Wisconsin LLC Taxes

As a Wisconsin limited liability company (LLC) owner, you need to be aware of the different tax obligations that apply to your business at the state and local levels. Depending on how your LLC is classified for tax purposes, you may have to file different forms and pay different rates of taxes. 

This article will explain the basics of Wisconsin LLC taxes and guide you through the steps of filing them correctly.

Recommended: Schedule a free consultation with 1-800Accountant to stay on top of your taxes. 

How Is an LLC Taxed in Wisconsin?

Taxation in Wisconsin isn’t applied in the same way to all LLCs – instead, it varies depending on a number of factors, such as an LLC’s nature, locality, and tax election.

While LLCs typically benefit from pass-through taxation by default, they can elect to be taxed as one of the following:

• C Corporations: The LLC is treated as a separate entity to its owners, paying corporate income tax rates on its total profit while the owners also pay personal income taxes on any distributions they take.
• S Corporations: In return for paying owners a “reasonable salary,” the LLC’s remaining profits are distributed among members without a need to pay FICA or self-employment taxes on them.

The following sections go into the various tax responsibilities of your LLC at local, state, and federal levels in Wisconsin to help you ensure your LLC navigates them effectively.

Wisconsin Local Taxes

Below is a list of tax types that may be imposed by your city or county government:

Sales and Use Taxes

If you’re selling goods or services in Wisconsin or selling to Wisconsin customers, you may also be subject to a local sales/use tax, which is levied by certain counties and stadium districts. The local tax rate cannot exceed 0.6%, and the total combined rate of state and local taxes cannot be higher than 5.5%.

In Wisconsin, there are two types of local entities that can impose these taxes:

• Counties
• Stadium districts 

That being said, the City of Milwaukee will impose a new 2% sales and use tax starting on January 1, 2024. Milwaukee County's sales and use tax will also increase from 0.5% to 0.9%​​.

Other types of local entities, like cities or towns outside of these specific exceptions, do not impose their own separate sales and use taxes in Wisconsin.

Note: You can access the Wisconsin State and Local Sales Tax Rate Look-Up tool on the Wisconsin Department of Revenue website to determine the state, county, and city sales and use tax rates applicable to a specific location. 

Exemptions

To figure out your Wisconsin LLC's local sales and use tax, you may consider these guidelines: 

• Local Sales Tax: Based on where the sale happens, often at your LLC business location. Note that if you deliver the product to the buyer, you will use their location to determine the sales tax. 
• Local Use Tax: Based on where the item is actually used or stored – usually at the buyer's location. If it’s used in a different county that has a different local tax, then that area's tax rate applies.

Wisconsin has various types of sales and purchases that are exempt from the Wisconsin sales and use tax, such as food and food ingredients, prescription drugs and certain medical devices, burial caskets and urns, modular and manufactured homes, farming, and more. 

To know more about these exemptions and if they apply to your business, see the Wisconsin Sales and Use Tax Information publication from the Wisconsin Department of Revenue.

Property Tax

There is no statewide property tax in Wisconsin. Property taxes are collected on a county level, from as low as 0.47% in Menominee County to as high as 2.86% in Sawyer County​. Each county in Wisconsin has its own method of assessing and collecting taxes. 

To learn more about how your local area handles property tax, you should contact one of the following in your county:

• Treasurer or Tax Collector, who is responsible for collecting and distributing property taxes, issuing tax bills and receipts, and maintaining tax records. 
• Assessor, who is responsible for valuing and classifying property, conducting assessments, and reviewing appeals.

Note: To help you find the relevant contact information, you can use the county officials directory provided by the Wisconsin Counties Association. You can also search for the tax records of any property in Wisconsin using the County Office website. Alternatively, you can download a PDF document that lists the contact information of all the municipal assessors in Wisconsin.

Recommended Service: Schedule a free consultation with 1-800Accountant to ensure your business remains legally compliant.

Wisconsin State Taxes

Every state has its own regulations and rules that dictate how it taxes individuals and businesses. Below is a list of the most relevant state-level taxes for LLCs in Wisconsin. 

Franchise Taxes

In Wisconsin, LLCs are generally not subject to the corporate franchise tax unless they choose to be taxed as a corporation. Typically, an LLC is treated as a pass-through entity for tax purposes, meaning that the income is taxed on the individual tax returns of the members or owners rather than at the corporate level.

However, if your LLC elects to be treated as a corporation for tax purposes, it would then be subject to the same franchise tax requirements as corporations. This includes the flat 7.9% tax rate and, if applicable, the economic development surcharge for corporations with $4,000,000 or more in gross receipts. In addition, you have to file a Wisconsin corporate franchise tax return and pay the annual report fee of $25.

