Setting Up a Business Partnership in Wisconsin
Forming a business partnership in Wisconsin requires careful planning and compliance with state-specific regulations. Partners must file registration documents with the Wisconsin Department of Financial Institutions, obtain necessary licenses, and create a comprehensive partnership agreement that outlines rights, responsibilities, and profit-sharing arrangements.
Without a written partnership agreement, your business will default to Wisconsin's Uniform Partnership Act provisions, which may not align with your specific business needs or intentions. Taking time to properly establish your partnership structure now can prevent costly disputes and legal complications in the future.
Key Considerations
Scenarios
Decisions
Scenarios
Decisions
Scenarios
Decisions
Relevant Documents
Buy-Sell Agreement
A contract that outlines what happens to a partner's share of the business if they die, become disabled, retire, or wish to sell their interest in the partnership.
Partnership Agreement
A comprehensive contract that outlines the rights, responsibilities, and obligations of all partners, including profit sharing, decision-making authority, capital contributions, dispute resolution, and dissolution procedures.
Partnership Capital Contribution Agreement
A document that specifies the initial and ongoing capital contributions of each partner, including cash, property, services, or other assets.
Partnership Operating Procedures
An internal document that details day-to-day operations, management responsibilities, and standard procedures for the partnership business.
Relevant Laws
Wisconsin Uniform Partnership Act (Chapter 178)
This is the primary law governing partnerships in Wisconsin. It covers formation, operation, and dissolution of partnerships, as well as the rights and responsibilities of partners. Understanding this act is essential when setting up a partnership in Wisconsin as it establishes the legal framework for your business structure.
Wisconsin Business Name Registration (§ 178.0902)
When forming a partnership in Wisconsin, you must register your business name with the Wisconsin Department of Financial Institutions if you're operating under a name other than the partners' surnames. This law protects your business name and ensures compliance with state requirements.
Wisconsin Tax Registration Requirements (§ 73.03)
Partnerships in Wisconsin must register with the Wisconsin Department of Revenue for state tax purposes. This includes obtaining a seller's permit if selling taxable goods and registering for employer withholding if hiring employees. Compliance with tax registration is mandatory for legally operating your partnership.
Wisconsin Partnership Filing Requirements (§ 178.0121)
This law outlines the filing requirements for partnerships in Wisconsin, including the filing of a statement of partnership authority. While general partnerships aren't required to file formation documents, this statement can be beneficial as it establishes the authority of partners to bind the partnership.
Wisconsin Partnership Agreement Requirements
While not statutorily required, Wisconsin law strongly recommends creating a written partnership agreement. This document outlines the rights and responsibilities of each partner, profit and loss allocation, decision-making processes, and dissolution procedures. Without a written agreement, the default provisions of the Wisconsin Uniform Partnership Act will apply.
Regional Variances
Major Metropolitan Areas
Milwaukee County has additional business registration requirements for partnerships. Partnerships operating in Milwaukee County must register with the Milwaukee County Clerk's Office in addition to state filings. The county also has specific zoning regulations that may affect certain types of business partnerships, particularly those in retail, food service, or manufacturing.
Madison has enhanced sustainability requirements for new business partnerships. Partnerships may need to complete a sustainability plan when applying for certain local permits. Additionally, Madison offers special incentives for technology and green-focused partnerships through the Madison Development Corporation, including potential tax benefits not available elsewhere in Wisconsin.
Rural Counties
Many northern Wisconsin counties (including Bayfield, Ashland, and Vilas) offer rural enterprise zone incentives for partnerships establishing businesses in these areas. These may include reduced filing fees, expedited permitting, and potential property tax abatements. However, these counties may have stricter environmental regulations for partnerships involved in tourism, forestry, or lakefront development.
In predominantly agricultural counties like Grant and Lafayette, partnerships focused on agricultural production or processing may qualify for special agricultural enterprise designations. These designations can provide liability protections and tax benefits beyond standard partnerships, but require additional documentation of agricultural activities and may involve annual reporting requirements.
Tribal Jurisdictions
Partnerships operating on or with tribal nations in Wisconsin (such as the Menominee, Oneida, or Ho-Chunk Nations) must navigate both state and tribal regulations. These partnerships may need separate tribal business licenses and may be subject to tribal taxes and employment laws. However, certain partnerships with tribal members may qualify for federal contracting preferences and specialized financing options.
