How To Start LLC In Missouri
Starting a limited liability company in Missouri may seem like a hard task, but it is fairly easy and can be done with adequate research and the right guidance. Since every state has a separate set of rules, taxes, and fees, numerous factors must be considered before deciding to form an LLC. Therefore, we have put together the most comprehensive guide on forming an LLC in Missouri with all the necessary, updated information to make your journey a breeze.
What is an LLC?
A Limited Liability Company, or LLC, is a corporate structure in which owners, unlike conventional corporations, are not personally liable for the business’s debts or liabilities.
The proprietors of a Limited Liability Company are not required to give up their personal property in the event of bankruptcy. One of their main advantages is that limited liability companies do not directly pay taxes on their revenues. Instead, the member’s individual tax returns are used to declare earnings and losses.
The ownership of a limited liability business is often not restricted by state laws. This means that anyone, including other corporations and even foreign companies, may join. Banks and insurance businesses are examples of organizations that can’t lawfully incorporate a limited liability company.
The procedure for forming a limited liability company is less difficult and time-consuming than that for forming a corporation. Investors benefit from greater security, which is a lot simpler and easier.
The articles of organization for an LLC must be officially signed by the owner and the state in which it is being established. A legal document known as an article of the organization is used to create a company at the state level.
Since an LLC’s primary goal is to shield shareholders from direct liability for the company’s debts, fraud may take place. However, the creditors might be able to go after the members and hold them accountable personally if they are found to have engaged in fraud or are unable to provide their legal reports.
Advantages Of an LLC In Georgia
Each state has its own set of advantages and disadvantages; here are some of the advantages you may have if you choose to start your LLC in the state of Missouri:
Easy setup process
A key advantage for aspiring entrepreneurs in Missouri is the ease of setting up an LLC, which offers a straightforward and uncomplicated method to establish a business. The simplified rules and regulations for LLCs enable small businesses and startups to enjoy the same level of protection as larger corporations.
Lower cost of formation
Another major benefit of forming an LLC in the state of Missouri is that it is much cheaper compared to other states. The cost to file for an LLC is only 50$ with an additional 2$ online filing fee.
Business incentive programs
A significant advantage of starting an LLC in Missouri is the availability of various business incentive programs. For example, startup companies in the state are exempt from paying state sales tax and local use tax. Additionally, if your company creates or maintains jobs, the Missouri government offers incentives, including state tax credits that reduce state withholding tax.
Missouri also offers an appealing program for startup LLCs that support the state’s youth by providing employment opportunities, such as internships or apprenticeships. In this case, the startups may be eligible for tax credits of up to 50% for their financial contributions.
Limited personal liability
One of the main advantages of owning an LLC in Missouri is that there is limited liability for owners, which means that if the company were to get sued, then the owners or the members of the LLC would not be liable to pay off the company’s debts or loans.
Prevention of double taxation
A notable advantage of owning an LLC in Missouri is the prevention of double taxation for business owners. They are only required to pay tax once, covering their personal income from their share of profits, rather than paying additional taxes on the corporation’s revenue and profits.
Disadvantages of Starting a Georgia LLC
The disadvantages of owning an LLC in Missouri surely outweigh the advantages. However, it is fairly important to consider both the advantages and disadvantages before you decide to form an LLC yourself. The disadvantages include the following:
Mandatory entity dissolution
A primary drawback of an LLC in Missouri is that the entire entity may be dissolved if the business owner dies or if the company goes bankrupt. This also applies in the event of a member’s death or bankruptcy.
Higher formation costs
Compared to other corporate structures, forming an LLC may incur higher formation costs due to additional fees, annual report fees, and franchise tax fees. These expenses differ across states, so it’s advisable to consult your state secretary’s office for specific fee information.
A challenge that LLCs often encounter is the transfer of ownership. Transferring ownership in an LLC can be more difficult than in other corporate structures, where shares can be easily sold. In a multi-member LLC, all members must agree on the transfer of ownership. Disagreements among members can lead to disputes, making the process even more complicated.
Individual tax requirements
Another drawback is that members may need to pay individual taxes on their share of profits, even if they haven’t received the earnings. This issue can be particularly significant when there are multiple owners, and some haven’t received their portion of the profits. Nevertheless, they are all still responsible for paying taxes on their shares.
How to Form an LLC in Georgia
Many people are often overwhelmed by the thought of starting a corporation, as it often seems like a lot of work. However, it may not be as hard as you think because there are only a few simple steps that you need to follow, and these steps may include:
- Choose a name for your LLC in Missouri
- Choose a Registered Agent in Missouri
- File the Missouri LLC Articles of Organization
- Receive a certificate from the state of Missouri
- Create an Operating Agreement
- Get an Employer Identification Number (EIN)
Choose a name for your LLC in Missouri
Choosing a name for your company is always the first and most important step. However, you need to follow the naming guidelines set by the state of Missouri. These guidelines include the following:
- Words such as attorney and lawyer may require you to provide the Missouri state with additional legal documents.
