How to Register for a Sales Tax Permit in Wisconsin

For many people, running their own company would be near the top, if not at the top, of their ultimate career goals. However, starting your own company is a serious and daunting step for many. Others strive and see this as an opportunity to evolve, become their own boss, call the shots and start living off a company, not for the company. Different personalities approach this decision differently. Some spend years working as employees, learning every aspect of running a company, while working in one. Every position, every job they take on is a new learning experience that will get them closer to the ultimate goal.

Others might skip this step altogether and plunge into the entrepreneurial waters immediately. No one can say one approach is better than the other. The decision to start a company comes from a person or a group of people. At any given moment, the decision they make and their approach is the best for them.

However, in general, before starting a business, there are a few questions everyone should ask themselves. Am I ready for this step? Why am I taking this step? Is this business sustainable? Do I have the right knowledge to run a company? These are some of the questions that could help you make the decision. Doubting your decision even a bit can be bad further on in the process.

What can be said about the two approaches we mentioned above is that if you do spend years as an employee, learning all the tricks of the trade along the way, you might already have a substantial knowledge base that can come in handy when selecting a market or a product to work with. You might already be familiar with the market dynamics, any market gaps, supply shortages, best suppliers and the most reputable companies to collaborate with. At the start, this can be of huge importance and a significant push in the right direction.

What You Need to Kow Before Starting a Business in Wisconsin

If you don’t have much knowledge of the market, you should not take running a company lightly. The legal framework is clear and the process is fairly streamlined as you will be able to read further along in this text, but beyond that, there are other aspects that make a business a success or a failure. What you can do is take advice from attorneys or business advisors as you prepare to start up a new company. In most cases, starting small is the best choice.

Jumping straight into a competitive market is hard for even established companies, let alone a start-up. This is why we advise making a sort of a preferred list of markets or products you would be comfortable working with. This puts a focus on your interests.

Once the list is complete, do some market research, see whether any of the market or products are in higher demand, or whether there is a shortage of supply in any of the markets from your list or if any of the products are sought after but there are not as many suppliers. Such niche markets are perceived as the best place to start. This means that you already have a substantial customer base that is in need of a product. Another aspect of a niche market is the lack of competition. This allows you build a reputation, gather experience and streamline your services and the operating process before you branch out into new market segments and start growing your company.

 

If, for instance, you live in the state of Wisconsin and you have already looked into several opportunities and have found your target market it is time to take a look at the legal side of starting your business.

Registering a New Business in Wisconsin

The steps in the process of registering a business in Wisconsin are similar to other states. But, before you tackle the legal process, it is advised to develop a business plan. This is often used as a guideline to check how far you’ve come in the registration process and how far you have to go still. In addition to being your guideline, a business plan is an essential tool to secure additional financing, like a loan from a bank or any other financial institution.

The first step to take when registering your business in the state of Wisconsin is to select the legal structure of the business. Most common forms include sole proprietorships, general partnerships, corporation or limited liability companies (LLC).

A sole proprietorship is the easiest and least expensive legal structure to form. While easy to set up, a sole proprietorship makes no distinction between the business owner and the business. The downside is the unlimited liability, meaning the owner is responsible for all the business debts. A general partnership is similar to the sole proprietorship, but in this case, two or more individuals join to conduct business. Corporations and limited liability companies are more complex to set up, but both of these forms offer liability protection to owners.

The next step in the process is to select the business name. If you plan on registering as a sole proprietor, you can use your own name as the name of your business, since there are no legal distinctions between the owner and the business. However, if you plan on operating under a separate business name, you have to file an Assumed Name, also known as DBA (doing business as) with your county clerk’s office. The office depends on the location of your business as well as the fee for filing an assumed name which is around $30. When filing for the business structure, LLCs and corporations also have to file for a unique name. You can check the name availability at the Wisconsin Department of Financial Institutions.

To streamline the registration process, Wisconsin government created a One Stop Business Registration platform that allows you to register your business with a number of agencies. The service enables a streamlined registration of your business online with the Department of Financial Institutions, Department of Revenue and the Department of Workforce Development. The Department of Revenue covers the registration of Sole Proprietorships, Non-Wisconsin LLC or corporations, partnerships and nonprofit organizations through its online registration platform. The One Stop Business Registration Portal covers the registration of the remaining entity types or legal structures which are a domestic limited liability company, a business corporation or a statutory close corporation which is done through the Department of Financial Institutions.

If you intend to register a business corporation, a limited liability company (LLC), a statutory close corporation, you can complete the process through the One Stop Business Portal.

When registering a new business through the OSBP, you are required to provide a proposed name of the company, a registered agent, organizers, drafter, signatures, contact, as well as the type of management the company will use. You will also have to set up and make a payment with fees ranging from $101 for corporations and $131 for an LLC.

