Starting a Limited Liability Company is exciting, but it’s also a lot of hard work. But it’s worth it to a lot of business owners because it provides you with personal asset protection, which is a feature you don’t enjoy if you choose a corporation or partnership business structure. But how long does all of that paperwork take? We’ll tell you everything you need to know about LLC formation and how long it takes in this through guide.
Discovering Missouri
Missouri is called the “Show Me State”. It’s typically agreed that it means that “actions speak louder than words” and that you have to show residents before they’ll believe something. As a midwestern state, Missouri borders many other states: Illinois, Kentucky, Tennessee, Arkansas, Oklahoma, Kansas, and Nebraska, as well as the Mississippi River.
The largest geographical region in the states is the Ozark Plateau, where water erosion created these high ridges with forests, caves and springs. Of course, the Lake of the Ozarks is located there, too. The border of the state where the Mississippi River runs has very fertile soil, where rice, cotton and soybeans are farmed. At one time in the Osage Plains section of the state, Tallgrass grew so high it could cover a person on horseback. But it’s now located in Prairie State Park.
In addition to fertile soil and forests, Missouri is the nation’s top producer of mined lead, which is used to make car batteries. It’s also the top producer of lime, which is used in steel manufacturing, as well as for gardening, and to bind masonry.
Economic Overview of Missouri
Missouri’s Gross State Product (GSP) is $304 billion, and its growth rate from 2018-2023 was 19.7k%. The state’s top industries by revenue are Third Party Administrators & Insurance Claims Adjusters, Drug, Cosmetic & Toiletry Wholesaling, Hospitals, Commercial Banking, and Health & Medical Insurance. The companies that employ the most people in the state are Walmart, BJC HealthCare, Mercy Inc., Washington University, and Boeing Co. And the sectors that contribute the most to the state’s GDP are Manufacturing, Real Estate & Rental & Leasing, Healthcare & Social Assistance, Professional, Scientific & Technical Services, and Wholesale Trade.
Business Environment in Missouri
According to the Usnews.com survey of the best states, Missouri is #21 in terms of economy, and ranks 16th in the nation for Business Environment. It’s #13 in Affordability. In fact, the state has a cost of living index of 92.0 (national is 100.0), the median household income is $61,847 (national average is $69,717) and the poverty rate is 12.7% which is on par with the national figure of 12.8%.
But it’s important to know that just last year in 2023, Missouri was ranked as one of the worst states to do business in according to the U.S. Bureau of Labor Statistics. Missouri had the 2nd worst rate of business failures, only after Washington D.C., who had 28% business failures, and Missouri had 27.2%. But their 5 year business failure rate jumps to 60.5%, which is the nation’s highest.
Most of the businesses in Missouri are really small, with around 79.8% of them employing 10 or less people. And in 2022 Columbia was named the 22nd best city in the Midwest for startups. This means that the state is a great place to start a small business, but you may find it hard to keep your head above water in the long term.
State-Specific Regulations and Incentives for Forming an LLC in Missouri
Here’s a list of the regulations, incentives and programs in place for businesses and LLCs in Missouri.
Missouri Works: This is a tax incentive and payroll benefit for businesses that create new, full-time jobs in the state. The program gives qualifying businesses the ability to withhold taxes of newly created jobs, or to receive a corporate income tax credit for the percentage of new payroll they’ve created. High-impact projects may receive additional benefits.
Business Use Incentives for Large Scale Development (BUILD) Bonds: This is a program that provide tax credits for large economic development projects in the state. The project’s capital investment in infrastructure is made using BUILD bonds, and the company makes principal and interest payments. The Department of Revenue provides tax credits that cover the infrastructure costs the company incurs. The projects have to be in manufacturing or R&D, and an investment minimum of $15 million must be made, and at least 100 jobs must be created. Office headquarters projects must make a minimum investment of $10 million and create at least 500 jobs in the state, or 200 jobs in distressed communities.
Business Facility Headquarters Tax Credit Program: This is a tax incentive to help encourage companies to expand or create new businesses in the state. Businesses that are eligible are architectural, accounting, or engineering firms. To qualify, the business must create 25 new jobs over 10 years and make at least a $1 million investment during the first year. They’re also required to keep up with a new facility investment of $20 million and 500 new facility employees.
R&D Tax Credit: This income tax credit is equal to 15% of research expenses if they’re eligible. An additional 5% credit is available for research expenses if they’re conducted at a Missouri university. The program has a cap for the credit of $10 million annually, and no company is allowed to receive over $300,000 in credits per year. $5 million of the total $10 million each year is set aside for minority and women-owned businesses and small businesses. And new businesses (under 5 years old) are issued full tax credits before other businesses.
