Missouri is fast becoming a preferred destination for entrepreneurs looking to incorporate an LLC. The state offers generous tax credit programs to new small businesses. These incentives help businesses grow, improve the local economy, and help bring more jobs to the state.
To take advantage of these incentives, you must first learn how to start an LLC in Missouri. The process is simple enough and if you follow the steps highlighted below, you’ll be able to get up and running there in no time.
What Is a Missouri LLC?
An LLC is a type of business entity that provides its owners with vital liability protection. It shields their personal assets from the debts and liabilities of the business. A Missouri LLC can have one or more members. This is a tax-efficient business structure as all income flows through the LLC and must be reported on the personal returns of the members. It’s easy to incorporate an LLC in Missouri. The entire process doesn’t normally take more than a few days to complete.
What to Consider Before Forming an LLC in Missouri?
Before you even think about incorporating an LLC, you need to be sure about what line of work you want to be in. Once you’ve decided on the business you want to do, there will be a few prerequisites to complete. You’ll need to create a business plan that highlights the opportunity you’re looking to tap. It will also include the market and customer research that you’ve done as this would be vital for deciding what products and services you’re going to offer.
Once this legwork has been done, it will become clear what type of business entity you should register. An LLC will be the appropriate structure if you’re looking for a simple entity that shields your personal assets and has easy compliance requirements. If you’re interested in raising outside capital, you may consider another type of entity such as a corporation.
8 Steps to Start an LLC in Missouri
While the process to incorporate an LLC is simple enough, you might find it difficult to figure out certain matters, particularly if you don’t have any prior experience in setting up a business. That’s why by following the easy plan highlighted below you can be sure that your business entity is properly registered so that you can start running your business without any problems.
Step 1: Decide on a Business Name
You must have already decided what you’re going to call the business. Start by checking business name availability to ensure that there’s no other business with the same name. You’ll need to come up with a different name if another business is already using it. Ideally, the name you choose should be easily distinguishable and also highlight the vision of your business.
A simple online search can reveal if the name is already in use and whether it’s trademarked by someone. You can also search the state’s business name database. Whatever name you decide, you will have to put LLC or Limited Liability Company at the end of it.
If you’d like a shorter name to appear in your marketing materials, communications, etc., you can go for a DBA or a fictitious name. It’s basically a permit for the LLC to conduct business under a name that’s different from its registered name.
Step 2: Choose a Registered Agent
A Missouri LLC is required to have a registered agent. It’s possible for you to be your own registered agent if you’re a resident of the state. Missouri requires that registered agents for LLCs must have a physical address in the state and be available during normal business hours to accept legal documents and service of process.
Another reason why you need a registered agent is the assistance that they can provide you. They’ll send reminders when annual reports are due and also help you stay on top of any other regulatory filings that need to be made. A Missouri registered agent can do the LLC formation on your behalf as well, thus saving you a lot of time in the process.
Step 3: Prepare and File LLC Articles of Organization
The document that includes all the important information about your business, such as the name, particulars of all the members, business purpose, address, and more is called the Articles of Organization. This is the foundation upon which your business is built so it’s important to be mindful of all technicalities when you’re putting together this document.
Once it has been drafted, you’ll need to file this document with the Secretary of State. It’s only when the document has been reviewed and approved by the authority that your LLC will become a legal entity separate from its owner. Once it’s incorporated, you as a member of the LLC will enjoy liability protection whereby your personal assets will remain separate from the business.
Step 4: Draft an LLC Operating Agreement
Another foundational document for your LLC is the operating agreement. This is where all the rights, operating procedures, and responsibilities of the LLC will be mentioned. It’s a way to bring structure to the management affairs of the business. When everything is put on paper, all members know what’s expected of them and how they’re supposed to operate in relation to the business.
The operating agreement also includes details about how the profits and losses of the business will be distributed among the members. The management structure is also clarified so the chain of command is clearly established from the get-go.
It’s not uncommon for businesses to have internal disputes. Ensure that there’s an effective dispute resolution method outlined in the agreement so that such issues can be dealt with properly in the future.
