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Advantages of Incorporating a Business in Wisconsin

What makes “America’s Dairyland” one of the best places to grow or expand your business? A start-up company in Wisconsin can leverage several aspects of the pro-business environment, which includes favorable tax policies, rapid industry development, strong infrastructure, good connectivity with transportation hubs, availability of business funding, and skilled and dedicated workforce. The state is home to the top 6 start-up eco-systems in the country and Milwaukee, WI is considered as the numero-uno place for food entrepreneurs. The state has been built on the backbone of a strong agricultural tradition that has evolved and expanded over a period of time along with manufacturing, advanced machinery, biohealth, aerospace, and material sciences among others.

Business Growth Incentive for New Businesses

The gains are plenty if you register a new company in Wisconsin and these gains can vary from funding opportunities to deriving exemptions and credits on taxes. The various incentives available can be categorized under the following industries:

  • Agriculture
  • Arts
  • Construction & Housing
  • Green/Energy
  • Logging
  • Manufacturing
  • Printing & Advertising
  • Recreation
  • Retail & Services
  • Transportation
  • Others including Enterprise zones

Let’s take a quick look at the advantages of forming an LLC or a Corporation in Wisconsin.

Advantage#1: The benefits of Incorporation or LLC formation

Corporation

  • Credits for businesses: If you register a new business in Wisconsin as a business corporation then you can take advantage of several credit programs. These include 13 types of tax credits available for corporations that can be claimed against the corporate income as well as franchise tax. The different types of Corporate Non-Refundable Credits available to businesses include:
    – Manufacturer’s Sales Tax: The maximum credit amount available is $6,142,807
    – Manufacturing Investment: The maximum credit amount available is $22,170,938
    – Research Facility Credit: The maximum credit amount available is $23,331,973
    – Dairy and Livestock: The maximum credit amount available is $133,458,349
    – Development Zone: The maximum credit amount available is $10,214,549
    – Economic Development: The maximum credit amount available is $25,971,668
    – Historic Preservation: The maximum credit amount available is $3,628,623
    There are many more tax credits that a start-up companies in Wisconsin can leverage. These credits have been grouped into five general categories, which are:
    – Industry-specific credits,
    – Research credits,
    – Zone-based credits,
    – Credits for economic development,
    – Agricultural credits
  • No Income Tax: If you register a new business in Wisconsin as an S Corporation, you can benefit from the fact that there are no income taxes to be paid and an S corporation loss or income will be passed through to the stockholders. It is also important to know that there are a few exceptions though.

LLC

  • Flexible Profit Distribution: A start-up company in Wisconsin registered as an LLC has the benefit of being able to select different ways of distribution of profits unlike a partnership where the distribution is 50-50.
  • Sales and Use Tax Exemptions: Wisconsin provides a variety of exemptions targeting start-ups in specific industries like farming, construction, printing, manufactured home production, logging, and newspapers. Some of the most popular exemptions include:
    – Manufacturing Machinery and Equipment: A start-up company in Wisconsin can benefit from a comprehensive sales and use tax exemption especially when purchasing machinery and equipment to be used directly in a manufacturing process.
    – Manufacturers’ Materials: The state of Wisconsin will exempt businesses from sales and use tax on any tangible personal property that is consumed during the manufacturing process or loses its identity while in the process of manufacturing of tangible personal property.
    – Pollution Abatement, Waste Treatment, and Recycling Equipment: A business will be exempted from sales and use tax on waste treatment facilities and pollution abatement equipment. Businesses will also enjoy exemptions on any replacement parts, and supplies to be used for waste treatment and pollution abatement.

Advantage#2: Wisconsin Business Incentives

Once you register a new company in Wisconsin, there are several business incentives and programs that your company can benefit from. Let’s take a look at some of the most popular programs:

  • Wisconsin Enterprise Zones: If you register a new company in Wisconsin in the enterprise zone then there are several incentives that your business will benefit from including tax credits. The program has been implemented in the state by the regional economic development division of the Wisconsin Economic Development Corporation (WEDC). The primary objective of the Enterprise Zone (EZ) Program is to incentivize those projects that involve expansion of existing Wisconsin businesses or even relocation of business operations from other states to the EZ. Businesses can enjoy tax credits on several areas like job retention, job creation, employee training, capital investment, and supply chain investment. Know More
  • Development Opportunity Zone Tax Credit (DOZ): The primary aim of the Development Opportunity Zone (DOZ) Program is to incentivize new as well as expanding business in the cities of Janesville, Beloit, and Kenosha. The program has been implemented by the Wisconsin Economic Development Corporation (WEDC) and you will have to apply to the regional economic development director to avail the tax credits under this program. These Development OZ tax credits will be available to a start-up company in Wisconsin if they are involved in job creation, job retention, capital investment and environmental remediation within the mentioned opportunity zones. Know More

Are there any Disadvantages of Incorporating in Wisconsin?

If you register a new business in Wisconsin, you will be able to enjoy several benefits in the form of tax credits, grants, loans, Enterprise Zones for Development and Opportunity zone programs, sales and use tax exemption, capital gains deferral, and much more. So, the big question is – are there any disadvantages? In reality, there are no disadvantages as such except the ones that are specific to the type of business you register. For instance, an LLC has a limited life and can get dissolved if a member dies. Similarly, incorporation can lead to higher overall taxes and this is where you can find relief in the form of the tax credit programs.

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