You should also look further into licensing requirements for your business. Depending on the line of business, you might require specific licenses. The state government has set up a comprehensive list of licenses and requirements at the Department of Safety and Professional Services.

Wisconsin Sales Tax Permit

Following the completion of entity type, and business name registration through the adequate platform, you are required to look into a very complex aspect of the whole process: taxes.

Your business needs a Federal Employer Identification Number (EIN) which can be acquired online through the Internal Revenue Service (IRS). Sole proprietorships are not required to use an EIN, and can use the owner’s social security number (SSN); however, it is advised that you apply for an EIN to minimize chances of issues such as identity theft.

After acquiring your EIN, you should look into the required tax permits. If you are registering your business through the Department of Revenue, this step will be completed along the way. However, if you registered your business through the OSBP, you will have to complete the business tax registration separately with the Department of Revenue. Depending on the type of your business, you may apply for a seller’s permit, consumer’s use tax certificate, use tax certificate and a withholding tax number.

In case you plan to purchase wholesale merchandise online in order to resell on an e-commerce platform like Amazon, you should look into the regulatory requirements, and determine whether you need to apply for any of the said permits.

The first thing to look at is the sales tax nexus, which is a significant presence in the state determined according to several parameters. You have a sales tax nexus if you have an office or a place of business in Wisconsin, an employee, stock in a warehouse or you own personal or real-estate property. You can find further details at the Wisconsin State Legislature website.

If you determine that you have a sales tax nexus in Wisconsin, you should check whether the services you provide or the products you intend to sell are taxable. In general, services are tax exempt while selling tangible products is taxable.

If you determine that you tick all the boxes, you can apply for a sales tax permit with the Department of Revenue, either online or by filing the Form BTR-101 – Application for Wisconsin Business Tax Registration with the DoR. The completed form should be emailed to the address provided in the ‘Contact Details’ section below.

According to the Department of Revenue’s website, you will receive your permit within 10 to 15 business days, and an email containing your account numbers will be delivered to you on the day of registering your business. The fee for the business tax registration is $20. If you look at the Form BTR-101, you will notice that you are required to provide a reason for application, select the type of tax permits that apply to your business, business details such as location and type, as well as the operations starting date and business owners.

If you are going to buy wholesale merchandise to resell online, you will have to apply for a seller’s permit. A seller’s permit is required for every individual, partnership, corporation, or other organization making retail sales, leases, or rentals of tangible personal property or taxable services in Wisconsin unless all sales are exempt from sales or use tax, the DOR notes. Wholesalers and manufacturers will not be issued a seller’s permit.

It has to be noted that you may be required to make a security deposit of up to $15,000 before the Department of Revenue issues your seller’s permit. But, a security deposit is required mainly in situations when the applicant has a history of delinquent taxes.

The initial fee of $20 covers the period of two years. Once the two-year period expires the business is required to pay a $10 renewal fee for the next two-year period.

Sales Tax Exemptions in Wisconsin

Like many other states, Wisconsin provides certain tax exemptions. Retail sales of food by grocery stores are tax exempt if it does not meet the definition of candy, soft drinks or prepared food. The sales tax is not applied to sales of products that will be resold.

Other sales may also be exempt from the sales and use tax if the buyer provides the Wisconsin Sales and Use Tax Exemption Certificate (Form S-211 or Form S-211-SST). The buyer fills and signs the exemption certificate and given to the seller to verify the transaction is tax exempt. According to the Department of Revenue, sellers should exclude from taxable sales price the transactions for which they have accepted an exemption certificate from a purchaser and also retain copies of exemption certificates.

Since you will be buying merchandise for resale, you might come across buyers who will provide you with an exemption certificate. As a buyer, you are required to know whether you qualify to claim tax exemption. You will also be held liable for any tax and interest as well as penalties if you are not eligible to claim tax exemption.

In addition to sales for resale is exempt from tax, an exemption certificate may be provided if the products purchased will be used in manufacturing or biotechnology, farming, government units and other exempt entities. Read through the Form S-211 for more details on exemptions. You will have to fill the form completely and the information includes business name, address, seller’s permit. If you are on the receiving end of a resale certificate you must ensure that the form has been properly filled and signed by the buyer. You can also check the validity of the resale certificate at the Department of Revenue website by looking up account number. If you have any additional questions regarding the resale certificate, you may contact the Department of Revenue, details provided below.

Contact Details

Wisconsin Department of Revenue

Tax Operations Bureau
PO Box 8902
Madison, WI 53708-8902
Phone: (608) 266-2776
Fax: (608) 327-0235
[email protected]

State of Wisconsin Department of Safety and Professional Services

1400 East Washington Ave.
P.O. Box 8935
Madison, WI 53703
Phone: (608) 266-2112, (877) 617-1565

Wisconsin Department of Financial Institutions

201 W Washington Ave Suite 500
Madison, WI 53703
Phone: 608-261-9555

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