How to Form a Professional Corporation in Wisconsin


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Form a Professional Corporation in Wisconsin

Are you considering starting a professional corporation in Wisconsin? Congratulations! Establishing a professional corporation is an excellent choice for entrepreneurs and professionals alike who seek to benefit from a business structure that provides limited liability protection, tax advantages, and enhanced credibility. However, navigating the process of forming a professional corporation in Wisconsin can be daunting.

This article aims to provide a comprehensive guide on how to form a professional corporation in Wisconsin, covering everything from understanding the basics of this business entity to the essential steps and requirements you must comply with to launch your new venture successfully. Let’s dive in and explore the ins and outs of forming a professional corporation in Wisconsin!

What is a Professional Corporation in Wisconsin?

A professional service corporation (PSC), sometimes called a professional corporation (abbreviated as PC), is a type of organization authorized by state law to allow owners of particularly licensed professions in Wisconsin. The owner of a professional corporation is responsible for their own negligence or misconduct, but they are not held personally accountable for the actions of other owners. PC or P.C. is a regularly used abbreviation to identify professional corporations.

PCs and LLCs provide personal asset protection; that is, the personal assets are free from business debts. However, they do not have similar tax benefits. There is no secret formula as to which type of business structure is better than the other. It solely depends on the requirements of your business. However, forming an LLC is easier than setting up a PC in Wisconsin.

LLCBuddy Editorial Team

Unlike other types of corporations, owners of Professional Corporations get two types of citizenship. One is where they incorporated the corporation, and the other is where they conduct the business. This benefit is not available for other types of corporations. You can form a free LLC in Wisconsin if you hire a professional service that provides LLC formation at $0.

How to Form a Professional Corporation in Wisconsin

To form a Professional Corporation for the professional service you provide, you must follow a few steps that include verifying if you are qualified for a PC, naming your business, hiring a Registered Agent, filing the Articles of Incorporation, outlining an operating agreement, requesting for an EIN, opening a bank account, getting a business license, and filing for an annual report and taxes. 

Step 1: Verify If You Are Qualified for a Professional Corporation

In forming a professional corporation in Wisconsin, you should know if you are qualified. There are specific professions that are allowed to form a professional service corporation, including-

  • Doctors
  • Architects
  • Engineers
  • Accountants
  • Lawyers and others

You should be qualified to have a license to provide your service. In most cases, once you have graduated with your studies, passed the exam, and got your license, you may now form a professional corporation. However, if you work in an industry that doesn’t offer a license or professional certification, you should consider forming a corporation or limited liability company.

Step 2: Name your Professional Corporation in Wisconsin

After you have decided on the idea to form a professional corporation in Wisconsin, deciding the name for your corporation is significant. There is a complete guide on  Wisconsin LLC name guidelines for you to have a proper business name. Here are some regulations you must follow while naming your professional corporation.

  • The business name should have the word PC, frequently followed by the name of the principal owner in place of Inc or LLC. (Example. John Doe, MD, PC)
  • No confusion with a government entity name.
  • A unique name is needed with no match
  • Limit of restricted words that need a license. 

In Wisconsin, if you do not wish to file your professional corporation right away but want to hold the name that you have decided on, then you can reserve your corporation name for 120 days. To keep the name, you must file a name reservation application with Wisconsin Secretary of State

A professional corporation, professional association, service corporation, or professional service corporation must be present in the name if it doesn’t already. You might opt to register your business under a different legal name if your preferred name isn’t available.  Once you have chosen a name, you can submit an application for a DBA (doing business as). In this manner, you can choose any name you desire to run a clinic or law firm.

Step 3: Choose the Wisconsin Registered Agent

The next step in forming a professional corporation is hiring the Wisconsin Registered Agent, a person that accepts legal paperwork on behalf of your business. This person or business will receive important tax forms, legal documents, all notices of lawsuits, and other official government correspondence in Wisconsin. Forming a professional corporation for your service will be easier if you have Registered Agent in Wisconsin.

Alternatively, you can serve as your own Wisconsin Registered Agent if you have the time. However, you must stay compliant to avoid missing any important documents from Wisconsin.

Step 4: File the Articles of Incorporation in Wisconsin

After you hire a Wisconsin Registered Agent to form a professional corporation, the next step is to file the Wisconsin Articles of Incorporation. In writing the Articles of Incorporation, the business name, owner’s contact information, corporation address, and Registered Agent contact information should be written. You should also include the names of all co-owners. All owners have to prove they have the proper license to practice the specific profession they intend to. 