- The name must not contain words used to name a government agency such as the CIA or FBI.
- Your name must be different from existing businesses in the state of Missouri.
- Your business name must include the words limited liability company or LLC in their name.
- It is important to reserve your name if you are not planning to register immediately, as someone else can take that name.
Additionally, there is another important thing you must consider, and that is if the name that you are planning to use for your LLC is not taken. It is better if you reserve the name you have chosen for your corporation if you do not plan to register any time soon. You can make sure to check if the name you want is not taken by someone else by using the business entity search feature on the Missouri Secretary of State website.
Choose a Registered Agent in Missouri
It is a requirement for you to choose a registered agent for your LLC in the state of Missouri. A registered agent is a business entity or an individual responsible for receiving important legal documents, such as tax forms or notices of lawsuits, on behalf of your company. It is important to note that the registered agent must be a resident of Missouri or a Missouri corporation.
This means you can elect an individual within your company or yourself. It is also important for you to make sure that the agent is available to accept all business documents and business hours or be on-site at all times. Moreover, it is also important for the registered agent to have an official address in the state of Missouri.
File the Missouri LLC Articles of Organization
Filing an article of an organization is a very important step for your LLC. The article of the organization is an official legal document that lays out the basic information for your business. There are two ways to file your articles of organization in the state of Missouri, one can be done through email, and the other can be done by filing online with the Secretary of State. In order to successfully file your articles of organization, there is a set of information you need to file, and this can include the following:
- Signature of the person forming the LLC (owner or member).
- The name of your LLC.
- The name and address of the registered agent you have chosen for your company.
Once you have successfully filed the articles of organization, the Secretary of State will review your articles of organization and send you a certificate to approve your filing.
Receive a certificate from the state of Missouri
Once you have completed the steps prior to this, you will receive a certificate from the State confirming your existence as a limited liability company in the state of Missouri. This certificate will enable you to get an employer identification number (EIN), a business license, and a business bank account. The important step after this is to create a Missouri LLC operating agreement.
Create an Operating Agreement
While other states, such as Virginia, may not require an LLC to file an operating agreement, the state of Missouri requires you to file an operating agreement as it is a must. An operating agreement is a legal document highlighting your LLC’s ownership and operating agreement procedures.
The operating agreement is a very important legal document that makes sure that the business owners are always on the same page and can be very helpful if there are any future conflicts. One of the major benefits of an operating agreement is that if any financial disagreement were to arise, the courts could settle them using the document. Not having an operating agreement can prove to be bad for your company in court.
An operating agreement can often include the following information:
- Indemnification and liability clauses
- LLC’s name and principal address
- Duration of the LLC
- Name and address of the registered agent
- Information about the Articles of Organization
- Purpose of the business
- Members and their contribution
- The way profits and losses will be divided
- Procedure for admitting new members, as well as outgoing members
- Management of the LLC
Get an Employer Identification Number (EIN)
An employer identification number is a vital part of your organization as it is a nine-digit number assigned to you by the Internal Revenue Service (IRS). It is necessary to help your business with some of the basics required to start your business. An EIN can also be referred to as a federal tax identification number. An employer identification number is required for the following:
- An EIN helps you file and manage federal and state taxes.
- An EIN is required for you to hire employees.
- An EIN is also very important if you want to open a business bank account.
You can get an EIN very easily, and it can be done in one of two ways, the first being by applying online and asking the IRS, and the second can be done through email.
Types of LLC
Which type of LLC is ideal for me?
In Missouri, you can choose from a variety of Limited Liability Company (LLC) types to suit your specific business needs. Here are some of the most common types of LLCs you’ll find in Missouri, along with my personal take on their benefits:
- Single-Member LLC: This is perfect if you’re an individual or entity planning to run a business on your own. You’ll enjoy limited liability protection and pass-through taxation, meaning you’ll report your profits and losses on your personal tax return. It’s a simple and efficient option for solo entrepreneurs.
- Multi-Member LLC: If you have two or more people interested in owning and running a business together, this is the way to go. Multi-member LLCs provide limited liability protection and pass-through taxation as well, with profits and losses reported on each member’s individual tax return. It’s great for fostering teamwork and shared ownership.
- Series LLC: This unique LLC type lets you create multiple separate series or divisions within a single company. Each series has its own assets, liabilities, and business operations, which adds an extra layer of liability protection. It’s an interesting choice if you have diverse business interests or want to compartmentalize your ventures.
- Professional LLC (PLLC): Designed for licensed professionals like doctors, lawyers, architects, or accountants, a PLLC is similar to a standard LLC but comes with extra requirements and regulations from the relevant professional licensing board. It’s a specialized option for those in regulated professions.
