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LLCs, or limited liability companies, represent a popular structuring tool for those wanting to start a business in Missouri. This business structure offers benefits for both you personally and for the business as a whole.
We’ll break down the steps to follow when seeking to start your LLC in Missouri. The good news: It’s not as hard as you may think!
Why Starting an LLC in Missouri Is Worth It
An LLC works nicely for a wide variety of business entities. It’s easy to set up, even for those with limited knowledge about running or creating businesses. Maintaining an LLC as the business grows and matures is relatively easy too.
Ultimately, the LLC gives the business owner the ability to protect his or her personal assets and legal standing. The LLC shields the owner from financial or legal concerns that the business has through a concept called limited liability protection.
While you can start an LLC in any state, Missouri is a good option because it doesn’t require annual reports or fees from its LLC owners, saving you both money and paperwork.
Benefits of Starting an LLC
Starting an LLC in Missouri provides a number of benefits, including:
- Make your own decisions: With a limited liability corporation, a single person can be in charge. The business owner doesn’t need to rely on a board of directors or on others to make decisions for the business.
- Limit personal liability: By creating an LLC, business owners will separate the business from their own individual financial situation and legal obligations. When the LLC accumulates debts or faces legal issues, such items do not affect the owner’s personal standing, as long as the owner does not personally guarantee debt or commit some sort of legal breach personally.
- Simplicity of starting out: Within the state, Revisor of Missouri Chapter 347.039 clearly spells out the requirements for forming an LLC, making it easy to understand the process. The Missouri Secretary of State allows the filing process to occur completely online, further simplifying the work.
- Reduced paperwork requirements: Unlike a corporation, LLCs do not need to draft bylaws or hold annual meetings of shareholders. This means the LLC won’t need to hire extra people to handle all of these obligations.
- No double taxation: With an LLC, the structure of the business allows it to pass profits through to the owners’ individual tax returns. With a corporation, the business must pay taxes on its profits, and shareholders then also must pay taxes on any dividends.
Disadvantages of Starting an LLC
Even though the LLC business structure has multiple benefits for business owners, there are a few potential drawbacks related to taxes.
- Paying extra taxes: The owner of an LLC must pay Social Security and Medicare taxes on salaries and profits, just like a self-employed person. With a corporation structure, the Social Security and Medicare taxes come out of the salaries, but they don’t come out of the profits.
- Employee disadvantages: For an LLC that has employees, the employees must treat any benefits as income subject to taxes. These would include things like health insurance premiums the company pays or reimbursed parking costs. Employees of a corporation receive benefits without concerns about taxation.
The Investment Needed to Start an LLC in Missouri
An advantage of starting a Missouri LLC is the limited startup cost. Using the LLC structure is a highly cost-effective means of starting a business in the state.
Additionally, Missouri does not require the filing of annual reports for LLCs. Some states require annual licensing and fees along with the reports, but Missouri does not.
The LLC will have a few expenses related to starting the business and filing the paperwork with the Missouri Secretary of State office.
When performing the setup process online, the LLC will pay only $50 and will receive immediate verification of the successful completion of the process.
Business owners also have the option of submitting the paperwork by mail to the state. Using traditional postal mail and paper forms carries a higher fee of $105. It can take 5 to 10 business days to receive verification of the filing when sending paperwork via postal mail.
Paying a Registered Agent
LLCs in Missouri require the designation of someone to serve as a registered agent for the LLC. This agent’s name and address will be part of the public record with the LLC.
As an LLC business owner, you can serve as your own registered agent with no added cost. Or you can hire a company to serve as a registered agent for the LLC. Costs typically will range from $40 to $100 annually for this service.
Some registered agents also can take care of the entire process of filing the LLC with the state. Although filing as an LLC in Missouri on your own is an easy process, some people will prefer to hire an entity to handle the steps required. This could cost a few hundred dollars or more.
The LLC may have a few other costs related to operating and setting up the LLC. These costs are low, and some of them are optional.
- Name reservation: In Missouri, a business owner can reserve a business name for up to 60 days prior to actually filing the forms to start the LLC. Form BE-1 in the state carries a $25 filing fee. This same form works to reserve a name for a corporation or limited partnership.
- Certified copies of business records: The Secretary of State office in Missouri allows LLCs to order copies of business record documents, generally starting at about $10 per record. Additional fees may apply for multi-page documents.
- Certificate of good standing: Some lending institutions or insurance companies require your LLC to have a certificate that shows it is in good standing with the state of Missouri. Businesses can order these certificates for $10 apiece through the Secretary of State office.
- Articles of Amendment: Should any of the information about the LLC change over time, such as the business address, the business owner will need to file an amendment document with the state. This filing costs $25.
- Permits and licenses: Some LLCs, as well as other types of business structures, will need a variety of permits or licenses to operate in the state. City or county governments may require licenses as well. Some LLCs may even need to obtain a federal license or permit. These costs vary quite a bit, depending on the nature of the business.
5 Steps to Starting an LLC in Missouri
When it’s time to form the LLC, the business owner will need to follow a series of steps. The business owner can perform these steps online through the Missouri Secretary of State office website or through paper forms submitted to the state via postal mail.
