A comprehensive guide on how to start an LLC in Missouri in 7 steps.
Starting a Limited Liability Company (LLC) in Missouri can be an exciting venture for any entrepreneur. Whether you're a seasoned business owner or new to the entrepreneurial world, understanding how to navigate the formation of an LLC is crucial. This article is designed to guide you through the process of forming an LLC, from brainstorming business name ideas to understanding the costs and benefits involved. As we delve into the details of starting a business, remember that starting an LLC is more than just paperwork — it's about creating a stable and profitable business.
How to start an LLC in Missouri in 7 steps
01. Pick your business name
To start a business in Missouri, the first step is selecting a name for your LLC. It's not just a creative process, it's a legal one too. Make sure your chosen name ends with "LLC," "L.L.C.," or "Limited Liability Company" to meet state requirements. Your business name should be unique and not too similar to others on record with the Missouri Secretary of State.
Here's how to come up with a business name that both stands out and fulfills legal requirements:
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Check for availability: Use the Missouri Secretary of State's online database to search for existing business names.
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Follow naming guidelines: Avoid restricted words that could confuse your LLC with a government agency (e.g., FBI, Treasury).
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Consider your online presence: Search for domain availability if you plan to also focus on building a website, which can be easily done through platforms like Wix.
Tip: If you're having trouble coming up with a unique name for your business, consider using a business name generator.
02. Choose your registered agent
Every LLC in Missouri must have a registered agent, an individual or company that agrees to accept legal papers on behalf of your LLC. Your registered agent must be available during regular business hours and have a physical address in Missouri.
To choose the right registered agent, consider the following factors:
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Reliability: Ensure they are dependable and can handle confidential documents.
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Availability: They should be consistently available at the listed address during business hours.
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Compliance: Verify that they meet all legal requirements set by the state of Missouri.
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03. Obtain state business permits
Depending on the nature of your business, you may need specific permits or licenses to operate legally in Missouri. These could range from general business licenses to industry-specific permits.
To obtain the necessary permits in order to register your business, follow these steps:
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Identify requirements: Check with local and state agencies to determine what permits you need.
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Complete the applications: Fill out all required paperwork accurately and submit them to the appropriate authorities.
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Pay any fees: Be prepared to pay any associated fees for obtaining your permits.
Let’s say you want to start a handyman business in the state. First, you’ll need to register your business with the Secretary of State. Additionally, depending on what specific services you offer, you may need additional permits or licenses. It is important to research and understand all necessary requirements in order to operate legally and avoid any penalties or fines.
Learn more: How to get a business license
04. File a Articles of Organization
The Articles of Organization is a critical document that officially creates your LLC in Missouri. You'll file this with the Missouri Secretary of State, either online or by mail, along with the required filing fee.
These key actions are included in filing:
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Gather your business information: You'll need details like your LLC's name, registered agent information and management structure.
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Fill out Form LLC-1: This is the specific form used for filing an LLC's Articles of Organization in Missouri.
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Submit and pay fees: Complete the submission process by paying the filing fee, $50 online or $105 by mail.
05. Draft your LLC operating agreement
While not legally required in Missouri, creating an operating agreement is highly recommended. This internal document outlines ownership structures, member roles and operational procedures for your type of business.
Here’s why an operating agreement is important:
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Clarifies business rules and guidelines: It sets clear expectations for members regarding operations and conflict resolution.
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Protects LLC status: Helps maintain limited liability status by proving that your LLC is a separate business entity.
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Prevents misunderstandings: Reduces potential disputes among members by detailing policies and procedures for how the business should be run.
06. Apply for an EIN and pay relevant taxes
An Employer Identification Number (EIN) is like a social security number for your LLC. It’s necessary for hiring employees, opening bank accounts and filing taxes.
Securing an EIN involves:
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Applying online or via mail: The IRS provides free EIN registration through their website or via mail submission.
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Understanding your business tax obligations: Learn about state-specific taxes that apply to your LLC, such as franchise tax or sales tax. In Missouri for an LLC owner this includes a 15.3% self-employed tax (12.4% social security, 2.9% Medicare). For more information, visit the Missouri Department of Revenue website.
07. Organize annual reports
In some states, annual reports are mandatory filings that keep your company's information up-to-date with the state government. If your LLC is taxed as a sole proprietorship or a partnership, it is exempt from the annual report requirement in Missouri.
How much does it cost to start an LLC in Missouri
Starting an LLC in Missouri involves various costs, which are important to budget for when planning your business. Here's a breakdown of the expenses you can expect:
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Filing fee for Articles of Organization: This is the fee paid to the Missouri Secretary of State to officially register your LLC. It’s a one-time cost that is mandatory for all new LLCs. For an LLC it costs $520.
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Registered agent fee: If you choose to hire a professional registered agent, they will charge a service fee. This fee varies depending on the agent or service company you select.
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Business permits and licenses: The cost for these will depend on your specific business activities and location. Some industries may require multiple licenses, which can increase your startup costs.
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Operating agreement: If you hire a lawyer or use a professional service to draft your operating agreement, there will be associated costs. However, drafting it yourself can reduce expenses.
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Employer Identification Number (EIN): Obtaining an EIN from the IRS is free of charge.
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State taxes: Depending on your business structure and operations, you may need to pay state taxes in addition to federal taxes.
