A limited liability company (LLC) is a business structure in the U.S. that protects its owners from personal responsibility for its debts or liabilities. Limited liability companies are hybrid entities that combine the characteristics of a corporation with those of a partnership or sole proprietorship.
Different states have different state laws governing LLCs and the filing fees vary from state to state. In this video, Attorney Burton discusses the filing fees and process for organizing an LLC in the state of Wisconsin.
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Welcome back, I'm Attorney Thomas Burton and today's question is how much is the annual report fee for a Wisconsin LLC?
So an LLC is a limited liability company and here in Wisconsin, there's a fee for filing the LLC when you originally set it up and then every year, there's an annual report that's required to be filed, in order to maintain your LLC and stay active with the department of financial institutions.
So there's two fees we're talking about here and this one is the annual report fee. The initial fee to file an LLC is $130, if you file online in Wisconsin and then the annual report fee is currently, a very reasonable, $25 per year which you can file online on the anniversary date of forming your LLC. Generally, the department of financial institutions will send you a blue postcard, with your entity ID number, reminding you to file this report. So it's important that whatever you named as your registered office that you want the mail to get that postcard and file your annual report because without the annual report, you can be what they call administratively dissolved for not filing the annual report and paying the fee.
Let's take a quick look here at the fee schedule, we'll go to the Wisconsin department of financial institutions, filing fees and you'll see there what I just discussed about LLC filing fee, $130, if you do online, they charge you more to do it by paper. I recommend saving money, do it online but then here, this is the annual report, $25 for a Wisconsin LLC and if you're a foreign LLC, it's $80. That would mean an out of state an LLC formed in another state doing business in Wisconsin that's required to register but if you have a Wisconsin LLC, you're doing business here, you're going to need to file the annual report which is $25.
This is a good thing to think through as you're setting up your LLC, what are the annual costs and I talk on the channel about single member LLCs, if you're a single member LLC, you don't have to file a separate tax return as a district guided entity, you can file on schedule C for business to your personal tax return. That's another annual cost, not that there's a fee to file the tax return but usually, if you're a multi-member LLC, you'll prepare Form 1065 and there can be CPA fees, hiring someone to prepare this.
Think about the ongoing annual compliance costs and here in Wisconsin, they're relatively reasonable. Now just for an example, if we go over here to California, on the screen, they charge from what I can tell, I believe it's $70 to form the LLC but look at this, every year, there's an $800 annual tax. So that's why, sometimes you may hear, depending what state you're in, always check what state you're in and where you're forming the LLC on these fees before proceeding because other states, some of the higher tax states, have a much higher annual cost to an LLC and this is the annual tax, the $800 and then, it appears they also charge a fee, if you make more than $250,000, then you have these fee schedules, you pay as well.
Just be aware, this is your state in California, it's this franchise board and one other example, Wyoming which is often a very business friendly state, people choose to form their fee to file an LLC would be a $100 and then the annual fee is the exact same as Wisconsin, the annual report is a reasonable $25.
Wyoming is often the market leader on or I should say they're often considered the most friendly on this and so lots of people talk about maybe forming an LLC in Wyoming or Nevada as a very LLC friendly state but this is good to see that Wisconsin annual fee is the same as Wyoming, very reasonable and then just a little bit more on the filing $130 versus $100 but again, it's the annual fee you'll pay every year to keep the LLC going.
Back to Wisconsin, currently $25 annual report and we'll just go back on camera here for a moment to emphasize, I think this is a good question to think about your annual cost because with the sole proprietorship which is an entity that there is no entity, it's just you, the problem with the sole proprietorship is, if you die it dies with you whereas an LLC can have perpetual life and that's why it's one of the most popular form of business entities for small business but it's important to think about, will my annual costs increase by forming this entity and in most cases, for an LLC, it's very reasonable especially a single member LLC, especially here in Wisconsin. So that's where I'm talking about, where I form LLCs for clients here in Wisconsin but if you're watching this video and you're in another state, you think about the state you're in and you check on those fees before filing and then make sure, it makes sense in your situation.
Most of the time the asset protection and benefits of an LLC and the limited liability in my opinion, make sense to incur those small annual fees but of course, the choice is up to you as you evaluate your own situation.
Just to summarize, the annual report or annual compliance fee, annual report fee in Wisconsin is $25.
Great question and thank you for asking.
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