Data Center Sales and Utility Tax Exemption: A business that creates at least 10 full-time jobs and provide wages that are either at or above 150% of the county’s average wage, plus invests $25 million in a new data center facility during a 36 month window can receive a total 15 year sales and utility tax exemption. There’s also a 10 year exemption that’s available for businesses that expand existing data center facilities, making an investment of $5 million during 12 months and creating at least 5 full time jobs with wages at or above 150% of the county’s average wage over 24 months. An organization of companies can also combine the jobs and investments made at the same facility to reach the threshold minimums.
Sales Tax Exemption for Manufacturers and R&D: Any gas, water, electrical energy, coal, chemicals, energy sources, machinery equipment or certain materials that are consumed or used in the manufacturing and R&D processes are exempt from sales and use tax.
Pros and Cons of Establishing an LLC in Missouri
There are several pros and cons involved with running a business in Missouri, which you should carefully weigh before starting your LLC.
The first benefit is generally the most attractive one to most business owners. Missouri has very low taxes. The corporate income tax rate is only 6.25%, which is great if you choose to have your LLC taxed as a corporation. But if you have your LLC taxed as a pass-through entity, then you’d ordinarily be taxed on your personal income taxes. But personal income taxes aren’t collected in Missouri, which is great news for LLCs.
The infrastructure in Missouri is pretty solid. It ranks #33 in the nation. But just last year the state received $1.7 billion through the Broadband Equity, Access, and Deployment program that’s part of the federal government’s Infrastructure, Investment and Jobs Act (IIJA) to improve internet access and upgrade the infrastructure. It was the third-highest BEAD allocation in the nation.
There are disadvantages, too. Here’s what you need to know.
While it’s been named as one of the best places to start a business, Missouri has one of the worst business failure rates over the course of 5 years in the whole country. The first-year failure rate is 27.2%, a 5 year failure rate of 60.5%, and a 10 year failure rate of 68.7%. So, it’s easy to start a business in the state, but it’s hard to keep it going.
The unemployment rate in Missouri is 3.3%. Unfortunately, that means it’s hard for businesses to hire new employees. According to NFIB, around 40% of small businesses in the state have open positions that they can’t fill, and 14% of small business owners have plans to create new jobs during the next 3 months. That’s actually the lowest number of new jobs being created since all the way back in 2020, and it’s because businesses know that it’s hard to fill jobs in the state.
On top of the labor shortage, there’s currently a Small Business Deduction in place that gives small businesses a 20% tax reduction. But that’s going to expire in 2025, and after that small businesses are going to get hit with a massive amount of taxes. That’s something most small business owners in the state can’t deal with right now, especially when they’re already dealing with rising inflation.
Procedure of Establishing an LLC in Missouri
Before you learn about all of the details of formation times, you need to learn the essentials. Here are the steps to form a Limited Liability Company in Missouri.
- Get Your Hands on an Articles of Organization Form: The first step of your journey is getting an Articles of Organization form. You can get one from the Missouri Secretary of State Corporations Division.
- Choose a Business Name (That’s Available): There are several rules when it comes to business names in Missouri. You’re not allowed to use a business name if another business in the state is already using it. Luckily, there’s a business name database on the Missouri Secretary of State website, and you can run a search (for free) to find out if your business name is available. Once you find a name you can use, you also need to file a Name Registration form to reserve it.
- Pick a Registered Agent: Every LLC in the state is required to have what’s known as a “registered agent”. It’s a legal position that’s designed to ensure that your business keeps its Certificate of Good Standing.
- Choose Your Business Address Wisely: Your business address may not seem like a complicated issue, but it’s something you should choose carefully. If you list your home or personal address, then it’ll be put on the public record where everyone can access it, posing a number of security concerns.
- Sign and File Your Articles of Organization: Make sure you double-check the information on your documents and edit out any typos or erroneous information. Then sign and submit the form to the Missouri Secretary of State Corporations Division.
Necessary Documentation for Filing an LLC in Missouri
Here’s a list of the documents you’ll need to file for an LLC in Missouri.
Articles of Organization: This is the primary form you need to apply for a Limited Liability Company, and it’s how the Secretary of State initially obtains all of the information about your business. It lists crucial information like your business name, its duration and purpose, address, a list of all of your LLC members and contact information for each LLC member, the management style of your LLC (member-managed or manager-managed), and your registered agent’s information.
Operating Agreement: An Operating Agreement isn’t a legal requirement, but it’s definitely something you should have, regardless of legalities. It includes comprehensive instructions about how your business will be operated and managed. Some of the things you should add to your Operating Agreement include information about your business (name, address, registered agent information, duration, formation date, etc.), a list of your LLC members along with their contact information and their roles in the company, the contributions and ownership shares of each member, an explanation of the distribution of profits and losses among members, manager names and their contact information, information about member voting rights and meeting schedules, and a detailed section about how to add or remove an LLC member.
