Across State Lines: What Wisconsin LLCs Need to Know Before Expanding

06.02.26

By Sophia Smith, Boardman Clark Law Clerk

If your Wisconsin limited liability company (LLC) plans to conduct business outside the state, it is important to understand that each jurisdiction has its own rules governing when and how a business must register if it will operate (often called “transacting business”) in that jurisdiction. These considerations apply to other types of entities as well, such as corporations and partnerships; however, this article focuses specifically on the requirements for LLCs.

In general, when a Wisconsin LLC operates in another state, it is treated as a “foreign” LLC under that state’s laws. Before transacting business in that state, the LLC typically must obtain a certificate of authority or register with the appropriate state agency. While states’ “transacting business” rules may be similar in many respects, each state may impose distinct requirements and penalties for noncompliance.

For example, Wisconsin, Illinois, Iowa, Minnesota, and Michigan all share a common framework for regulating foreign LLCs. Each requires a foreign LLC to register (i.e., obtain a certificate of authority) before transacting business. They also generally:

• recognize that the law of the LLC’s state of formation governs its internal affairs,
• will not deny registration solely because of differences in state law, and
• require similar basic registration information (such as the LLC’s name, jurisdiction of formation, and registered agent).

While the aforementioned states share many similarities with Wisconsin’s approach to foreign LLCs, businesses should not assume uniformity across state lines. Because states generally do not clearly define what constitutes “transacting business” or “doing business,” Wisconsin LLCs must evaluate their activities on a case-by-case basis in each jurisdiction. Following is some information for each of those states.

In Illinois, a Wisconsin LLC must submit a certificate of good standing from Wisconsin (or a certificate stating that the company is in existence under the laws of the jurisdiction where it is organized) as part of the registration process, along with a statement appointing the Illinois Secretary of State as agent for service of process in certain circumstances. 805 Ill. Comp. Stat. 180/45-5, 45(a). Failure to register can result in significant penalties, including an initial fine of $2,000, an additional $100 for each month of continued noncompliance, and a potential enforcement action by the Illinois Attorney General. 805 Ill. Comp. Stat. 180/45-45(d), 50.

In Iowa, the registration requirements similarly include additional documentation. An LLC must provide an authenticated certificate of existence (in Wisconsin, a certificate of status) issued within the prior 90 days. Iowa Code Section 489.903. If the LLC fails to register before doing business, it may be subject to a possible enforcement action by the Iowa Attorney General. Iowa Code Section 489.912.

Minnesota, by contrast, does not impose the same additional documentation requirements as Illinois or Iowa. Additionally, the statute does not specify a fixed monetary penalty for failure to register. However, a noncompliant LLC is still barred from maintaining an action in Minnesota courts, and the Attorney General may seek an injunction to prevent the LLC from continuing to transact business in the state. Minn. Stat. § 322C.0808.

Michigan stands apart from the other neighboring states in several respects. While its registration requirements are generally similar, its penalty structure is distinct. An LLC that fails to register in Michigan may be subject to civil penalties ranging from $100 to $1,000 per month of noncompliance, up to a maximum of $10,000. Mich. Comp. Laws § 450.5007(1), (6). In addition, Michigan uniquely allows managers, members, and other agents of the LLC to face personal civil penalties for their involvement in unauthorized business activity. Id. Unlike the other states discussed, Michigan also does not expressly provide that member liability is governed by the law of the LLC’s home state.

Expanding into neighboring states can be a natural next step for growing Wisconsin businesses. By understanding and complying with each state’s foreign registration requirements, LLCs can avoid costly penalties and ensure they maintain the legal protections and operational flexibility needed to succeed across state lines.

• Formation