Additional costs may include:
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Legal or financial consulting fees: If you seek professional advice during the formation process, these services will add to your startup LLC costs.
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Domain registration and website creation: Establishing an online presence via a website is crucial in today's market. Costs here include domain registration and potentially hiring a web designer or using a website builder like Wix.
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Business insurance: Depending on your industry, you might need various types of insurance to protect your LLC.
Learn more: How much does it cost to start an LLC
Who can start an LLC in Missouri
To form an LLC in Missouri, there are specific eligibility criteria that need to be met. It's crucial to understand who can start an LLC in the state before you begin the process.
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You must be at least 18 years old to form an LLC in Missouri.
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There's no residency requirement, meaning you don't have to live in Missouri to start an LLC there.
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You must have the legal capacity to enter into a contract. This means individuals who are not barred by law due to certain conditions or past activities can form an LLC.
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Most types of businesses can be structured as an LLC, except for certain professional services that may require a different business structure, like a professional corporation.
Benefits of starting an LLC in Missouri
Forming an LLC in Missouri has a number of benefits that can be appealing to business owners. These advantages include legal protections and tax breaks, making it a popular option for enterprises.
Limited liability protection
Owners (members) are typically not personally responsible for business debts and liabilities.
Flexibility in management
Unlike corporations for example, LLCs have fewer formalities and can be managed by the members or appointed managers, providing flexibility in how the business is run.
Pass-through taxation
Profits go directly to the members without being taxed at the company level, avoiding double taxation.
Credibility with customers and partners
Having 'LLC' after your business name can enhance your credibility with potential customers, suppliers and financial institutions. You can then choose an .llc domain for your website to reinforce this credibility.
Disadvantages of starting an LLC in Missouri
To make an informed decision on whether an LLC is the best business structure for you in Missouri, it is crucial to assess both the advantages and disadvantages. Here are some challenges you may encounter with an LLC in Missouri:
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Members of an LLC may be subject to self-employment taxes on their share of the profits.
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Some investors may prefer to work with corporations due to the potential for issuing stock.
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Annual reports and other requirements can mean recurring fees and paperwork.
Why start an LLC over another business entity in Missouri?
Choosing the right business structure is crucial. It's important to compare an LLC with other types of business structures to understand why it might be the best choice for your venture.
Here's how an LLC stacks up against other business entities:
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Sole proprietorship: Unlike a sole proprietorship, an LLC provides personal asset protection, separating your personal liabilities from those of your business.
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Partnership: An LLC offers more protection for each member compared to a partnership, where each partner can be personally liable for the debts of the business.
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Corporation: While corporations also provide limited liability protection, they’re also subject to double taxation (taxes on both corporate profits and shareholder dividends). An LLC avoids this with pass-through taxation.
LLCs also offer these unique advantages:
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Operational flexibility: Corporations are required to have a formal structure with directors and officers, while an LLC can be managed by its members or managers, providing greater operational flexibility.
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Fewer record-keeping requirements: An LLC has less stringent requirements for record-keeping and reporting compared to a corporation.
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Profit distribution flexibility: Profits in an LLC can be distributed in any manner agreed upon by the members, unlike corporations that distribute profits according to the number and type of shares held.
You've formed your LLC in Missouri, now what?
After successfully forming your LLC in Missouri, it's time to focus on the next steps to ensure your business thrives:
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Open a business bank account: Keep your personal and business finances separate by opening a dedicated bank account for your LLC.
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Set up accounting systems: Implement accounting software or hire an accountant to manage your finances and prepare for tax season.
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Obtain business insurance: Protect your LLC with the appropriate insurance policies, such as general liability or professional liability insurance.
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Create a website: Establish an online presence by creating a professional website. Wix offers user-friendly tools to build and manage your site.
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Develop a marketing plan: Use online marketing strategies to reach potential customers. Consider SEO, social media marketing and email campaigns.
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Stay compliant: Keep up with annual reports and any changes in business laws to maintain good standing with the state.
Looking to start an LLC in a different state?
How to start an LLC in Missouri FAQ
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How long does it take to form an LLC in Missouri?
The processing time can vary. If you file online, it may be quicker than filing by mail. Check the current processing times on the Missouri Secretary of State's website.
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Can I reserve a business name before forming my LLC?
Yes, Missouri allows you to reserve a business name for a certain period before you formally start your LLC.
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Do I need a business license to operate an LLC in Missouri?
It depends on your type of business and location. Some businesses may require a state license, while others need local permits.
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What if my LLC has more than one owner?
Multi-member LLCs operate similarly to single-member LLCs but make sure to outline each member's role and ownership percentage in the operating agreement.
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Can I form an LLC myself, or should I hire a service?
You can form an LLC on your own by following the steps outlined by the Missouri Secretary of State. However, if you're unsure about the process, consider hiring a professional service.
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What taxes do I need to pay with an LLC in Missouri?
As an LLC owner in the state you may be liable for both federal and state taxes. Federal taxes include: income tax, self-employment tax (if you're LLC has more than two members), employment tax (if you have employees), estimated tax payments, if your tax liability is expected to exceed more than US$1,000 a year. Potential state taxes are: Missouri income tax, which is your share of the profits from your LLC taxed an at individual income tax rate; sales tax payable to the Missouri Department of Revenue and Use taxes, which is applicable to goods purchased for use in Missouri but which is not relevant if you've paid sales tax.