Name Registration Form: The only way that you can legally use a business name in the state is to file a Name Registration form. This is a way of registering the business name and claiming it as yours so that other businesses can’t use it. You can get the form from the Missouri Secretary of State.
EIN: An Employer Identification Number, or EIN, is important to any new LLC because it’s how the IRS will identify your business. You can use it on tax forms and government documents as opposed to your Social Security Number, and you need one to open a business bank account or hire employees. Head on over to the IRS website to apply for an EIN for free.
Tax Registrations: You need to register your new business with the Department of Revenue to collect sales tax. This can be easily done online.
Business Licenses: You’ll need a number of business licenses and permits, depending on the type of business you run and the services and goods you provide. You’ll need to register with both the state and county governments.
Legal Requirements for Starting an LLC in Missouri
Missouri has a few legal requirements for LLCs.
Your new business entity is required to have a registered agent. A registered agent is a person or company who agrees to accept official government mail, legal notices and service of process on behalf of your company. You’re allowed to designate someone you trust to fill the role and help out, like a friend or an excellent employee. But if you want the job done by professionals for legal reasons, you could hire a professional registered agent service.
You’re not required to file an Annual Report in Missouri, but you do have to register with the Department of Revenue for tax purposes, and make sure you’ve got all of the necessary business permits and licenses. You’ll also need to obtain a Certificate of Good Standing for your company.
Time Frame for Establishing an LLC in Missouri
Now that you’ve learned how to file an LLC in Missouri, you can understand how long all of that takes. Here’s a look at formation time frames in the state.
How Long Does the Initial Paperwork Take in the State of Missouri?
Approval times in Missouri for filing by mail can take 5-6 weeks, and online filings are processed immediately. Approval times are the total amount of time it takes from the time you submit all of your documents to the time they’re approved, and they include processing times.
Processing Times in the State of Missouri
Processing times to file by mail are 3-4 weeks, and filing online has immediate processing.
Common Delays in the LLC Formation Process in Missouri
There are several things that can hold up the formation process, and they’re not all in your control.
- Technical Glitches: Technology: we can’t live with it, but can’t live without it either. Unfortunately, you can’t predict it, but server problems, internet issues, electrical outages, equipment malfunctions can cause delays. And if the website goes down, that could cause problems, too.
- The Filing Method You Choose: Obviously, choosing online filing will give you faster processing times. Choosing mail filing will significantly slow down your filing times.
- When You File: The two busiest times of year for the Missouri Secretary of State Corporations Division are the first of the year and the end of the year, and filing during either of those periods could cause a delay because of the backlog. You also should file on or close to weekends or holidays, as filings are only processed on business days.
- Documentation Errors: Any errors on your documents (missing information, typos, etc.) could mean that your application is rejected, which would obviously delay the formation process for you.
Expedited Processing for LLC Formation in Missouri
Expedited processing is the fastest way to get an LLC, hands down.
What Are the Expedited Options Available?
Unfortunately, there aren’t any expedited options in Missouri. This is likely because they have immediate processing for online filing.
Additional Costs for Expedited Services in Missouri
Since there aren’t any expedited options in Missouri, there aren’t additional costs. But generally speaking, states with expedited processing do have additional fees. That means that if you choose an expedited service, you’ll have to pay an extra fee on top of the filing fee.
Comparing LLC Formation Time Frame in Missouri with Other States
We’ll provide you with the processing times of other states so you can better understand how Missouri’s times measure up to other states. This is especially important to business owners that are still thinking about whether to have a domestic or a foreign LLC.
Brief Comparison with Key States
In Missouri, processing time to file by mail takes 3-4 weeks plus mail time, there’s immediate processing on online filings, and no expedited processing options.
There are states with faster processing times. Delaware, Michigan, Montana, Nevada and West Virginia all have 1 hour expedited processing options, New York has a 2 hour option, Louisiana’s takes 2-4 hours, and California has a 4 hour option. Ohio and Kentucky have 1 day processing on mail filings, and Alabama, Massachusetts and South Dakota have mail processing in 1-2 days. However, you won’t find faster online processing times.
Missouri isn’t the only state that doesn’t have expedited filing options, but it actually could be worse. In Arizona, expedited processing takes 5 days, while it takes 7 days in Maryland. Online processing in Arizona takes 14-16 days, Washington takes 12-14 days, Maryland takes 2 weeks, and Texas takes 13-15 days. And mail filing takes 5-8 weeks in Maryland, 6 weeks in Pennsylvania, and 8 whole months in New York.
Why is Missouri a Favorable Place for Forming an LLC?
Missouri is a good place to form an LLC because it has low taxes. LLC owners who typically pay for their businesses through personal income taxes will enjoy the fact that Missouri doesn’t have personal income taxes. And not only is the state’s infrastructure fairly good already, it’s recently received funding to make improvements to it, making it even better.
