California vs. Wisconsin LLC: A Side-by-Side Comparison

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California vs. Wisconsin LLC

California

Filing fee: $70

State income tax: 1% to 12.3%.

Franchise tax: $800

Foreign qualification fee: $200

Wisconsin

Annual filing fee: $135

State income tax: No

Franchise tax: No

Foreign qualification fee: $125

California LLC	Wisconsin LLC
California has a progressive state income tax system, with rates ranging from 1% to 12.3% based on income levels. High-income earners may face higher state income tax rates.	Wisconsin also has a progressive state income tax system, with rates ranging from 3.54% to 7.65% based on income levels.
It has a state-wide sales tax rate of 7.25%, and local jurisdictions may impose additional taxes, leading to combined rates that can go up to 10.25%. This can impact the cost of goods and services for businesses and consumers.	It has a state-wide sales tax rate of 5%, and local jurisdictions may impose additional taxes. The combined sales tax rate can vary, potentially affecting the cost of goods and services for businesses and consumers.
California’s property tax rates are governed by Proposition 13, capping the tax rate at 1% of the property’s assessed value, plus any additional local taxes. However, due to high property values in some areas, property tax burdens can still be significant.	Wisconsin’s property tax rates vary by county and are based on the property’s assessed value. The state has relatively moderate property tax rates compared to some other states.
It imposes a corporate income tax rate of 8.84% on corporations doing business in the state. This tax is based on the corporation’s net income.	It imposes a corporate income tax rate of 7.9% on corporations with income up to $4 million and 4.6% on income exceeding $4 million.
California LLCs are subject to an annual franchise tax of $800, regardless of the company’s profitability. This is an ongoing cost for businesses operating in the state.	Wisconsin does not impose an annual franchise tax on LLCs, providing potential cost savings for businesses operating in the state.
Its LLCs are required to file an annual report. California imposes a $20 annual report fee on LLCs.	Its Annual Report costs $25 each year. This filing fee is paid every year for the life of your LLC.

Cost Breakdown of The Two

You may use our free LLC cost calculator by state to find out filing fees, tax percentages, income taxes, and more.

California LLC:

Formation Fees: California requires filing fees of approximately $70 to $80 for submitting Articles of Organization.

Annual Fees: The state imposes a minimum $800 franchise tax on all LLCs, irrespective of income or size, and additional taxes may apply based on revenue and activities.

Compliance Costs: The complex regulatory environment in California may result in higher legal and accounting expenses for businesses.

Operating Expenses: California generally has a higher cost of living, impacting office space, salaries, and general operational costs.

Additional Taxes: Depending on the business, there may be other state and local taxes applicable in California.

Wisconsin LLC:

Formation Fees: The initial formation fees for a Wisconsin LLC range from $130 to $170.

Annual Report Fee: Wisconsin requires LLCs to file an annual report, which costs $25.

This report confirms the LLC’s contact information and is essential for keeping the business in good standing with the state.

State Income Tax: Wisconsin has a progressive state income tax system, with rates ranging from 3.54% to 7.65% based on income levels.

This tax is applied to the LLC’s profits and is reported on the owners’ individual tax returns.

Sales Tax: Wisconsin has a state-wide sales tax rate of 5%, and local jurisdictions may impose additional taxes.

This can affect the cost of goods and services for businesses and consumers.

Property Tax: Wisconsin’s property tax rates vary by county and are based on the property’s assessed value.

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Similarities Between California and Wisconsin LLC

Limited Liability Protection: Both California and Wisconsin LLCs offer limited liability protection to their owners.

This means that the personal assets of the owners are generally protected from the debts and liabilities of the LLC.

Pass-Through Taxation: Both states follow a pass-through taxation system for LLCs.

This means that the LLC itself does not pay federal income taxes; instead, the profits and losses “pass through” to the individual owners, who report them on their personal tax returns.

This taxation structure is generally advantageous as it avoids double taxation at both the entity and individual levels.

Formation Process: The process of forming an LLC in both California and Wisconsin involves filing Articles of Organization with the respective state authorities.