Suggested Compliance Checklist
Research Partnership Types in Wisconsin
1 days after startingWisconsin recognizes several types of partnerships including general partnerships, limited partnerships (LP), and limited liability partnerships (LLP). Research which structure best suits your business needs based on liability protection, tax considerations, and management preferences. General partnerships offer simplicity but unlimited liability, while LLPs provide liability protection but have additional filing requirements.
Draft Partnership Agreement
14 days after startingCreate a comprehensive partnership agreement that outlines ownership percentages, capital contributions, profit and loss allocations, management responsibilities, dispute resolution procedures, and exit strategies. While not legally required in Wisconsin, a written agreement is essential to prevent misunderstandings and protect all partners' interests. Consult with a business attorney to ensure your agreement addresses all necessary legal considerations.
Draft Partnership Capital Contribution Agreement
14 days after startingCreate a document detailing each partner's initial and ongoing capital contributions, including cash, property, services, or other assets. Specify the valuation method for non-cash contributions, timing of contributions, and consequences for failure to contribute as agreed. This agreement may be incorporated into your main partnership agreement or exist as a separate document.
Register Business Name
21 days after startingCheck name availability through the Wisconsin Department of Financial Institutions (DFI). If using a name other than the partners' surnames, file a Fictitious Business Name Statement (also called 'doing business as' or DBA) with your county register of deeds. Name registration is valid for 10 years in Wisconsin and must be renewed before expiration.
File Certificate of Partnership (for LPs or LLPs)
21 days after startingIf forming a limited partnership or limited liability partnership, file the appropriate registration documents with the Wisconsin Department of Financial Institutions. General partnerships are not required to register with the state but may choose to file a Statement of Partnership Authority. LLPs must file an annual report with the DFI to maintain their status.
Apply for Employer Identification Number (EIN)
28 days after startingApply for an EIN from the Internal Revenue Service (IRS), even if you don't plan to have employees. The EIN is required for tax filings, opening business bank accounts, and hiring employees. Apply online through the IRS website for immediate processing or by mail using Form SS-4.
Open Business Bank Account
35 days after startingOpen a separate business bank account using your EIN and partnership documentation. Prepare a Business Bank Account Resolution authorizing specific partners to conduct banking activities. Maintaining separate business finances is crucial for proper accounting and tax purposes, and helps establish the partnership as a distinct entity.
Obtain Required Business Licenses
42 days after startingResearch and obtain all necessary business licenses and permits at the state, county, and municipal levels. Requirements vary based on your business type and location in Wisconsin. Start with the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) or Department of Safety and Professional Services (DSPS) depending on your industry.
Register for State Tax Accounts
42 days after startingRegister with the Wisconsin Department of Revenue for applicable state taxes, including sales tax, withholding tax (if you'll have employees), and unemployment insurance tax. If your business will sell taxable goods or services, apply for a Wisconsin Seller's Permit (sales tax permit).
Draft Buy-Sell Agreement
56 days after startingCreate a buy-sell agreement that outlines what happens to a partner's ownership interest in case of death, disability, retirement, or voluntary departure. Include valuation methods, payment terms, and funding mechanisms (such as life insurance). This agreement is crucial for business continuity and preventing unwanted third parties from becoming partners.
Establish Partnership Operating Procedures
63 days after startingDocument day-to-day operational procedures, including meeting schedules, voting procedures, record-keeping requirements, and partner responsibilities. While not legally required, clear operating procedures help prevent disputes and ensure compliance with Wisconsin partnership laws. Include procedures for maintaining required partnership records and filing annual reports if applicable.
Set Up Accounting and Tax Procedures
70 days after startingEstablish accounting procedures that comply with Wisconsin tax requirements. Partnerships must file Form 1065 (federal) and Form 3 (Wisconsin) partnership returns annually, though the partnership itself doesn't pay income tax. Instead, partners report their share of profits/losses on their personal tax returns. Consider consulting with a CPA familiar with Wisconsin partnership taxation.
Obtain Insurance Coverage
77 days after startingResearch and obtain appropriate business insurance, which may include general liability, professional liability, property, business interruption, and workers' compensation (if you have employees). Wisconsin requires workers' compensation insurance for partnerships with employees. Consider partner life and disability insurance to fund the buy-sell agreement.