Filing the Articles of Incorporation in Wisconsin may be done with two methods, online and by mail. The Articles of Incorporation fee may vary from different states. However, in Wisconsin, it costs $100 for online and by mail filing. Create an account/Log in to the SOS site, get the e-form, fill it, and submit online. Or get the online PDF, fill it up and upload it back on the site. . For offline filing, Send the form by mail to State of WI – Dept. of Financial Institutions, P.O. Box 93348, Milwaukee, WI 53293.

Step 5: Write an Operating Agreement in Wisconsin

An operating agreement is a document that contains all of your company’s organizational details. It is not required to draft an operating agreement in most states. Yet, having one as an internal document is strongly advised. The Wisconsin operating agreement includes information like-

  1. About Business
  2. Members and management
  3. Capital contribution
  4. Profit Distribution
  5. Change of membership
  6. Dissolution

Step 6: Designate the PC Board of Directors in Wisconsin

The next step is to appoint the initial board of directors in your PC in Wisconsin. All the initial directors must submit their details to the owner. The owner must keep the records and submit them in accordance with the Wisconsin SOS. When writing the By-laws, as a shareholder and owner, you must make sure there is a point mentioned about appointing a new director later. 

Step 7: Write the Corporate Bylaws

Now that you are done forming the team of the board of directors, the next step is to draft corporate bylaws. Corporate bylaws are the basic rules that control a corporation. It includes the organization’s structure, processes, laws, and rules. As a result, all personnel, managers, and corporation members must obey the firm’s rules. 

In creating corporate bylaws, you should include the following on how the decisions will be made.

  • The responsibilities are given to each officer.
  • How will judgments in business be made?
  • Where and when are the annual shareholder meetings?
  • The minimum number of shareholders required for decision-making.
  • Location and timing of dividend payments.

Step 8: Hold the First Board of Directors’ Meeting

After drafting the corporate bylaws, gather all the board of directors for the first meeting. This meeting will be finalized by appointing directors to manage the company’s daily operations, approve the bylaws, choose the corporation’s accounting year, and approve the stock issue. All board meetings should have minutes taken and stored with the company’s records.

Step 9: Request an EIN in Wisconsin

After documenting the operating agreement, you should get or request an Employer Identification Number (EIN). An EIN will serve as the tax ID for your professional corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website. 

The application of an EIN in Wisconsin can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that the Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is 4 weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN number, you can benefit in a number of ways. It will give your professional corporation the final advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 10: Open a Bank Account and Prepare for Taxes

Once you have filed and received your Employer Identification Number, you should open a bank account since you will use this account for yourself, your clients, and your employees. 

Your business dealings in Wisconsin  might be simpler by having a US business bank account because it boosts your company’s legitimacy and liquidity. For firms other than sole proprietorships, most banks demand an EIN to create a business bank account. Also, keeping separate finances helps you avoid combining personal and professional finances. Also, having an EIN makes tax preparation easier. With a professional corporation, you can anticipate paying employment and corporate taxes.

Step 11: Get a Business License in Wisconsin

Before your professional corporation operates in Wisconsin, you need to have a business license first. A business license is a formal document issued by the state government agency that allows you to operate your business in the geographic region that that agency governs. In Wisconsin, business license and permit costs depend on the business’s nature and type. You must check with the local authorities if any special licenses or city-based permits are needed. 

Step 12: File Your Taxes in Wisconsin

Finally, you are down to the last step. After getting a business license and being ready to operate, do not forget to file your taxes first. You should start paying taxes quarterly as soon as possible to avoid a large tax bill. Each state has different tax requirements. Go through the Wisconsin classification of taxes for the taxes an LLC in Wisconsin has to pay. 

Important Information

Maintaining Professional and Business License in Wisconsin

Now that you have established your professional corporation, you must maintain or renew your professional license every now and then. Even if your business is established but you don’t have a valid license to operate, your business is irrelevant. And, even if your professional license is still valid for a year or two, but your business license is already expired, it is still irrelevant. 

Make time to check the status of your licenses at least once per year. Then, you can keep from missing anything significant. If there are any issues, you can address them.