#1 – Select a Name for the LLC
Naming the LLC can be a fun process, helping set the tone and branding for the business. However, it’s also an extremely important aspect of legally establishing the business.
Each LLC in the state of Missouri must have “LLC,” “Limited Liability Company,” or a similar term as an official part of the name.
The selected name must be unique in the state of Missouri. The Secretary of State office allows those preparing to form an LLC to search all business names already registered in the state of Missouri. This helps the new business owner find a unique name.
Businesses cannot use a name that would indicate they provide medical or banking services, unless they actually have personnel involved with the LLC who hold a license in Missouri for those services. The name cannot indicate that the LLC has an affiliation with educational or government entities either.
If the LLC desires to use a name that indicates these types of affiliations, the business owner may need to complete additional forms and paperwork.
As mentioned earlier, the state of Missouri does allow those preparing to form an LLC to reserve a name before actually filing the LLC forms. This is a good idea, especially if the business owner is looking for a website domain name that matches the business name. Reserving both names ahead of time helps the business successfully plan ahead.
#2 – Choose the Registered Agent
Next, the LLC needs to select a registered agent. This person or entity will serve as the legal representative of the business.
In Missouri, the registered agent will accept any legal documents that the business receives. Because the agent’s name is part of state records that members of the public can access, anyone can send legal documents to this person.
As mentioned earlier, you as the business owner can serve as the registered agent. However, because the registered agent’s name and address will become part of the public record, some business owners prefer to select someone else as the agent. The business owner may prefer to keep his or her contact information private.
If selecting another individual to serve as the registered agent, this person must be at least 18 years old. The individual should be someone who is available at the registered address for the LLC during normal business hours. For many small businesses with a limited number of employees, it’s easier for the business owner to serve as the registered agent, because he or she will often be on-site.
The business owner could choose to hire a third-party entity to serve as the registered agent instead. This third party often will be an entity that serves as an official registered agent for multiple LLCs.
A third-party entity that serves as a registered agent should have its contact information on file with your LLC and should be available at its place of business during typical business hours. The third-party agent does not have to be available at your place of business.
#3 – Complete the Articles of Organization for the LLC
As part of the process of filing the LLC, the business owner will need to submit quite a bit of general information about the business and about the owner. All of this occurs through the Missouri Articles of Organization.
Missouri allows businesses to submit this information online or as part of paper forms. Some of the types of information required as part of the Articles of Organization include:
- Business name: Use the legal business name you selected earlier on this area of the form, as long as it meets the requirements in Missouri and is a unique name.
- Business purpose: List a brief description of what the business will do. If the business will have some sort of tax-favorable status, the IRS will provide some specific language that the business owner should list here.
- Registered agent information: The name and address of the registered agent will be part of the articles. This could be the name and address of an individual, the business owner, or a third-party entity serving as the registered agent.
- Management structure: Select how the business management will occur within this section. The management of an LLC will occur either through a manager or managers, or it will occur through its members. A member management structure is more common.
- Duration: If the LLC will have a particular end date for dissolution, the business owner should list it here. More often, the LLC will have no plan for an end date, and the business owner should enter perpetual on this line.
- Organizers: List the names and addresses of anyone who serves as an organizer for the LLC.
- Effective date: For those business owners who want the creation of the LLC to occur at a certain future date, they can list it here. Otherwise, the creation date will be the date the filing with the Secretary of State office occurs.
The form has a couple of optional areas too, including listing the physical address of the actual business and whether the LLC will be a series LLC. The series LLC consists of a central master LLC and other segments that branch away from the master.
#4 – Set Up the Operating Agreement for the LLC
Missouri requires that limited liability corporations hold operating agreements. Having this document in place is beneficial, as it protects the business’ operations by setting rules for the operation of the LLC. The operating agreement also provides credibility for the LLC’s operation.
LLCs will not need to file the operating agreement with the Secretary of State in Missouri, as this is an internal document. The business simply has to provide proof that it has this agreement in place.
#5 – Request an Employer Identification Number
The business will be able to request an Employer Identification Number (EIN) through the IRS. The EIN serves the LLC in the same way that a Social Security Number serves an individual.
The IRS will give the LLC an EIN for free. To receive the EIN, the business must have a date of formation on file with Missouri, so requesting the EIN should be the final step of creating an LLC. The legal business name must be on file with the state before requesting the EIN too.
A business must have an EIN before it can hire employees. The EIN application process can occur completely online.
Once the limited liability corporation is in place, it’s important to take steps to separate your personal and business assets and finances. Open a separate bank account for the LLC, obtain a business credit card, and create business branding options. You want to make it clear that your personal life and LLC life are separate.
As the business begins operations, having some long-term strategies in place will give you a better chance at success. We recently published a companion article that provides advice for maintaining an LLC. This is a helpful resource for moving forward.
When it’s time to pay taxes, read through our Guide to How LLC Taxes Work article. Some business owners struggle with keeping on top of their tax obligations, but this advice should be helpful in avoiding costly mistakes.