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Sole Prop, LLC, or S-Corp? Choosing the Right Structure for Your Wisconsin Business

Updated: Oct 14

Starting a business in Wisconsin is exciting, but choosing the right legal structure can feel... less fun. From taxes to liability to how you pay yourself, your business structure affects a lot more than just what you write on forms.


Whether you're launching a retail shop in Sturgeon Bay, running a mobile service in Kewaunee, or expanding your consulting gig in Green Bay, here's what you need to know about your options—and how to make the best choice for your goals.


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The Main Players: What Are Your Options?

Let’s take a look at the three most common business structures for small business owners in Wisconsin.


Sole Proprietorship

Best for: Freelancers, early-stage side hustles, or ultra-simple setupsHow it works: You operate the business under your own name (or a DBA), and there’s no legal separation between you and the business.

Pros:

  • Easiest to start (no filing required)

  • Low cost and low maintenance

  • You report business income on your personal tax return (Form 1040 + Schedule C)

Cons:

  • No liability protection—you’re personally responsible for business debts and legal issues

  • May be harder to get funding or appear “legit” to vendors

Fun Fact: Many Wisconsin businesses start as sole props, then upgrade to LLCs as they grow.


Limited Liability Company (LLC)

Best for: Small businesses that want legal protection with flexibilityHow it works: A Wisconsin LLC is a separate legal entity from you. It can be single-member or multi-member.

Pros:

  • Protects your personal assets from business debts

  • Flexible structure—you can choose to be taxed as a sole prop, partnership, or S-Corp

  • More credibility than a sole prop

  • Simple to file in Wisconsin through the WDFI

Cons:

  • Annual filing required with the state

  • Requires a little more structure: operating agreement, EIN, business bank account

Cost in Wisconsin: $130 online filing fee (as of 2025)


S-Corporation (Tax Election, Not an Entity Type)

Best for: LLCs or corporations with steady profits who want to save on self-employment taxesHow it works: You form an LLC or C-Corp, then file IRS Form 2553 to elect S-Corp status for tax purposes.

Pros:

  • Potential tax savings by splitting income between salary and distributions

  • Still offers liability protection

  • Can appear more established to investors or vendors

Cons:

  • More paperwork and IRS rules to follow

  • You must run payroll and pay yourself a “reasonable salary”

  • Need to be profitable enough to make the extra work worth it

Note: You’ll still file an Annual Report in Wisconsin (and likely need payroll support—hi, that’s us).


What’s the Right Fit for You?

Structure

Liability Protection

Taxes Filed

Complexity

Best For

Sole Prop

None

Personal return (1040 + Schedule C)

Very Low

Freelancers, hobbyists, side hustles

LLC

Yes

Flexible (default: Schedule C or Form 1065)

Moderate

Growing local businesses

S-Corp

Yes

Form 1120S + W-2s

High

Businesses with steady profits & payroll

Local Tip: Keep Wisconsin in Mind

  • All LLCs must file an Annual Report with the Wisconsin Department of Financial Institutions

  • Wisconsin doesn’t recognize S-Corp status separately—you’ll still pay state income tax

  • Use My Tax Account to manage your sales tax, withholding, and other filings online. I find this very easy to navigate and have all your information in one spot.




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Still Not Sure? We’ll Help You Decide.

At Curated Accounting Solutions, we help small business owners across Door, Kewaunee, and Brown Counties choose and maintain the business structure that actually fits their goals—not just what looks good on paper.

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