Comply with Employment Laws (if applicable)
84 days after startingIf hiring employees, ensure compliance with Wisconsin employment laws regarding minimum wage, overtime, workplace safety, and anti-discrimination. Register with the Wisconsin Department of Workforce Development for unemployment insurance and new hire reporting. Federal requirements include I-9 verification and tax withholding.
Schedule Regular Compliance Reviews
90 days after startingEstablish a schedule for regular reviews of your partnership's compliance with Wisconsin laws and regulations. Include license renewals, tax filing deadlines, annual report requirements (for LLPs), and updates to partnership documents as needed. Consider working with a business attorney for annual legal checkups.
| Task | Description | Document | Days after starting |
|---|---|---|---|
| Research Partnership Types in Wisconsin | Wisconsin recognizes several types of partnerships including general partnerships, limited partnerships (LP), and limited liability partnerships (LLP). Research which structure best suits your business needs based on liability protection, tax considerations, and management preferences. General partnerships offer simplicity but unlimited liability, while LLPs provide liability protection but have additional filing requirements. | - | 1 |
| Draft Partnership Agreement | Create a comprehensive partnership agreement that outlines ownership percentages, capital contributions, profit and loss allocations, management responsibilities, dispute resolution procedures, and exit strategies. While not legally required in Wisconsin, a written agreement is essential to prevent misunderstandings and protect all partners' interests. Consult with a business attorney to ensure your agreement addresses all necessary legal considerations. | Partnership Agreement | 14 |
| Draft Partnership Capital Contribution Agreement | Create a document detailing each partner's initial and ongoing capital contributions, including cash, property, services, or other assets. Specify the valuation method for non-cash contributions, timing of contributions, and consequences for failure to contribute as agreed. This agreement may be incorporated into your main partnership agreement or exist as a separate document. | Partnership Capital Contribution Agreement | 14 |
| Register Business Name | Check name availability through the Wisconsin Department of Financial Institutions (DFI). If using a name other than the partners' surnames, file a Fictitious Business Name Statement (also called 'doing business as' or DBA) with your county register of deeds. Name registration is valid for 10 years in Wisconsin and must be renewed before expiration. | Fictitious Business Name Statement | 21 |
| File Certificate of Partnership (for LPs or LLPs) | If forming a limited partnership or limited liability partnership, file the appropriate registration documents with the Wisconsin Department of Financial Institutions. General partnerships are not required to register with the state but may choose to file a Statement of Partnership Authority. LLPs must file an annual report with the DFI to maintain their status. | Certificate of Partnership | 21 |
| Apply for Employer Identification Number (EIN) | Apply for an EIN from the Internal Revenue Service (IRS), even if you don't plan to have employees. The EIN is required for tax filings, opening business bank accounts, and hiring employees. Apply online through the IRS website for immediate processing or by mail using Form SS-4. | Employer Identification Number (EIN) Application | 28 |
| Open Business Bank Account | Open a separate business bank account using your EIN and partnership documentation. Prepare a Business Bank Account Resolution authorizing specific partners to conduct banking activities. Maintaining separate business finances is crucial for proper accounting and tax purposes, and helps establish the partnership as a distinct entity. | Business Bank Account Resolution | 35 |
| Obtain Required Business Licenses | Research and obtain all necessary business licenses and permits at the state, county, and municipal levels. Requirements vary based on your business type and location in Wisconsin. Start with the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) or Department of Safety and Professional Services (DSPS) depending on your industry. | Business License Application | 42 |
| Register for State Tax Accounts | Register with the Wisconsin Department of Revenue for applicable state taxes, including sales tax, withholding tax (if you'll have employees), and unemployment insurance tax. If your business will sell taxable goods or services, apply for a Wisconsin Seller's Permit (sales tax permit). | Sales Tax Permit Application | 42 |
| Draft Buy-Sell Agreement | Create a buy-sell agreement that outlines what happens to a partner's ownership interest in case of death, disability, retirement, or voluntary departure. Include valuation methods, payment terms, and funding mechanisms (such as life insurance). This agreement is crucial for business continuity and preventing unwanted third parties from becoming partners. | Buy-Sell Agreement | 56 |
| Establish Partnership Operating Procedures | Document day-to-day operational procedures, including meeting schedules, voting procedures, record-keeping requirements, and partner responsibilities. While not legally required, clear operating procedures help prevent disputes and ensure compliance with Wisconsin partnership laws. Include procedures for maintaining required partnership records and filing annual reports if applicable. | Partnership Operating Procedures | 63 |