These documents officially create the LLC and provide essential information such as the LLC’s name, address, registered agent’s details, and the purpose of the LLC.

Registered Agent Requirement: Both states require LLCs to designate a registered agent with a physical address in the state.

The registered agent is responsible for receiving legal and official documents on behalf of the LLC and must be available during regular business hours.

Annual Reports: Both California and Wisconsin require LLCs to file annual reports to keep the LLC in good standing with the state.

These reports confirm the LLC’s contact information and are essential for maintaining compliance with state regulations.

Additional Resources:

Steps to Form LLC in California

Choose a Name: Select a unique and distinguishable name for your LLC.

Ensure the name complies with California’s naming requirements and is not already in use by another business.

Registered Agent: Appoint a registered agent with a physical address in California who will receive legal and official documents on behalf of your LLC.

Articles of Organization: Prepare and file the Articles of Organization with the California Secretary of State.

This document officially establishes your LLC and includes essential details such as the LLC’s name, registered agent information, member details, and the LLC’s purpose.

Operating Agreement: Although not required by California law, it is highly recommended to create an Operating Agreement.

This document outlines the internal workings of your LLC, including ownership percentages, management structure, profit distribution, and other important rules and regulations.

Obtain an EIN: Apply for an Employer Identification Number (EIN) from the IRS.

This unique nine-digit number is used for tax purposes and is necessary if you plan to hire employees or open a business bank account.

Business Licenses and Permits: Check with local and state authorities to determine if your LLC requires any specific business licenses or permits to operate legally in California.

Comply with Tax Requirements: Familiarize yourself with California’s tax obligations, including income tax, sales tax, and other applicable state taxes.

Register with the California Franchise Tax Board and the California Department of Tax and Fee Administration for tax purposes.

Publication Requirements (if applicable): California used to require new LLCs to publish a notice of formation in a local newspaper in the county of the LLC’s principal office.

However, please verify if this requirement is still in effect, as laws and regulations can change.

Bank Account and Finances: Open a business bank account to keep your personal and business finances separate.

This will help maintain the limited liability protection offered by the LLC structure.

Maintain Compliance: Ensure your LLC remains in compliance with California’s ongoing requirements, such as filing annual reports and other necessary documents, to keep the LLC in good standing.

Steps to Form LLC in Wisconsin

Choose a Name for Your LLC: Select a unique and distinguishable name for your LLC that complies with Wisconsin’s naming requirements.

The name must include “Limited Liability Company,” “LLC,” or similar abbreviations.

You can check the name’s availability by conducting a name search through the Wisconsin Department of Financial Institutions website.

Appoint a Registered Agent: Designate a registered agent who will be responsible for receiving legal and official documents on behalf of the LLC.

The registered agent must have a physical address in Wisconsin and be available during regular business hours.

File Articles of Organization: Prepare and file the Articles of Organization with the Wisconsin Department of Financial Institutions.

This document officially creates your LLC and includes essential information such as the LLC’s name, address, registered agent’s details, and purpose of the LLC.

You can file the Articles of Organization online or by mail.

Create an Operating Agreement: Although not required by Wisconsin law, it is advisable to create an operating agreement for your LLC.

This internal document outlines the ownership structure, rights, and responsibilities of the members, and how the LLC will be managed.

The operating agreement helps prevent disputes and provides clarity on how the business will operate.

Obtain an Employer Identification Number (EIN): If your LLC has more than one member or if you plan to hire employees, you will need to obtain an Employer Identification Number (EIN) from the IRS.

The EIN is used for federal tax purposes and is often required for opening business bank accounts and filing taxes.

Obtain Necessary Licenses and Permits: Depending on the nature of your business, you may need to obtain specific licenses or permits to operate legally in Wisconsin.

Check with the Wisconsin Department of Revenue and local authorities to identify any required licenses or permits for your industry.

File Annual Reports: After forming your LLC, you will need to file an annual report with the Wisconsin Department of Financial Institutions to keep your LLC in good standing.

The report confirms the LLC’s contact information and is typically due by the end of the LLC’s anniversary month.