Filing an Annual Report in Wisconsin

In Wisconsin, you will be required to submit a report each year. The owners’ and Registered Agent’s names and contact details are listed in the annual report. Also, it should include all of your yearly financial activity. You must submit one yearly in Wisconsin, and you can do it yourself or hire someone else to handle it. Everything must be precise and up to date.

Advantages of Forming a Professional Corporation in Wisconsin

A professional corporation takes a lot of time to process and pursue. However, with the help of the Wisconsin Registered Agent, everything will become easier. In fact, there are advantages that will help you form a professional corporation in Wisconsin. 

  1. Limited Liability: The biggest advantage of setting up a professional corporation is that the owners are not held personally responsible for the debts and obligations of the company. This indicates that only the company’s assets will be confiscated to settle claims and creditors if the business is sued or declares bankruptcy. Additionally, this protection exempts corporate owners from being held accountable for other owners’ reckless or criminally negligent acts.
  1. Tax Deductions: Similar company expenses, such as employee fringe benefits, startup and operating costs, and equipment purchases, can be written off by professional companies in the same ways they can be for other kinds of firms. However, there are several tax deductions professional corporations can take advantage of that other types of businesses can’t. For example, the salaries and bonuses paid to owners and employees are tax-deductible.
  1. Retained Earnings: Professional corporations can keep a portion of their profits under the corporate tax system to grow their companies.