| Set Up Accounting and Tax Procedures | Establish accounting procedures that comply with Wisconsin tax requirements. Partnerships must file Form 1065 (federal) and Form 3 (Wisconsin) partnership returns annually, though the partnership itself doesn't pay income tax. Instead, partners report their share of profits/losses on their personal tax returns. Consider consulting with a CPA familiar with Wisconsin partnership taxation. | - | 70 |
| Obtain Insurance Coverage | Research and obtain appropriate business insurance, which may include general liability, professional liability, property, business interruption, and workers' compensation (if you have employees). Wisconsin requires workers' compensation insurance for partnerships with employees. Consider partner life and disability insurance to fund the buy-sell agreement. | - | 77 |
| Comply with Employment Laws (if applicable) | If hiring employees, ensure compliance with Wisconsin employment laws regarding minimum wage, overtime, workplace safety, and anti-discrimination. Register with the Wisconsin Department of Workforce Development for unemployment insurance and new hire reporting. Federal requirements include I-9 verification and tax withholding. | - | 84 |
| Schedule Regular Compliance Reviews | Establish a schedule for regular reviews of your partnership's compliance with Wisconsin laws and regulations. Include license renewals, tax filing deadlines, annual report requirements (for LLPs), and updates to partnership documents as needed. Consider working with a business attorney for annual legal checkups. | - | 90 |
Frequently Asked Questions
Wisconsin recognizes several types of partnerships: General Partnerships (GPs), Limited Partnerships (LPs), and Limited Liability Partnerships (LLPs). General Partnerships are the simplest form where all partners share management and liability. Limited Partnerships have general partners who manage the business and limited partners who are investors with limited liability. Limited Liability Partnerships provide liability protection for all partners while allowing them to participate in management.
It depends on the type of partnership. General Partnerships are not required to register with the state, though they may need to register a business name (DBA) with the county clerk. Limited Partnerships and Limited Liability Partnerships must register with the Wisconsin Department of Financial Institutions by filing the appropriate formation documents and paying the required fees.
Wisconsin law does not legally require a written partnership agreement, but it is strongly recommended. Without a written agreement, your partnership will be governed by the default rules in the Wisconsin Uniform Partnership Act, which may not align with your intentions. A written agreement allows you to customize important aspects like profit sharing, decision-making authority, dispute resolution, and exit strategies.
Partnerships in Wisconsin are generally considered 'pass-through' entities for tax purposes. This means the partnership itself doesn't pay income taxes; instead, profits and losses 'pass through' to the individual partners who report them on their personal tax returns. Partnerships must file an information return with both the IRS (Form 1065) and Wisconsin Department of Revenue (Form 3). Partners may also be subject to self-employment taxes and may need to make quarterly estimated tax payments.
In a General Partnership, all partners have unlimited personal liability for the partnership's debts and obligations. This means your personal assets could be at risk. In a Limited Partnership, general partners have unlimited liability while limited partners' liability is restricted to their investment. In a Limited Liability Partnership, partners are protected from personal liability for the partnership's debts and the negligence of other partners, though they remain liable for their own negligence and the partnership's contractual obligations.
To dissolve a partnership in Wisconsin, follow these steps: 1) Review your partnership agreement for dissolution procedures; 2) Vote on dissolution according to your agreement or state law; 3) Notify all creditors, customers, and relevant parties; 4) Wind up business affairs, including paying debts and distributing remaining assets; 5) File a Statement of Dissolution with the Wisconsin Department of Financial Institutions (required for LPs and LLPs); and 6) File final tax returns. Consider consulting with an attorney to ensure proper dissolution.
Yes, Wisconsin law allows partnerships to convert to other business entities such as LLCs or corporations. This process, known as a statutory conversion, requires filing the appropriate forms with the Wisconsin Department of Financial Institutions and paying the required fees. The conversion must be approved according to your partnership agreement and may have significant tax implications. It's advisable to consult with both a business attorney and tax professional before proceeding with a conversion.
Ongoing compliance requirements vary by partnership type. General Partnerships have minimal requirements beyond tax filings. Limited Partnerships and Limited Liability Partnerships must file annual reports with the Wisconsin Department of Financial Institutions and pay the annual report fee (currently $25). All partnerships must maintain accurate financial records, file appropriate tax returns, renew any business licenses or permits, and update registration information if there are significant changes to the partnership structure or registered agent.