectively within the state’s financial framework.

Top Industries in Wisconsin:

Wisconsin’s economy has been historically rooted in manufacturing, agriculture, and healthcare. Manufacturing, in particular, plays a central role. The state is known as America’s “Dairyland” due to its significant dairy production, which is especially renowned for cheese. Wisconsin leads the nation in cheese production, accounting for nearly 27% of the U.S.’s total output. This prominence in dairy extends to other areas of agriculture, with the state also being a significant producer of corn, cranberries, ginseng, and snap peas.

Manufacturing in Wisconsin goes beyond food processing. The state is strong in machinery manufacturing, paper products, and medical devices. Wisconsin’s manufacturing sector contributes to about 19% of the state’s gross domestic product, demonstrating its significance in the economy.

Healthcare is another major industry in Wisconsin. The state has a robust network of hospitals, clinics, and research institutions. Major institutions like the University of Wisconsin Hospital and Clinics in Madison serve as healthcare providers and significant employers in the region.

As for emerging industries, Wisconsin is seeing growth in the information technology and renewable energy sectors. Initiatives are underway to foster innovation in these areas, aiming to diversify Wisconsin’s economy and make it more resilient. Considering these developments, Wisconsin’s future outlook for business appears promising, with a blend of its rich industrial legacy and fresh sectors driving growth.

Network Your Way to Success When Starting a Business

Networking is a skill that most successful business owners have as one of their top talents. You can do it too! Networking is a great way to improve your success and grow your personal and business reputation. Here are a few ways to get started.

Identify Complementary Businesses:  Recognizing and forming partnerships with complementary companies can offer significant advantages in the dynamic business ecosystem. Such collaborations can lead to cross-promotion, where both businesses benefit from shared customer bases. For instance, a coffee shop might partner with a nearby bookstore, resulting in mutual referrals and joint marketing campaigns. These strategic alignments often lead to increased customer traffic, higher sales, and the fortification of both brands. .

Leverage Workforce Talent:   A company’s most valuable asset is its workforce. Harnessing employees’ unique skills, expertise, and perspectives can drive innovation and foster growth. By investing in continuous training and development programs, businesses enhance operational efficiency and boost employee morale and job satisfaction. Furthermore, by cultivating a culture of open communication, companies can tap into the collective intelligence of their teams, leading to improved problem-solving and innovative solutions.

Collaborate with Industry Leaders:  Engaging with industry leaders and key influencers provides businesses with invaluable insights and access to best practices. Such collaborations can manifest in various forms, from attending industry-specific seminars to forming strategic partnerships. By aligning with established leaders, emerging businesses can accelerate their learning curve, gain credibility in the market, and access a wider network of potential clients and partners. In the long run, these relationships can significantly impact a company’s trajectory, ensuring sustainable growth and success.

Workforce and Talent

For businesses, understanding workforce and talent demographics is crucial. This knowledge helps make decisions related to hiring, product development, and aligning with community needs.

Unemployment Rate

Wisconsin’s unemployment rate is approximately 2.4%. This low rate suggests a robust economy and more consumer spending. Yet, it also means businesses may find attracting and retaining employees challenging due to fewer people seeking jobs.

Minimum Wage

Wisconsin follows the federal minimum wage of $7.25 per hour. Businesses must be aware of this to ensure compliance and predict labor costs.

Average Age and Demographics

Wisconsin has a median age of around 40.1 years. The population consists of roughly 50.3% females and 49.7% males. This balanced distribution provides businesses with diverse age groups and gender preferences to cater to.

Breakdown of People with Various Levels of Education

Educational attainment among North Carolinians aged 25 and above is as follows:

  • Approximately 21% hold a bachelor’s degree or higher.
  • Around 91% have a high school education.
  • About 9% have no high school diploma.

Having insights into Wisconsin’s workforce and demographic details is invaluable for businesses. Awareness of these factors helps in decision-making, ensuring companies are in tune with the community’s needs.

Top Areas of Skilled Workers for Residents of Wisconsin

Wisconsin boasts a diverse talent pool, reflecting its rich industrial heritage and evolving economic landscape. Several sectors particularly stand out for their concentration of skilled workers.

Manufacturing:  A historical stronghold for Wisconsin, manufacturing remains a significant employer. While many think manufacturing jobs are purely factory-based, the reality is different. Skilled workers in this sector have opportunities in direct production and areas like quality assurance, product design, supply chain management, and even technological integration as modern factories increasingly adopt automation and Industry 4.0 principles.

Healthcare:  Wisconsin’s healthcare system is growing rapidly. Beyond the traditional roles of doctors and nurses, there’s a demand for medical technicians, healthcare administrators, and specialists in fields like senior care and telehealth services. As the state’s population ages, there’s an increasing need for professionals who can cater to the elderly and offer specialized care.

Information Technology:  Wisconsin is no exception to the global shift towards a digital economy. There are numerous opportunities for software developers, cybersecurity experts, and data analysts. The state’s businesses and governmental bodies need IT professionals to help modernize their operations, improve cybersecurity postures, and make sense of the vast amounts of data they collect.

Agriculture and Dairy:  Wisconsin is renowned as America’s Dairyland. While the state is known for its cheese production, there’s much more to its agricultural sector. Skilled workers can find opportunities in agritech, where technology meets traditional farming, in roles related to sustainable farming practices, supply chain optimization, and niche product development.

Education and Research:  Wisconsin’s educational institutions, from K-12 to its renowned universities, offer roles for educators, researchers, and administrative professionals. Especially at the university level, there’s a continuous demand for professionals who can lead research projects, develop educational curricula, and contribute to academic advancements.

While Wisconsin’s skilled workforce reflects its top industries, the opportunities within these sectors are vast and varied. Each area offers a blend of traditional roles and innovative positions that cater to the evolving needs of the 21st-century economy.

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