Creating a Rental Property LLC in Wisconsin

Benefits of creating LLCs for rental properties in Wisconsin 

So, what are the benefits of an LLC?

Liability Protection

Limiting personal and business liability is a key reason investors decide to create a rental property LLC in Wisconsin. One way that a limited liability company can protect real estate investors is by distinguishing between business and personal property. When you form a rental property LLC in Wisconsin, it’s important to make very clear which assets are for personal use and which are for business use. If you form an LLC and don’t personally guarantee the company’s debts, a creditor can’t hold you personally liable for them. 

Pass-Through Taxation

Pass-through taxation means that the business profits are taxed on the individual property owners’ tax returns at their personal income tax rate instead of at the corporate level. A rental property LLC in Wisconsin affords this option to real estate investors. Your city or county may also offer tax incentives to LLCs. Make sure to check with your local government.

Series LLCs for real estate investors in Wisconsin 

Only a few states allow investors to create series LLCs. A series LLC is similar to a holding company. Each entity’s liability is isolated from the other entities’ obligations. While Wisconsin technically allows for the formation of such limited liability companies, multiple sections of its Business Corporations Law still permit a creditor to hold all of the LLCs in the series liable for each other’s debts. This effectively negates the purpose of forming a series LLC. A regular rental property LLC in Wisconsin may provide the same benefits as you would get with a Wisconsin series LLC.

What to know before creating a rental property LLC in Wisconsin

Let’s take a closer look at why forming an LLC for your current or future rental property is a good idea.

How to form an LLC for your Wisconsin rental property

We can help you form your LLC with our fast, easy Wisconsin LLC Formation Service. Here are the steps: 

Step 1: Choose LLC Name

When selecting a name for your LLC, be sure to choose one that meets state requirements. We can do a search for you to see if the business name you want is available. If it is, let us reserve the name while you get the filing paperwork together. 

Step 2: Select Registered Agent

Businesses in the state are required to appoint a registered agent. This person is responsible for receiving important documents on behalf of the LLC, such as state correspondence and legal notices. If you need a registered agent, we can help you find one.  

Step 3: File Articles of Organization

To officially form your rental property LLC, you need to file a Certificate of Organization with the right state office and include the appropriate filing fee.

Step 4: Create an Operating Agreement

Your LLC’s Operating Agreement is one of your most important business documents. It governs how your LLC runs and provides instructions for anything from voting procedures to dissolve the company. If you’re not sure how to create an Operating Agreement, we offer templates that can serve as a guide. 

Step 5: Apply for Employment Identification Number (EIN)

The IRS assigns businesses a nine-digit EIN that is used to identify their enterprise. Having one is necessary for certain business matters, such as opening a business bank account, hiring employees, and getting financing. You can apply for an EIN yourself on the IRS’s website, or we can do it for you with our EIN service. 

Step 6: Transfer Title of the Property to Your LLC

If you form your LLC before you purchase your investment property, you won’t need to transfer the title to your LLC. However, if you bought your rental property in your own name, you’ll need to transfer the title of the property to your LLC once it’s formed. Accomplishing the transfer usually includes:

• Filing the revised deed with the proper city or county authority
• Paying a title transfer tax, if applicable

Your local tax authority or county assessor’s office can provide you with more information about processes and fees.

You’ll need to notify the lender of the change of titleholder if there’s a mortgage or loan on the property. The bank may want to revise the loan agreement. This is another reason why forming your LLC before buying property makes your life easier.

If you formed your rental property LLC in Wisconsin before you bought and leased out your property, then you’re good to go. You’ll just need to set up your lease agreements to ensure that your renters pay rent to the LLC and not to you personally. If you formed your LLC after you purchased and leased your property, you’ll need to take some additional steps. First, inform all current tenants or renters of the ownership change from individual to LLC ownership. You’ll then need to edit your lease agreement to reflect the change.

Who should form a Wisconsin LLC for their rental property?

Any investment property owner, especially those earning rental income, may consider forming a rental property LLC in Wisconsin. Most real estate investors find it simpler to form an LLC before purchasing rental properties. By first creating a limited liability company, you can buy your rental properties in the LLC’s name instead of your own. Having your investment property held in the LLC’s name from the start can streamline your workload and property management operations.

How we can help

We can help you quickly and easily form your rental property LLC in Wisconsin, so you can get to managing your property faster. Our suite of business services helps connect real estate investors like you with the practical information you need to build and grow your investment.