What’s Next After Filing an LLC in Missouri?
The process doesn’t end once the LLC has been formed. There are still a few more steps left before the business can operate. You’ll need to obtain an EIN from the IRS as that’s crucial not just for opening a business bank account but also for hiring workers.
This is also the stage where you’ll apply for any licenses or permits that you may need. This is done to ensure compliance with any and all regulations, both federal and state.
Step 5: Apply for EIN
The Employer Identification Number or EIN is a nine-digit number that’s unique to a business entity. This is why you can’t have multiple LLCs on one EIN. It must be separate for each entity as the IRS uses EINs to identify businesses for taxes. To obtain an EIN, you’ll need to file form SS-4 with the IRS. This can be done online or through mail. You’ll find your EIN on the approved form that the IRS returns to you.
In case you have lost your EIN, don’t worry, it can be recovered quite easily. You can get in touch with the IRS and they’ll sort you out. You can also find it on the confirmation letter that the IRS sent after your EIN application was approved. The number would be mentioned on it.
Step 6: Open a Business Bank Account
With the EIN in hand, head over to your preferred bank to open an account for your business. Don’t use your personal account for business transactions as this could cause problems later on, particularly when you need to report business income and expenditure on your tax returns. Just choose the right bank account based on the unique needs of your business.
The list of things you need to do for a new bank account is very simple. Visit your preferred bank and speak to them about the various accounts they offer. Getting clarity about their fees and related charges should be among the questions to ask before opening a bank account.
Once you’re satisfied with everything, provide them with the relevant documents and information so that they can complete the process on their end and open your business bank account. Most banks can do it on the spot and may also offer you additional services to help expand your business.
Step 7: Obtain Licenses or Permits
Depending on the nature of your business, Missouri will require you to obtain licenses or permits. The process may involve registration with both state and local authorities, including the Secretary of State. Most filings are easy to complete and can be made online so you won’t need to spend much time going from one office to another.
However, be mindful of the fact that there may be some fees associated with these filings. You can easily find a lot of information related to the licenses and permits required for your business online, so make good use of the internet to mitigate any potential problems in the future.
Step: 8: Get Business Insurance
It’s always a good idea to have insurance for your business as there could be unforeseen issues that could create a big financial risk and threaten the existence of the company. Missouri also mandates businesses that have five or more employees to have workers’ compensation insurance.
The other types of LLC business insurance that you can consider include general liability insurance and automotive insurance. You should strive to maintain adequate insurance coverage so that your business is protected in any eventuality.
5 Types of LLCs to Consider in Missouri
LLC is an umbrella term as there are many different types of LLCs that you can opt for depending on the unique needs of your business. It’s important to choose the right type of LLC as that would provide the most favorable environment for your business to grow. Here are all the LLC options available for you to incorporate in Missouri.
1. Single-member LLC
As the name suggests, a single-member LLC has one owner, so it’s effectively a sole proprietorship with the liability protection that an incorporated entity provides. It’s easy to incorporate and there are minimal filings to be made every year. Since there’s one single owner, they exercise complete management control over the entity.
LLCs are pass-through entities for taxation. This means that the income flows to the owner who has to report it on their personal tax return. LLCs are great for small business owners who would like to shield their assets from the liabilities of their business. Owners should keep in mind that they may be required to pay self-employment taxes on the profits that their business generates.
2. Multi-member LLC
These are quite similar to single-member LLCs with the major difference being that they have multiple members. Two or more people who want to come together and run a business can do so under a multi-member LLC. They all have the same level of liability protection so their personal assets remain shielded.
It’s up to the members to decide the percentage of their equity and how the profits and losses will be distributed among them. The ease of setting up a multi-member LLC and the minimal paperwork requirements are why most small business owners operating in a partnership choose to form a multi-member LLC.
An L3C is described as a Low-Profit Limited Liability Company where the primary purpose is not to produce income through business or appreciation of property. An L3C’s primary purpose must be charitable or social. Profit generation can only be the secondary objective of this entity. They’re useful for private foundations that wish to keep their tax-exempt status as they continue to invest in charities and qualifying businesses.
