Big news for Wisconsin LLCs—Wisconsin passed a new limited liability company law and it takes effect on January 1, 2023. The new Wisconsin Uniform Limited Liability Company Law (the “New LLC Law”) incorporates major changes to LLC law and automatically applies to any LLC (a) formed after January 1, 2023 and (b) any LLC formed on or by December 31, 2022, that does not opt out of the new law by submitting the required filing (as described below) to the Wisconsin Department of Financial Institutions.
The following business owners are most affected by the changes to the New LLC Law:
- Owners of multi-member LLCs that do not have an operating agreement
- Previously, multi-member LLCs that did not create an operating agreement were subject to default rules set forth in the current LLC law. The New LLC Law allows a court reviewing an LLC-related dispute to construct an operating agreement based on oral, written, or implied understandings about the function of the LLC before looking to the default rules set forth in the New LLC Law. This will make disputes among members even more time-consuming and expensive.
- Owners of multi-member LLCs that have outdated or template operating agreements
- If you last looked at your operating agreement 10 years ago, haven’t updated your operating agreement to reflect how your business actually operates, or used a template operating agreement that isn’t customized to your business, it’s time to invest in an updated operating agreement.
- Owners of single-member LLCs who may eventually add one or more members
- While the New LLC Law will not impact operations for single-member LLCs, the New LLC Law will automatically apply (unless you opt out of the New LLC Law), meaning that the new provisions will apply if and when you decide to take on a new business partner.
What should you do? It depends, but we’ve created four flat fee projects to help you make the decision:
- For $175, we’ll file to opt you out of the New LLC Law by filing the Statement of Nonapplicability with the Wisconsin Department of Financial Institutions.
- For $500, we’ll (a) review your multi-member operating agreement in relation to the New LLC Law; (b) discuss implications; and (c) file to opt you out of the New LLC Law.
- For $3,000-$5,000 (depending on the complexity of your LLC operations, including number of members, and your existing operating agreement)), we will update your operating agreement to either (a) comply with the New LLC Law or (b) maximize provisions of the current LLC law. We’ll also file to opt you out of the New LLC Law, if applicable.
- For $3,000-$5,000 (depending on the complexity of your LLC operations, including number of members), we will draft a new operating agreement.
Time is of the essence to complete the opt-out form (i.e., the deadline is December 31, 2022). If you’re interested in tackling any of the above, we will file to opt you out of the New LLC Law and work with you to determine next steps in the meantime. Questions? Email Stephanie or set up a call to discuss.