Although taxes can be unpleasant, paying taxes is an important part of running a business.
This article will get you started with the basics of Wisconsin LLC tax filing requirements, such as federal income tax, Wisconsin income tax, and employer taxes.
What taxes does a Limited Liability Company pay in Wisconsin?
After you start a Wisconsin LLC (Wisconsin Limited Liability Company), there are two main types of ongoing obligations: filing an Annual Report with the state, and filing taxes.
On this page, we discuss the federal and state tax requirements for your Limited Liability Company.
Each Wisconsin LLC has a unique tax situation. This lesson provides you with general resources and an overview of the rules.
Tip: We recommend hiring an accountant to ensure your LLC meets all of its tax obligations.
Get an EIN Number for your LLC
We recommend getting an EIN Number for your LLC. An EIN is also called a Federal Tax Identification Number. They mean the same thing.
Not only will an EIN number be used to open an LLC bank account, but it will also be used for filing taxes with the local, state, and federal governments.
LLC pass-through taxation (who pays the taxes?)
By default, LLCs don’t pay taxes. Instead, the LLC Members are responsible for reporting the income (or losses) on their personal 1040 tax return. The Members pay taxes on any LLC profits. This is because of LLC pass-through taxation.
How are LLCs taxed in Wisconsin?
By default, a Wisconsin LLC is taxed by the Internal Revenue Service (IRS) based on the number of Members the LLC has. Then the Wisconsin Department of Revenue honors this and taxes your LLC the same way at the state level.
An LLC with 1 owner (Single-Member LLC) is taxed like a Sole Proprietorship.
An LLC with 2 or more owners (Multi-Member LLC) is taxed like a Partnership.
The above are referred to as the “default status“. Meaning, they are automatically applied based on the number of LLC Members.
Alternatively, you have the option of requesting an “elective status” for your LLC. This is done by filing an extra form with the IRS. Once granted, this elective status means the IRS will treat your LLC as a Corporation (either an S-Corporation or C-Corporation) for tax purposes.
Note: Your Wisconsin LLC Operating Agreement should also include information about how your LLC is taxed.
Federal Income Taxes
There are several different options for how the IRS can treat your LLC for tax purposes.
Single-Member LLC taxes (default status)
The IRS treats all Single-Member LLCs as Disregarded Entities for tax purposes. This just means that the IRS doesn’t expect the LLC to file its own federal income tax return. Instead, the owner of the Single-Member LLC files the return (and pays the federal income taxes).
How the LLC pays federal taxes is determined by who owns the LLC:
- If the LLC is owned by an individual, the LLC is taxed like a Sole Proprietorship.
- If the LLC is owned by another company, the LLC is taxed as a branch/division of the parent company.
Multi-Member LLC taxes (default status)
If an LLC has two or more owners, the LLC is taxed like a Partnership.
The LLC needs to file a 1065 Partnership Return and issue a Schedule K-1 to the LLC owners. The K-1s report each owner’s distributive share of profits. And the K-1 income “flows through” to the owners. The income taxes are then paid by each owner on their personal income tax return (Form 1040).
Husband and Wife LLC taxes
In community property states like Wisconsin, a husband and wife LLC has the option to file taxes as a Single-Member LLC (aka Qualified Joint Venture) instead of a Multi-Member LLC.
On your EIN Application, you can choose to have your husband and wife Wisconsin LLC taxed as a Qualified Joint Venture. If you already have an EIN for your LLC, you can send a letter to the IRS requesting that your LLC be taxed as a Qualified Joint Venture.
Otherwise, a husband and wife Wisconsin LLC will be taxed in the default status as a Partnership.
Electing to have your LLC taxed as a Corporation
Instead of the default statuses above, a Limited Liability Company (LLC) can be taxed like a Corporation. We recommend speaking with an accountant before making a corporate election.
There are two types of corporate elections:
LLC taxed as an S-Corporation (elective status)
By filing Form 2553 with the IRS, your LLC can request to be taxed like an S-Corporation.
Being taxed as an S-Corp can help businesses (with established profits) save money on self-employment taxes.
Tip: There are additional expenses to having your LLC taxed as an S-Corporation. Most new business owners shouldn’t make this tax election until their business is established and revenue is consistent. Once there is at least $70,000 in annual net income per LLC Member, we recommend speaking to your accountant about this option.