Note: If your LLC retains the default tax classification as a pass-through entity, your key tax obligations lie in personal income tax and potentially other state-specific taxes or fees rather than corporate franchise tax.

Sales-Related Taxes

Sales-related taxes in Wisconsin are taxes that apply to the sale, lease, or rental of tangible personal property or taxable services in the state. 

The state sales tax rate in Wisconsin is 5.0%. This means that for every $100 of taxable sales, the seller must collect and remit $5 to the Wisconsin Department of Revenue. If you are starting a new business in Wisconsin, you may also need to apply for a seller’s permit with the Wisconsin Department of Revenue, depending on the type and amount of sales you make. 

A seller’s permit (also called a sales tax permit, a sales tax number, or a sales tax registration) is required for every business making retail sales, leases, or rentals of taxable products in Wisconsin unless all sales are exempt from sales or use tax. Some examples of exempt sales are groceries, prescription drugs, newspapers, magazines, and educational services.

Your seller’s permit allows you to collect and remit sales tax to the state. You can apply for a seller’s permit online through the Wisconsin One Stop Business Portal. This permit is valid for two years and will be renewed automatically unless you inform the Department of Revenue that you are no longer in business. 

Note: The seller’s permit is different from a business license, which is an official authorization to conduct a business in Wisconsin. For example, if you are forming an LLC in Wisconsin, you need to register your entity with the Department of Financial Institutions, which is a separate agency from the Department of Revenue. 

Transportation Taxes

Wisconsin imposes several types of transportation taxes and fees. Here are some key transportation-related taxes and fees in the state:

• Heavy Vehicle Use Tax (HVUT): Intrastate carriers in Wisconsin must file IRS HVUT Form 2290 with the IRS and provide proof of HVUT payment when renewing their heavy vehicle registration with the Wisconsin Department of Transportation (WisDOT)​.
• Fuel Taxes and Vehicle Registration Fees: The primary revenue sources for Wisconsin's transportation fund are fuel taxes and vehicle registration fees. These fees are necessary for the maintenance and development of the state's transportation infrastructure​. 
• State Excise, Sales, and Environmental Taxes and Fees on Motor Fuel: These taxes and fees are levied on motor fuel and are a part of the costs associated with operating a vehicle in Wisconsin. WisDOT provides tools for motorists to calculate these taxes and fees for different vehicle models.

Note: You can find a full list of Wisconsin state tax rates on the Wisconsin Department of Revenue's website. 

Federal Taxes

Regardless of where your business is located, if you run an LLC in the US, there are a number of federal taxes you’ll need to pay. Below are some of the main types your LLC may be required to pay for federal tax purposes:

Income Tax

By default, the IRS will not treat single- and multi-member LLCs as separate entities from you for tax purposes. What this means is that you’ll need to report your share of your LLC’s profits on your individual tax returns and pay federal income tax on them at the personal rate of your tax bracket.

Having said that, keep in mind that LLCs can also elect to be taxed as C corps or S corps, which changes how these taxes are levied in different ways.

Self-Employment Tax

In addition to income tax, members of single- and multi-member LLCs will need to pay self-employment tax on the share of the business’s profits that they report on their personal tax return at the end of the year.

This tax is levied at a flat rate of 15.3% against businesses with net earnings that exceed $400, though it is applied slightly differently to LLCs that have elected to be taxed as S corps or C corps.

Employment Tax

If your LLC hires any employees, it will need to withhold a portion of their salaries to cover various types of taxes on your employees’ behalf – including Social Security, Medicare (FICA), and payroll taxes.

Furthermore, the members of any LLCs that have elected to be taxed as an S corp will be required to pay employment taxes on their salaries. However, in return for this, the remainder of the business’s profit after these salaries have been distributed will be safe from both self-employment and FICA taxes. 

Excise Tax

If your LLC engages in certain types of business (such as the sale of alcohol and tobacco or operating a heavy highway vehicle, among others), it may need to pay federal excise taxes in order to do so legally. Each excise tax comes with its own set of rules, rates, and filing obligations you’ll need to be aware of.

Understanding and fulfilling these federal tax obligations is crucial for keeping your LLC compliant and avoiding unnecessary financial penalties and/or fines.

How to File LLC Taxes in Wisconsin

Below, we’ve outlined the general process an LLC in Wisconsin will need to follow in order to file their tax return correctly. Note that the specificities of each step will vary slightly depending on how your LLC is organized and the specific locality it’s based in. 

