The first step for starting a business in Wisconsin is having a good business idea. Maybe you already have an idea picked out, or maybe you are still deciding on one. Regardless, you can check out our library of business ideas to get detailed industry information, trends, costs to start, tips, and lots more.

Of course, any business idea should be thoroughly researched and planned before making any significant investments, but here are a few things to consider when doing your research.

Understand Your Passion and Strengths: Choose a business idea that aligns with what you’re passionate about and where your strengths lie. Running a business requires commitment and hard work, and staying motivated is easier if you genuinely enjoy what you’re doing.

Analyze the Market: Research your intended market thoroughly. Identify the existing businesses in the area you plan to serve, and look for gaps or underserved niches. Who are your potential customers? What are their needs and wants?

Identify Competitive Advantage: Determine what will set your business apart from existing businesses. This could be a unique product or service, a different business model, or superior customer service.

There is no guaranteed formula for success. It takes a combination of a sound business idea, hard work, determination, and a bit of luck. However, with careful planning and consideration, you can increase your chances of success.

Starting a business in requires careful planning and preparation. A comprehensive business plan is essential to ensure the success of your venture. A business plan serves as a roadmap and can help you identify potential risks, set goals, and develop strategies for achieving them.

Several studies have shown that businesses with a written plan are more likely to succeed than those without one. According to the Small Business Administration (SBA), businesses with a written plan are twice as likely to achieve their goals than those without one. The SBA also found that businesses with plans grow faster than those without plans and are more likely to secure financing from banks or other sources.

Related: How to write a business plan

The next step to starting a business in Wisconsin is selecting a business entity.

The business entity is sometimes referred to as a business structure or legal entity, which refers to how a business is legally organized. There are four primary business entities: sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). A brief description of each is below.

A Sole Proprietorship is an individual that decides to go into business. This is the easiest and least expensive of the four entities to set up as there is no state filing. The ease of startup is a big selling point; however, a major downside to the sole proprietorship is that the owner is personally responsible for all debts and actions of the company. If the business is sued, the owner’s personal assets are potentially at risk. Another potential downside is that the owner will pay self-employment tax on all business profits and may be more costly than some other entities.

Related: What is a sole proprietorship?

General Partnerships consist of two or more people conducting a business together. Like the sole proprietorship, there is no formal state filing. Also, like the sole proprietorship, the general partnership has unlimited liability. If the partnership were to be sued, the partner’s personal assets are equally at risk. The partnership itself does not pay tax from business income. Instead, profits and losses are passed through to the owner’s personal tax return. This income is subject to self-employment tax.

Related: What is a partnership?

A Corporation is a business structure that is a separate entity from the individual. While corporations are more expensive and difficult to form than sole proprietorships and partnerships, the major advantage is that the corporation provides personal asset protection for the owners should the corporation be sued. The downside is the compliance requirements and administrative burdens of having a board of directors, annual meetings for directors and shareholders, taking minutes at the meetings, appointing a registered agent, and more.

Related: How to form a Wisconsin corporation

The Limited Liability Company (LLC) is a popular business entity choice because it provides the liability protection of a corporation with the sole proprietorship’s ease of operation. The Limited Liability Company does not have many of the corporation’s burdens and has the greatest tax flexibility of the four entities. Income can be taxed as a pass-through entity like the sole proprietor, partnership, or corporation.

Related: How to form an Wisconsin LLC

Starting a business in Wisconsin involves several key steps related to licenses, permits, and registrations. Here are the main ones you may need to consider:

Business Licenses: The state of Wisconsin doesn’t have a general business license; however, many cities require a business license to operate.

Employer Identification Number (EIN): Most businesses will need to obtain an EIN from the U.S. Internal Revenue Service (IRS). This is essentially a social security number for your business and is needed for tax purposes. You can apply for an EIN directly from the IRS website. There’s no fee to apply, and the process can be completed online.

Seller’s Permit: Businesses selling products, leases, rentals, and certain services will need to register for a Seller’s Permit with the Wisconsin Department of Revenue.

Professional Licensing: Depending on the nature of your business, you may need to obtain professional licenses. Some occupations, such as barbers, home inspectors, interior designers, and manicurists, require licensing in Wisconsin. While this isn’t a license on the business, licensing is required to operate. Most licenses are issued by either the Wisconsin Department of Revenue, the Wisconsin Department of Natural Resources, and the Wisconsin Department of Health Services.

Related: What business licenses and permits are needed in Wisconsin?

