If you own and operate a business as a sole proprietorship or partnership (unincorporated) and are considering incorporating the business or turning it into a limited liability company (“LLC”), there are certain requirements that your new business MUST comply with in order for your business to enjoy the “limited liability” advantage that is associated with incorporation or registering your business with the State of Wisconsin Department of Financial Institutions (“DFI”).
Unfortunately, many business owners believe that, in order to enjoy the benefits of “limited liability,” all one needs to do is simply fill out and file, for example, the Articles of Organization form with the DFI and pay the filing fee. What these business owners do not understand is that, while filing your businesses Articles of Organization with the DFI does effectively register the business as a Limited Liability Company with the proper Wisconsin agency, it does NOT, under the laws of the State of Wisconsin truly afford the business the limited liability protection that business owners are seeking without satisfying other necessary legal requirements.
In order to provide your business with true limited liability protection in the court system in the event some third party were to name your company AND you personally as a defendant in a lawsuit (thus putting not only the business assets but also your own personal assets – including your home, other real estate, bank accounts, etc. – at risk of being used to satisfy a potential judgment against you), your new LLC must, in addition to filing the Articles of Organization with the DFI and paying the filing fee, comply with a number of other requirements under the statutory and common laws of the State of Wisconsin. Without complying with these other requirements, the Judge in any potential, future lawsuit likely will allow a third party plaintiff who sued the LLC AND you personally to “pierce the corporate veil” of protection which is normally afforded to managing member-owners of compliant LLCs. If the Judge allows the third-party plaintiff to “pierce the corporate veil” of protection, you may be at serious risk of losing your home, your other assets, and/or facing bankruptcy.
Call Seidl Law Offices, LLC at (715) 365-9008 right now for a free consultation to learn more about how to protect your business and your own personal assets against the claims of others against the business and you! Seidl Law Offices, LLC, defers to your Certified Public Accountant (CPA) with regard to tax questions and implications concerning the conversion of your business to a Limited Liability Company.