How to Form a C Corporation in Wisconsin
Introduction
Congratulations! You’ve taken the first step toward starting your own business and becoming a proud, tax-paying citizen of the world. Congratulations again! I mean that sincerely. Starting a business can be daunting, but it doesn’t have to be. And if you’re serious about going into business for yourself—and being successful at it—then you should know that having a corporate structure is not optional: It’s critical for protecting your personal assets from liability, shielding profits from taxes on both sides of the border and providing limited liability protection in case something goes wrong with your company or product.
Determine Your Business name.
Before you can register your business, you’ll need to choose a name for it. Make sure that the name is not already in use by another company by conducting a search with the Wisconsin Department of Financial Institutions. You can also check with your county clerk’s office.
You should keep your business name as short and easy to spell as possible. For example, “Smith & Associates” would be much better than “Smith Associates.”
You should also include “Limited Liability Company,” “Corporation” or some other form of organizational status in the name itself. This will help people know what type of company they are dealing with right away.
Choose a Registered Agent For Your Business.
Next, you’ll need to choose a registered agent for your business. This is an individual (or corporation) authorized to accept legal service on behalf of your company. The registered agent must have a physical address in Wisconsin and be available at that address during normal business hours.
File Articles of Incorporation with the Wisconsin Department of Financial Institutions.
The corporation and LLC are two of the most popular business structures in the United States.
The C Corporation Tax Structure:
- A C corporation is taxed at a corporate rate of $0 to $50,000 in taxable income and then at a flat rate of 9.8% on all income above that amount.
- The benefit of having this tax structure is that you can defer paying taxes on profits until they’re distributed to shareholders (usually as dividends). This lowers your initial tax burden because you don’t have to pay it out of pocket before receiving it from customers—you can use it for business expenses instead, so long as they have legitimate business purposes.
- If you have an S corporation, however, profits are automatically divided up among shareholders before taxes are applied—they don’t get deferred like in C corporations—which means that S-corporations usually only make sense if there aren’t many stockholders involved or if those shareholders each own less than 50 percent stake in the enterprise; otherwise what’s left after everyone gets their share would be too little for anyone to justify holding onto!
Prepare Corporate Bylaws.
Corporate bylaws are the rules that govern your business. They set out the structure of how you will operate, what happens if there is a change in ownership and how decisions can be made within your company.
The main purposes of corporate bylaws include:
- clarifying roles and responsibilities within an organization;
- identifying who will make major decisions (such as voting shareholders);
- specifying how to handle conflicts between members; and
- setting out other operational details, such as when meetings will be held or who has access to certain information.
Hold an Initial Board of Directors Meeting.
The initial board of directors meeting is held to elect the first members of your company’s board. The shareholders, who are also known as stockholders or simply shareholders, elect a majority of the board members. The remaining positions on the board can be appointed by you (the CEO) or other elected directors. Some companies choose to have all their directors serve on one committee called a nominating committee that handles all issues related to nominating new directors and removing existing ones from service.
It is important that you attend this initial meeting so that you can make sure everything goes smoothly and everyone understands what their responsibilities will be going forward. In addition to electing new directors, this meeting should also address other important issues such as:
- Hiring an employee who has been given temporary authority by corporate resolution until more permanent staffing arrangements have been made;
- Approving major capital expenditures like purchasing equipment for use by employees;
- Approving an annual budget for operations;
Issue Stock Certificates.
Stock certificates are an important part of the corporation’s history. They’re also a legal requirement and should be kept on file at all times in case of an audit or other issues with federal and state agencies.
The stock certificate shows who owns the company, how many shares they own, when they were issued, as well as other information about your corporation. You should keep these certificates in a secure place because they represent ownership stakes in your business.
Here is what you need to include on your stock certificates:
- Issued by Corporation (Name of Corporation)
- To: (Name)
- Date:
- Number of Shares Issued:
- Par Value per Share:
Get an Employer Identification Number for Tax Purposes.
An Employer Identification Number (EIN) is a tax identification number used to identify businesses, corporations, partnerships and sole proprietorships.
Your EIN is important because it allows you to file taxes as an independent business with the Internal Revenue Service (IRS). It also lets your corporation open a bank account without having to use its own personal information.
Before you apply for an EIN, make sure that you have filed your Articles of Incorporation with the Wisconsin Department of Financial Institutions (DFI).
File Annual Reports with the State.
Every corporation that is formed in Wisconsin must file an annual report with the state. The annual report can be filed online or by mail, and it’s due by March 15th of each following year. The annual report must include:
- The names and addresses of all directors, officers, managers and stockholders;
- A balance sheet showing the amount of assets owned by the corporation at the end of its last fiscal year;
- A profit-and-loss statement for that same period; and
- Any other information required by law.
Forming a C Corp in Wisconsin comes with many requirements, but it can be worth the benefits and protections that it offers your business and its owners.
The benefits of forming a C corporation are many. It is a separate tax entity, which means it has its own set of tax rules and regulations. This means that your business can be taxed at different rates than you as an individual, and you don’t have to pay taxes on the same things twice.
C corporations also provide liability protection for owners because they are legally separate entities from their owners or shareholders. If someone sues your business, they cannot sue you personally unless they can prove that you committed fraud or other illegal activities on behalf of your company (and even then, there are ways around this).
Another benefit of forming a C corp is the tax advantages it offers businesses that want to raise capital and go public in the future—being taxed separately from their owners allows them more flexibility when approaching investors who may not want to invest in unincorporated entities like LLCs or S Corps
Conclusion
The process of forming a C Corp in Wisconsin can be daunting at first, but it’s worth the benefits and protections that it offers your business and its owners. If you ask yourself any of the questions above, then you might just be ready to start!
