Wisconsin's new LLC laws: What you need to know.

Byline: Bridgetower Media Newswires

Effective Jan. 1, business entity law changes are coming for limited liability companies (LLCs) in Wisconsin.

Gov. Tony Evers recently signed 2021 Act 258, which adopts a more standard set of LLC laws similar to those LLC laws already used by 23 other states. Act 258 is a step toward the modernization of Wisconsin's business entity laws.

Wisconsin's current LLC laws have only a handful of cases to provide business owners guidance on their interpretation by the courts. Since the Act brings Wisconsin's LLC laws in line with many other states, there will now be hundreds of cases from jurisdictions across the country to rely upon when interpreting them. Act 258 will therefore give business owners more certainty and predictability in how their business will be governed under Wisconsin law, while continuing to provide the flexibility of an LLC structure.

The important changes you need to know

LLCs may now file a Statement of Authority to publicly identify the authority (or lack thereof) of a member. Currently, a person or entity who is a member of an LLC may have "apparent authority"[1] to act on behalf of the LLC (such as by signing contracts that bind the LLC to certain obligations), even if they haven't been expressly granted authority by the LLC. Act 258 removes this concept and does not give members authority just because they are members. As of Jan. 1, 2023, the LLC can file a Statement of Authority (or a Statement of Denial of Authority) with the Wisconsin Department of Financial Institutions (DFI) to publicly say who has authority to act on behalf of the LLC. This document can be accessed by third parties who want to verify whether a member has authority to act on behalf of the LLC.

An LLC may now have both economic and non-economic members. Under Act 258, persons can become LLC members without acquiring a transferrable interest in the LLC or having to make a monetary contribution. This is particularly helpful for the use of LLCs as non-profit charitable organizations (similar to non-stock corporations).

If an LLC is taxed as a partnership, the value of a member's contributions will now be based on their partnership capital account rather than just their initial contribution.For LLC members this means that the value of their contributions will now be based on how much they have contributed into the LLC over time, rather than just what they put in at the beginning.

Capital accounts for tax purposes are...

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