Keeping your business and personal finances in separate bank and credit card accounts makes it easier to track the business’s income and expenses. Every bank is different, but in general, they will request:

Sole proprietorship & partnership – Trade Name Certificate, EIN or SSN, and the owner(s) driver’s license
Corporation – Articles of Incorporation, bylaws, Certificate of Good Standing, EIN, and the owner(s) driver’s license
LLC – Articles of Organization, Operating Agreement, Certificate of Good Standing, EIN, and the owner(s) driver’s license

There are various funding options available to entrepreneurs in the state, each with its own advantages and limitations. Let’s explore some of the most common funding options for new companies in Wisconsin:

Personal Funds: Many entrepreneurs start by using their personal savings, credit cards, or borrowing from friends and family. This is often the most accessible and straightforward funding source, as it doesn’t require a lengthy approval process or collateral.

Pros:
– Fast and easy access to funds.
– No need for external approval or credit checks.
– Maintains full control and ownership of the business.
Cons:
– Difficulty obtaining financing: If you use all of your personal funds to start your business, you may have difficulty obtaining financing in the future.

Conventional Bank Loans: Traditional banks offer various loan products for small businesses, such as term loans, lines of credit, and equipment financing. These loans typically require a solid credit history, collateral, and a detailed business plan.

Pros:
– Potentially lower interest rates compared to other funding sources.
– Builds credit history for future borrowing.
Cons:
– Often requires collateral and a strong credit history.
– Lengthy approval process.

SBA Loan Guarantees: The U.S. Small Business Administration (SBA) provides loan guarantee programs, such as the 7(a) Loan Program and the 504 Loan Program, which can help small businesses secure loans from participating lenders. These programs reduce the risk for lenders, making it more likely for small businesses to receive funding.

Pros:
– Increased likelihood of loan approval, even with mediocre personal credit.
– Lower down payments and longer repayment terms.
– Access to larger loan amounts.

Cons:
– Lengthy and complex application process.
– Strict eligibility requirements.

Microloan Programs: Microloan programs, such as those offered by the SBA or local non-profit organizations, such as the Wisconsin Women’s Business Initiative Corporation (WWBIC) and KIva, provide small, short-term loans to small businesses that may not qualify for traditional bank loans. These loans are typically used for working capital, inventory, or equipment purchases.

Pros:
– Easier qualification process compared to traditional bank loans.
– Small loan amounts suitable for businesses with modest funding needs.
– May offer training and technical assistance.
Cons:
– Limited funding potential.
– Higher interest rates compared to conventional loans.

Investors: Small businesses can also seek funding from investors, such as angel investors or venture capitalists. These investors typically provide capital in exchange for equity in the company or a percentage of future profits.

Pros:
– Access to large amounts of capital.
– Valuable mentorship and industry connections.
– No repayment obligations like loans.
Cons:
– Loss of control and ownership in the business.
– Pressure to deliver high returns on investment.
– Lengthy and competitive process to secure funding.

In conclusion, there are various funding options available to a new business in Wisconsin. Each option has its pros and cons, and the right choice will depend on your specific business needs, credit history, and risk tolerance.

Related: Understanding the different types of business funding

Hiring employees is a complex and often overwhelming process for a new Wisconsin business owner. There are multiple agencies to register with, such as the Department of Revenue, the Department of Workforce Development, and others.

Employers are responsible for reporting new hires, verifying employees are eligible to work in the U.S., income tax withholding, unemployment insurance, unemployment taxes, and payroll withholding taxes, including Social Security and Medicare.

Related: Steps to hiring your first employee in Wisconsin

While some entrepreneurs believe insurance represents additional costs, proper planning can save time, money, and peace of mind down the road. Business ownership inherently entails taking calculated risks. However, unforeseen events, such as accidents, natural disasters, legal disputes, or health emergencies, can significantly harm not only the business, but the owner’s personal finances.

Related: Types of insurance your business may need

Setting up an accounting system for your business is one of the most important things you can do for your company to ensure long-term success. A few of these reasons include:

Financial Analysis and Management: Proper bookkeeping provides accurate financial information about your business, allowing you to make informed decisions. It helps you understand your revenue streams, manage your cash flow, and monitor your financial health.

Budgeting and Planning: Accurate records of income and expenses are key to creating forecasts and budgets. This helps you plan for future expenses, growth opportunities, or potential challenges.

Accurate Tax Filings: Accurate records are essential for preparing tax returns. Incomplete or inaccurate tax filings can lead to penalties, fines, or increased scrutiny from tax authorities.

Sales Tax Collection: If your business sells goods or services subject to sales tax, you need to track these transactions accurately to report and remit the correct amount to the state of Wisconsin.

Payroll Records: If you have employees, you need to keep accurate payroll records for tax purposes and to comply with labor laws.

At the end of the day, good accounting practices require consistency, time, and knowledge. If you don’t have the time or expertise to manage your own books, it’s often beneficial to hire a professional accountant or bookkeeper. They can help ensure your records are accurate, up-to-date, and ready for tax time.

Related: Setting up accounting for a business