- Manager-Managed LLC: If you want to appoint one or more managers to oversee your company’s operations rather than having members manage the company directly, consider this structure. It’s helpful when some members prefer to be passive investors or when you want professional management to take charge.
- Member-Managed LLC: This type of LLC involves all members in the company’s management and decision-making. It’s the default management structure for most LLCs unless specified otherwise in the Operating Agreement. I think it’s an ideal choice if you want a collaborative and hands-on approach to running your business.
When forming an LLC in Missouri, take the time to consider which type of LLC works best for your business needs. It’s always a good idea to consult with an attorney or a business advisor for guidance, as they can help you make an informed decision.
Applicable Limited Liability Taxes In The State of Missouri
If you want to run a limited liability company in the state of Missouri, then you may encounter various costs and must file various documents. Here are some of the applicable costs on your LLC in Missouri:
State Business Tax
When it comes to income tax, most LLCs can be considered pass-through tax entities. This means that the responsibility of paying federal taxes does not lie on the LLC itself; rather, it falls on the individual LLC members. Some states may impose a separate tax or fees on LLCs for doing business in their respective state.
However, Missouri is not one of the states that do not impose such a tax on limited liability corporations. Missouri, like other states, also has a corporate income tax, a flat 6.25% of the taxable income set by the state of Missouri.
Regardless, a business can choose to be treated like a corporation for tax purposes. Unlike LLCs, corporations have to file separate tax returns, which means that if an LLC chooses to be taxed as a corporation, it will have to file separate tax returns.
Annual Filing Requirements In The State of Missouri
Missouri is one of the few states that does not require an LLC to file an annual report or pay an annual fee to the Secretary of State. This is why Missouri is considered one of the best states to open your LLC in. However, if you need to make any sort of changes to your LLC, you can do so by filing an amendment of the articles of organization. This, nevertheless, is not free and can cost you about 25$ to file.
Sales And Use Tax
Sales tax is applicable on all retail sales made within a location in the state of Missouri. Moreover, any sales made by vendors, not from the state of Missouri must pay vendor use tax.
Cost of forming an LLC in Missouri
There are a few costs you may encounter when forming your LLC, most of these costs can vary depending on which state you are in. The costs an LLC may encounter in its formation in the state of Missouri are as follows:
Articles of Organization filing fee (online)
Articles of Organization filing fee (paper)
Name reservation (optional)
Registered agent fee
Annual report filing fee (online)
Annual report filing fee (paper)
Missouri business license
Employer Identification Number (EIN)
Starting A Business
Starting A Business In Missouri
Starting a business in Missouri is recommended by a lot of people because the state corporate tax rates are lower than in most other states.
This makes Missouri a very tax-friendly state to start a business in while also being a great state for startups, as there are many government programs and incentives that a new business can benefit from.
However, it is very important to consider the state’s laws and the advantages and disadvantages of forming a corporation in Missouri. You can form different types of entities in the state of Missouri, such as a corporation or an LLC, the steps for starting an LLC in the state of Missouri are mentioned above. They are fairly simple as compared to other business entities.
Is LLC The Best Entity For Me?
Maybe, LLC isn’t the right entity for you. Maybe it is a C-Corp. Only way to find out is to directly compare them all.
LLC vs Corporation (C-Corp)
Sole proprietorships and Limited Liability Companies (LLCs) are two of the most common business entities for individuals and small businesses. Learn what differentiates the two today.
LLC vs S-Corp
Not sure what business structure to choose? Learn about the key differences between LLC and S-Corp today.
LLC vs Sole Proprietorship
The primary difference is that an LLC provides limited liability protection for its owners, while a sole proprietorship does not.
Frequently Asked Questions About Starting An LLC In Missouri
Here are the most commonly asked questions about forming an LLC business in the state of Missouri:
No, Missouri is one of the few states that do not require a limited liability corporation to pay an annual filing fee.
Opening an LLC in Missouri is not as hard as people may assume it to be, as only a few simple steps are required to open an LLC successfully. Moreover, opening an LLC can be much easier compared to other business entities. However, it is important to do your research on the advantages and disadvantages of opening an LLC in your state.
Yes, just like in all other states, Missouri corporations also have to pay a corporate income tax, which is a total of 6.25% flat according to Missouri tax laws. This is fairly similar to other states. However, more towards the lower side than other states, as Missouri is considered one of the cheaper states to start an LLC in.
Yes, hiring a registered agent is vital to starting your Missouri LLC. The registered agent has to collect important legal documents for your business. However, there are a certain set of requirements that the registered agent must meet; these requirements are mentioned above. Lastly, registered agents can cost anywhere from 100-300$ in Missouri, which is cheaper than in other states such as Virginia.