Step 1: Gather Your Documentation

To ensure accurate tax filing, thorough record-keeping is essential. Begin by collecting your personal information, including:

• You and your partner’s Social Security number, date of birth, and residential address
• The previous year’s tax returns
• Your LLC’s Employer Identification Number (EIN)

Then, you’ll need to gather all documentation related to your business’s income, such as:

• Invoices you’ve issued
• Sales transaction logs
• Electronic payment reports from services like PayPal or Stripe

Lastly, assemble all records pertaining to your business expenses, which should cover:

• Lease receipts for your business premises
• Bills for utilities
• Records of office supplies purchases
• Documentation of business-related travel
• Payroll records for employees

Note: Depending on how your LLC is organized and its tax election, you may need different information for your tax return. 

Step 2: Find The Right Tax Forms

Once you've gathered all necessary documents, the next step is to select the correct tax forms for your LLC based on its organization:

• Single-Member LLCs: The business’s total income and expenses are reported on a Schedule C form, which is attached to the owner’s personal tax return and due by April 15 or the following business day if it lands on a weekend or holiday.
• Multi-Member LLCs: File an information return using Form 1065. Members must fill out a Schedule K-1 showing their individual earnings or losses by March 15 or the next business day.
• C Corporations: File a corporate tax return using Form 1120 by the April 15 deadline or on the next business day if it's a weekend or holiday.
• S Corporations: Use Form 1120-S for the corporate tax return and distribute Schedule K-1 forms to shareholders for reporting their shares of profits or losses. The deadline for filing taxes using 1120-S is March 15 or the following business day.

Since state and local taxes will have their own individual forms and requirements, we recommend contacting your municipality or hiring an accountant for guidance.

With the appropriate documentation gathered and the correct tax forms for your business entity on hand, you’ll be ready to fill them out and submit them.

Step 3: File Your Taxes

The majority of businesses choose electronic filing for its speed, enhanced security, and reliability compared to paper filing, which can be slower and more prone to errors. Here’s how it works:

• Federal Tax Returns: The IRS provides two electronic services for tax submission: Free File for businesses with an AGI below $72,000 and Free Fillable Forms for those above the threshold.
• State Tax Returns: For state-level taxes, such as corporate franchise taxes and state sales taxes, you will need to file your taxes to the Wisconsin Department of Revenue’s e-file system. 
• Local Tax Returns: For local taxes, such as property taxes or local business license fees, you will need to file your taxes at the county treasurer’s office where your LLC operates.

Note: These electronic filing tools are best suited for those who are already confident in handling their LLC taxes as if filling out a paper form. 

For new business owners, we recommend opting for the expertise of a tax professional in order to ensure both accuracy and compliance in your tax filings. 

Recommended: Schedule a free consultation with 1-800Accountant to stay on top of your taxes. 

Keep Your Wisconsin LLC Compliant

While LLCs are generally easier to maintain than corporations, there are certain state and local formalities your LLC must satisfy in order to remain compliant. 

Wisconsin LLC Annual Report

The Wisconsin LLC annual report (also called the Annual Report for Nonstock or Limited Liability Company or Form 5) is a document that LLCs registered in Wisconsin must file every year with the Wisconsin Department of Financial Institutions (DFI) to update or confirm their information (e.g., name and address of the LLC, the name and address of the registered agent, the names and addresses of the managers or members, etc.). 

The annual report is due by the end of the calendar quarter in which the anniversary date of the LLC’s formation falls. For example, if your LLC was formed on June 15, 2023, your annual report is due by September 30, 2024. You can file this report online through the Wisconsin One Stop Business Portal or the DFI Business Entity File Online website. 

The filing fee for the annual report is $25. 

Licensure and Tax Requirements

In Wisconsin, almost all businesses are required to obtain various licenses and permits at the local, state, and federal levels. Below, we’ve broken down three of the most common types your LLC may need:

• Sales Tax Licenses: If your LLC plans to sell products to consumers in Wisconsin, you may need to collect sales tax and have a sales tax permit. This is referred to as a Wisconsin seller’s permit. You can apply for this permit using the e-file system.
• Professional Licenses: If your LLC plans to engage in certain occupations or activities that are regulated by the state or local authorities, you may need to obtain a professional license or permit. For example, some businesses that need a professional license in Wisconsin are accountants, contractors, insurance agents, and real estate professionals. You can use the One Stop Business Portal to find out what licenses and permits you need for your LLC.
• Environmental Permits: If your LLC discharges water, air, or hazardous substances into the environment, you may need to comply with the environmental regulations and obtain a permit from the Department of Natural Resources. You can use the Permit Primer to learn more about the environmental requirements for your LLC.

Note: Find out what additional licenses and permits you need for your business based on your industry and location by using the One Stop Business Portal.

Wisconsin LLC Taxes FAQs