L3Cs are also capable of raising investments from private investors. The entity provides a high degree of liability protection as all members of an L3C have their liability limited to the capital that they’ve contributed. They have no personal liability for the debts of the business.
4. Series LLC
Missouri is among the few states that recognize Series LLC. It’s a unique kind of entity whereby you can have multiple LLCs grouped under a parent LLC. This enables you to have a separation between the various parts of the business while managing them from one main LLC. This is also a way to further improve asset protection as the liabilities of each segment of the business are contained within a separate LLC.
Series LLCs have become popular with people in the real estate business as it allows them to manage different properties under one parent LLC. Each subsidiary can have its own business activity with assets and liabilities separate from the parent. Business owners can also use this structure to reduce their operating costs if they are running several different business ventures.
The only downside is that Series LLCs are still not recognized in many states which can make it a bit troublesome to figure out the regulatory requirements.
5. Anonymous LLC
Anonymous LLCs are allowed in Missouri so you can keep your identity confidential from public records, thereby taking advantage of the additional layer of privacy on offer. You’re allowed to have nominee managers that appear on the public records so it will be their information that comes up instead of yours whenever somebody looks up the LLC’s ownership details.
This is a great option for those who are very particular about their privacy and are looking for a way to keep their personal assets discreet. Do keep in mind that Anonymous LLCs aren’t recognized in all states so their applicability remains limited.
Hasslefree Missouri LLC Formation is Within Reach
Whether you’re attracted by the tax credits offered by Missouri or the fact that you can have an anonymous LLC here, you’ll need to go through the same process to incorporate one. If you’d rather have professional help throughout the process, you’ll be glad you found doola’s LLC formation service.
Everything is handled for you end-to-end, freeing you from the worries of filing all of the different documents and meeting all the requirements. The only thing you need to focus on is how you’re going to expand the business.
Why should I file an LLC in Missouri?
You should think about filing an LLC in Missouri because the state offers various tax credits for new businesses. This could potentially provide you with a good support base in the early stages of your business. Missouri also offers many different types of LLCs, including anonymous LLCs, that you can’t get in other states.
How long does it take to get an LLC in Missouri?
It doesn’t take very long to set up your limited liability company in Missouri. The process starts by submitting all the required documents to the Secretary of State. You can expect the process to be completed within a week.
How much does an LLC cost in Missouri?
There’s a $50 filing fee if you’re doing the process online. It increases to a $105 filing fee if you opt to do it through mail. You’ll likely need to pay extra for a registered agent and other services such as expedited processing.
How is an LLC taxed in Missouri?
A Missouri LLC has to file both state and federal taxes. The entity is considered pass-through for taxation, which means that members have to report the income on their personal income tax returns. You may also be required to pay self-employment and payroll taxes. It’s possible to elect that your LLC be taxed as a corporation instead.
Can I change the name of my LLC in Missouri after it’s formed?
Yes, it’s possible to change the name of your LLC in Missouri after it’s formed. File the Amendment Form and wait for up to 10 days for it to be processed. You’ll receive a confirmation of the amendment once it’s approved. There’s a $25 fee for this process.
Can an LLC in Missouri be taxed as an S-Corporation?
Yes, you can elect that your LLC should be taxed as an S-Corporation in Missouri. To do this, go ahead and file Form 2553 with the Internal Revenue Service. You can potentially derive many tax benefits by electing to do this, but the quantum of the savings will depend on the kind of business you’re in. Your tax professional will be able to provide better guidance if this makes sense for your business.
Do I need to have a physical office for my LLC in Missouri?
Missouri requires LLCs to have a registered agent that has a physical address in the state and is also available during regular business hours to accept documents on behalf of the business. So even if you don’t keep a physical office for yourself in Missouri, the registered agent you choose there must have one.
Can I dissolve or close my LLC in Missouri if I no longer need it?
Yes, you can easily dissolve your Missouri LLC if you no longer need it. Send a Notice of Abandonment of Merger or Consolidation of Limited Liability or a Notice of Winding Up form to the Secretary of State. There’s a $25 fee for dissolving the LLC.