FAQs

What is a Professional Corporation in Wisconsin?
A Professional Corporation in Wisconsin is a form of business entity that is used for professional services such as accounting, architecture, engineering, and law.
How do I form a Professional Corporation in Wisconsin?
To form a Professional Corporation in Wisconsin, you need to file Articles of Incorporation with the Wisconsin Department of Financial Institutions and pay the filing fee. You will also need to register the business with the Wisconsin Department of Revenue.
What documents do I need to form a Professional Corporation in Wisconsin?
You will need to submit Articles of Incorporation and pay the filing fee to form a Professional Corporation in Wisconsin. You may also need to register the business with the Wisconsin Department of Revenue.
What is the filing fee to form a Professional Corporation in Wisconsin?
The filing fee to form a Professional Corporation in Wisconsin is $100.
What are the legal requirements for a Professional Corporation in Wisconsin?
A Professional Corporation in Wisconsin must have at least one director and three shareholders. It must also have a registered agent in the state and maintain a registered office in Wisconsin.
Can I be the sole shareholder of a Professional Corporation in Wisconsin?
Yes, you can be the sole shareholder of a Professional Corporation in Wisconsin. However, you must still have at least one director and you must register the business with the Wisconsin Department of Revenue.
What are the tax implications of forming a Professional Corporation in Wisconsin?
A Professional Corporation in Wisconsin is subject to federal and state income tax. The tax rate can vary depending on the type of services provided and the income generated.
Does a Professional Corporation in Wisconsin need to file an annual report?
Yes, a Professional Corporation in Wisconsin must file an annual report with the Wisconsin Department of Financial Institutions.
How do I dissolve a Professional Corporation in Wisconsin?
To dissolve a Professional Corporation in Wisconsin, you must file Articles of Dissolution with the Wisconsin Department of Financial Institutions and pay the filing fee.
What is the filing fee to dissolve a Professional Corporation in Wisconsin?
The filing fee to dissolve a Professional Corporation in Wisconsin is $25.
Are there any legal restrictions on the name of a Professional Corporation in Wisconsin?
Yes, a Professional Corporation in Wisconsin must have a name that clearly identifies it as a professional corporation and must not be too similar to the name of another business.
What are the reporting requirements for a Professional Corporation in Wisconsin?
A Professional Corporation in Wisconsin must file an annual report with the Wisconsin Department of Financial Institutions and may need to register with the Wisconsin Department of Revenue depending on the type of services it provides.
Does a Professional Corporation in Wisconsin need to keep corporate records?
Yes, a Professional Corporation in Wisconsin must keep corporate records such as meeting minutes, shareholder agreements, and financial statements.
Does a Professional Corporation in Wisconsin need to hold annual shareholder meetings?
Yes, a Professional Corporation in Wisconsin must hold annual shareholder meetings.
Does a Professional Corporation in Wisconsin need to have a board of directors?
Yes, a Professional Corporation in Wisconsin must have at least one director.
Does a Professional Corporation in Wisconsin need to have a registered agent?
Yes, a Professional Corporation in Wisconsin must have a registered agent in the state.
Does a Professional Corporation in Wisconsin need to have a registered office?
Yes, a Professional Corporation in Wisconsin must have a registered office in the state.
Does a Professional Corporation in Wisconsin need to file tax returns?
Yes, a Professional Corporation in Wisconsin must file federal and state income tax returns.
Does a Professional Corporation in Wisconsin need to issue stock certificates?
Yes, a Professional Corporation in Wisconsin must issue stock certificates to its shareholders.
Are there any restrictions on who can be a shareholder of a Professional Corporation in Wisconsin?
Yes, a Professional Corporation in Wisconsin must have at least three shareholders and cannot have more than one hundred shareholders.
Are there any restrictions on who can be a director of a Professional Corporation in Wisconsin?
Yes, a Professional Corporation in Wisconsin must have at least one director that is either a shareholder or an employee of the corporation.
What is the liability of shareholders in a Professional Corporation in Wisconsin?
The shareholders of a Professional Corporation in Wisconsin are not liable for the debts and obligations of the corporation.
What is the liability of directors in a Professional Corporation in Wisconsin?
The directors of a Professional Corporation in Wisconsin are not liable for the debts and obligations of the corporation except in cases of fraud or gross negligence.
Can a Professional Corporation in Wisconsin issue stock options?
Yes, a Professional Corporation in Wisconsin can issue stock options to its shareholders.
Can a Professional Corporation in Wisconsin issue debt securities?
Yes, a Professional Corporation in Wisconsin can issue debt securities such as bonds.
Can a Professional Corporation in Wisconsin issue preferred stock?
Yes, a Professional Corporation in Wisconsin can issue preferred stock to its shareholders.
Is a Professional Corporation in Wisconsin subject to double taxation?
No, a Professional Corporation in Wisconsin is not subject to double taxation.
What is a professional corporation in Wisconsin?
A professional corporation in Wisconsin is a business entity that is formed by licensed professionals, such as attorneys, doctors, and accountants. The purpose of forming a professional corporation is to provide professional services through a legal entity that offers limited liability protection for the owners.
What are the benefits of forming a professional corporation in Wisconsin?
The benefits of forming a professional corporation in Wisconsin include limited liability protection for the owners, separate legal entity status, and tax benefits such as the ability to deduct business expenses.
What are the requirements for forming a professional corporation in Wisconsin?
To form a professional corporation in Wisconsin, you must file Articles of Incorporation with the Wisconsin Department of Financial Institutions. Additionally, you must also appoint an initial board of directors, issue shares of stock, and draft corporate by-laws.
What is the filing fee for incorporating a professional corporation in Wisconsin?
The filing fee for incorporating a professional corporation in Wisconsin is $100.
What documents must be filed with the state to operate a professional corporation in Wisconsin?
To operate a professional corporation in Wisconsin, you must file an annual report and pay the annual franchise tax to the Wisconsin Department of Financial Institutions. Additionally, you must also maintain corporate records and hold annual meetings of the shareholders and directors.
What taxes does a professional corporation in Wisconsin need to pay?
A professional corporation in Wisconsin must pay federal, state, and local taxes, including income taxes, franchise taxes, and payroll taxes. Additionally, the corporation may also be liable for property taxes and sales taxes.
Is there an additional fee for renewing a professional corporation in Wisconsin?
Yes, there is an additional fee of $10 for renewing a professional corporation in Wisconsin.

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Conclusion

In forming a professional corporation in Wisconsin, having someone to help you build it is not necessary but suggestible. Even though it is easy because of the listed benefits and advantages above, forming your group of professional individuals will make it somehow successful. Just make sure to be guided by the steps and ensure that every one of the details and records is accurate and precise. And if you have any questions, share them in the comment section below.


About Author & Editorial Staff

Steve Goldstein, founder of LLCBuddy, is a specialist in corporate formations, dedicated to guiding entrepreneurs and small business owners through the LLC process. LLCBuddy provides a wealth of streamlined resources such as guides, articles, and FAQs, making LLC establishment seamless. The diligent editorial staff makes sure content is accurate, up-to-date information on topics like state-specific requirements, registered agents, and compliance. Steve's enthusiasm for entrepreneurship makes LLCBuddy an essential and trustworthy resource for launching and running an LLC.

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