LLC taxed as an C-Corporation (elective status)
By filing Form 8832 with the IRS, your LLC can request to be taxed like a C-Corporation.
Being taxed as a C-Corp can help large employers save money on healthcare fringe benefits.
Note: This election is not common. Most of our readers don’t choose to have their LLC taxed as a C-Corporation.
Wisconsin State Income Tax for Wisconsin LLCs
Single-Member LLCs in Wisconsin: The LLC itself usually doesn’t file a state-level return. However, the owner files a personal state-level return that includes the LLC’s profits or losses.
Multi-Member LLCs in Wisconsin: The LLC itself may need to file a Partnership return at the state-level. And the owners file a personal state-level return that include the LLC’s profits or losses.
There are other types of Wisconsin business tax that apply to certain industries and types of businesses.
We recommend hiring an accountant to prepare and file your state income taxes.
You can also contact the Wisconsin Department of Revenue for more information about Wisconsin state taxes.
Local Income Tax for Wisconsin LLCs
You and/or your LLC may need to file and pay income taxes with your local municipality (town, city, county, etc.).
We recommend hiring an accountant to prepare and file your local income taxes.
You can also contact your municipality to check on their requirements.
Wisconsin Sales Tax
If you sell products to consumers in Wisconsin, you may need to collect sales tax and get a Seller’s Permit. You can get a Seller’s Permit from the Wisconsin Department of Revenue (DOR).
You can read more information about Wisconsin sales tax from these Wisconsin DOR resources:
- What Permits Does My Business Need?
- Wisconsin DOR: Use Tax Fact Sheet
- Wisconsin DOR: Sales and Use Tax FAQs
If you have any questions, you can contact the Wisconsin Department of Revenue at 608-266-2776.
Tip: Save time by hiring an expert. We recommend using TaxJar. They'll help you register for, collect, and pay sales tax.
Wisconsin LLC Tax – FAQs
Yes, you have to pay an annual LLC fee by filing a Wisconsin LLC Annual Report every year. This is separate from the federal, state, and local taxes that you pay.
The LLC Annual Report is filed with the Wisconsin Department of Financial Institutions. It is not a tax paid to the Wisconsin Department of Revenue.
The Annual Report for Wisconsin LLCs costs $25 per year. This is paid every year for the life of your LLC.
Wisconsin LLC Costs include:
$170 to form your Wisconsin LLC (to file your LLC Articles of Organization).
$25 in annual fees (to file your LLC Annual Report) for a Wisconsin LLC.
Maybe – it depends on what type of LLC you have.
Single-Member LLC taxed as a Sole Proprietorship: No. You only need to file your personal tax return (Federal Form 1040 and Wisconsin Form 1) and include your LLC profits on the return.
Multi-Member LLC taxed as a Partnership: Yes. Your LLC must file a IRS Form 1065 and a Wisconsin Partnership Return (Form 3).
LLC taxed as a Corporation: Yes. Your LLC must file tax returns with the IRS and the Wisconsin Department of Revenue. Check with your accountant to make sure you file all the correct documents.
You just need to look at your EIN Confirmation Letter (CP 575).
- If your EIN Confirmation Letter says “SOLE MBR” after your name, your LLC is taxed as a Sole Proprietorship.
- If your EIN Confirmation Letter says “MBR” after your name, your LLC is taxed as a Partnership.
If you don’t have your CP 575, you can call the IRS and request an EIN Verification Letter (147C). The 147C letter will also show “SOLE MBR” or “MBR”.
Exception: If your LLC is taxed as a Corporation, the CP 575 doesn’t tell the whole story. You – or your accountant – would have filed a form with the IRS to make the election. And the IRS would have sent you back an Approval Letter. That Approval Letter will confirm which corporate election your LLC made.
If you’re still unsure about how your LLC is taxed, we recommend calling your accountant or the IRS (1-800-829-4933). To speak to a live person at the IRS, press option 1, option 1 again, and then option 3.
Here are the steps to starting an LLC in Wisconsin:
- Choose an LLC name and make sure it’s available
- Choose who will be your Wisconsin Registered Agent
- File the Wisconsin LLC Articles of Organization
- Complete and sign an LLC Operating Agreement
- Get a Tax ID Number (EIN) from the IRS
- Open an LLC bank account
- Check whether you need a business or sales tax license in Wisconsin