Setting up a startup in Wisconsin

It is Wisconsin’s corporate income tax under another name. Corporations doing business in Wisconsin pay a franchise tax measured by net income, at 7.9%; an income tax at the same rate applies to a few foreign corporations not subject to the franchise tax. There is no separate capital-based franchise tax on top.

Not usually. Wisconsin DOR says charges for accessing prewritten software on the vendor’s server are not taxable when the customer doesn’t operate or control that server and has no physical access to it — as long as nothing taxable, like a digital good, is in the transaction. Software downloaded to the customer’s equipment in Wisconsin is taxable.

Yes, more often than founders expect. Wisconsin requires a copy of the 1099 for nonwage compensation of $600 or more paid to a Wisconsin resident, or to a nonresident for services performed in Wisconsin, and for any payment with Wisconsin tax withheld. The Wisconsin threshold is written into its own law, so it doesn’t move with the federal one.

Not if they live in Illinois, Indiana, Kentucky or Michigan — Wisconsin has reciprocity with those four, and the employee files Form W-220 so you can skip Wisconsin withholding. Minnesota is different: the Wisconsin–Minnesota reciprocity agreement ended in 2010, so a Minnesota resident working in Wisconsin has Wisconsin tax withheld.

Every year, in the first calendar quarter — by March 31 — starting the year after registration. Domestic Wisconsin corporations file in the quarter of their incorporation anniversary instead. It costs $65 online for a foreign business corporation.

Partly. For tax years beginning after December 31, 2023, 25% of the Wisconsin research credit is refundable — paid out even with no tax to offset. The other 75% is nonrefundable and carries forward up to 15 years, and it can’t become refundable later. Partnerships, LLCs and S corporations compute the credit but pass it to their owners to claim.