Feature Comparisons Between California LLC vs. Wisconsin LLC

Formation Requirements: Both California and Wisconsin require filing Articles of Organization with their respective state authorities to form an LLC.

The documents provide essential information such as the LLC’s name, address, registered agent details, and purpose.

Limited Liability Protection: Both states offer limited liability protection to LLC owners, safeguarding personal assets from business debts and liabilities.

This protects individual members from bearing the full financial burden of the business’s obligations.

Pass-Through Taxation: Both California and Wisconsin follow a pass-through taxation system for LLCs.

This means that the LLC itself does not pay federal income taxes; instead, profits and losses “pass through” to the individual members’ tax returns.

Annual Reports: Both states require LLCs to file annual reports to maintain compliance.

These reports confirm the LLC’s contact information and are necessary to keep the business in good standing.

Flexibility in Management: LLCs in both California and Wisconsin offer flexibility in management and decision-making.

Members can choose between member-managed or manager-managed structures, tailoring the business’s internal operations to their preferences.

Business Environment

Economic Stability: A stable and thriving economy fosters a positive business environment.

Factors such as low inflation, steady GDP growth, and manageable interest rates create a favorable climate for businesses to operate and invest.

Regulatory Framework: A transparent and predictable regulatory framework is crucial for businesses to operate efficiently. Sensible regulations that protect consumers, ensure fair competition, and provide clarity for businesses help promote economic growth.

Infrastructure: Well-developed infrastructure, including transportation networks, reliable utilities, and digital connectivity, supports businesses in maintaining efficient supply chains and operations.

Skilled Workforce: Access to a skilled and educated workforce is essential for businesses to drive innovation and productivity.

A talented workforce can contribute to a company’s success and competitiveness in the market.

Market Demand: A strong market demand for products and services is critical for business growth.

Understanding consumer preferences and identifying market opportunities are key aspects of a thriving business environment.

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California vs. Wisconsin Taxes

California:

Income Tax: California has a progressive income tax system, with nine tax rates ranging from 1% to 12.3%.

Sales Tax: The statewide base sales tax rate in California is 7.25%. Local jurisdictions may add additional sales taxes, leading to varying total rates.

Property Tax: California property taxes are governed by Proposition 13, with a maximum rate of 1% of the property’s assessed value, plus local assessments and voter-approved bonds.

Franchise Tax Board (FTB) Tax: California imposes an $800 annual franchise tax on LLCs and corporations.

Wisconsin:

State Income Tax: Wisconsin has a progressive state income tax system, with rates ranging from 3.54% to 7.65% based on income levels.

This tax is applied to the individual income of residents.

Sales Tax: Wisconsin has a state-wide sales tax rate of 5%, and local jurisdictions may impose additional taxes.

This can affect the cost of goods and services for businesses and consumers.

Property Tax: Wisconsin’s property tax rates vary by county and are based on the property’s assessed value.

The state has relatively moderate property tax rates compared to some other states.

Corporate Income Tax: Wisconsin imposes a corporate income tax rate of 7.9% on corporations with income up to $4 million and 4.6% on income exceeding $4 million.

Annual Report Fee: Wisconsin requires LLCs to file an annual report, which costs $25.

This report confirms the LLC’s contact information and is essential for keeping the business in good standing with the state.

Flexibility in Rules and Regulations

California:

California’s regulatory environment is known for its complexity and extensive rules.

The state’s regulations cover a wide range of industries and business activities, which can sometimes create challenges for businesses seeking to navigate the compliance landscape.

However, California also offers opportunities for innovation and growth, particularly in technology, entertainment, and green industries.

The state has a diverse and vibrant economy, attracting entrepreneurs and investors from around the world.

Wisconsin:

Wisconsin’s regulatory environment is generally considered to be more business-friendly compared to some other states.

The state has taken steps to streamline regulations and create a more predictable and efficient business climate.

This flexibility in regulations can benefit businesses by reducing bureaucratic hurdles and administrative burdens.

Wisconsin is also known for its strong manufacturing and agricultural sectors, offering opportunities for businesses in these industries.

Key Differences Between California and Wisconsin

Differences between California and Wisconsin LLC