Congratulations! If you’re reading this article then you’ve likely made the decision to start an LLC in Missouri.
Starting a business can be an exciting venture, especially if you’re starting a business in a different state. So celebrate your decision to form an LLC in Missouri for what it is: a big step forward for your business!
Of course, I’m going to tell you everything you need to know about forming an LLC in the state of Missouri but I’ll start by telling you what a Limited Liability Company (LLC) is. You will also learn about some of the benefits LLCs can provide your company with and the advantages of choosing an LLC over another business structure so that you can make an informed decision about whether starting an LLC is really the right move for your business.
(If you want to skip to the ‘how to form an LLC’ section, click here)
Table of Contents
What Is A Missouri LLC?
A Missouri LLC is a Limited Liability Company formed in the state of Missouri that is governed by the laws, regulations, and statutes of the state of Missouri.
Why choose An LLC?
There are many advantages to forming an LLC (Limited Liability Company) in Missouri rather than choosing a different type of business entity or business structure, like a Limited Liability Partnership, sole proprietorship, sole trader, partnership, S Corporation or C Corporation. You’ll likely discover a lot more over time but here are the main benefits that your business in Missouri will reap from LLC formation.
1. Limited Liability And Asset Protection
The first reason I’ll discuss that many small business owners form an LLC rather than choosing a different business entity type (like a sole proprietorship or limited partnership) is that owners of LLCs cannot be held personally responsible for the liabilities and debts of their Limited Liability Company (LLC).
So, if your business in the state of Missouri is sued or goes bankrupt, as long as you’ve chosen a Limited Liability Company (LLC) as your business structure, the creditors of your Missouri LLC can’t come after your personal assets as a means of financial compensation. This means that they can’t list your house, car, or the money in your personal bank account as a way to fulfill the financial obligations of your Missouri LLC.
This past year has shown us that businesses that are very prepared and vastly successful can be toppled overnight by an unexpected event (like a worldwide, viral pandemic). And it’s for this reason that small business owners cherish the personal asset protection that comes from forming an LLC in Missouri. Anyone who has put a lot of hard work into creating and establishing their business in Missouri will value the protection that a Limited Liability Company (LLC) can provide.
2. Privacy
The next reason I’ll discuss is that you can protect your personal information when you form an LLC in Missouri.
This is important because hackers and swindlers have become very good at their nefarious online activities over the past decade. They can now steal your identity with just a few clicks and the smallest bit of seemingly insignificant information (like your name and address) which they can then use very quickly to steal your identity and amass thousands of dollars of debt in your name.
If you choose a business type like a sole proprietorship, partnership, or sole trader then you’ll need to register your name and address with the Missouri Secretary of State. They then list this information on the public record on the Missouri Secretary of State website and anyone can access it by searching your business name. This means that the criminals and hackers will have access to information you’d rather not provide them with.
If you form a Missouri LLC, however, you have the option to protect your information and keep it off public record.
How do you do this? You hire a Missouri LLC formation service. An LLC formation service is a professional service that will register their information with the Missouri Secretary of State to be listed on the public record on behalf of your business in Missouri, rather than your own. Of course, you’ll still maintain ownership of your Limited Liability Company in Missouri and your information is secured.
The two Missouri LLC formation services I recommend the most are Northwest Registered Agent and ZenBusiness
3. Taxation
The last reason for forming an LLC in Missouri (but definitely not the last benefit you’ll experience) are the tax benefits LLCs receive compared to corporations.
If you start a corporation rather than an LLC in Missouri, you’ll experience a phenomenon known as “double taxation”.
Here’s how “double taxation” works. The profits from corporations are charged a corporate income tax. Then the (already taxed) profits are distributed to shareholders as dividends and these have been taxed at a different rate as well, resulting in “double taxation”.
But when you form a Missouri LLC, you avoid “double taxation” entirely.
Here’s how taxation for LLCs works. Income for your LLC in Missouri will be taxed at company rates (not corporate rates), then disbursed to LLC members as personal income (not dividends), and are subject to personal income tax.
Believe it or not, there are even more tax benefits for Missouri LLCs beyond simply avoiding “double taxation”.
When the Tax Cuts and Jobs Act was instituted in 2017, it provided LLCs with a tax benefit known as Qualified Business Income Deduction. This provides a 20% tax discount to LLCs that isn’t available to other business entities.
How To Start An LLC In Missouri
Now that you know what a Limited Liability Company is and the benefits of starting an LLC in Missouri, we can discuss how to form a Missouri LLC. If you’re confident that a Missouri LLC is the right structure for your Missouri business then here are the five steps you’ll need to take to form an LLC in Missouri.
*IMPORTANT* If you’d like someone to guide you through the forest of red tape and mountains of legal documents that will be necessary to form an LLC in Missouri, there’s good news. There are professional services to help. They’re called LLC formation services and they make the formation process go a lot more smoothly.
They can charge fees as low as $0 plus the state filing fee to help you file all the legal forms to establish your LLC in Missouri. (However, my favorite Missouri LLC formation service is ZenBusiness and they charge $49 plus the state filing fee.)
If you’d like the guidance and protection of personal information that comes with hiring an LLC formation service, then check out my guide on the best LLC formation service.
1. Obtain Articles Of Organization Form
The first step you’ll need to take to form a Missouri LLC is to get your hands on an Articles of Organization form from the Missouri Secretary of State Corporations Division.
You can get the Articles of Organization form on the Missouri Secretary of State website here.
This is a PDF version of the Articles of Organization form and it’s the primary form that you’ll need to file with the Missouri Secretary of State to form your Missouri LLC.
The remaining steps will refer to the Articles of Organization form.
2. Choose Your Business Name
The very first thing you’ll need to add to your Articles of Organization form to start your LLC in Missouri is your LLC name.
Unfortunately, you can’t just list the first business name that you think of for your Missouri business here. The laws set forth by the Missouri Secretary of State state that LLC names must be distinguishable from other businesses, so you’ll have to choose a company name that isn’t already being used by another business.
You can check the business name database on the Missouri Secretary of State website here to find out whether the company name you want to use is available.
Fortunately, if the Missouri LLC name that you’ve chosen is already taken, you can add suffixes like “Ltd.”, “Co.”, “Limited Liability”, “L.L.C.”, or “LLC” to the end of it. Adding suffixes to the end of your LLC name is a bit like adding numbers to the end of an online screen name when you find that the name you originally wanted isn’t available.
Once you’ve decided on a name for your Missouri LLC, you’ll need to file a Name Registration form with the Missouri Secretary of State online or by mail, along with a payment for the state filing fee. You can get a copy of the form here to send in by mail, and you can file online here by paying the filing fee with a credit card.
If you’ve had to add some suffixes to the end of your company name and you’re not fond of it, don’t worry. You can always register for a trade name or DBA (Doing Business As) name.
A trade name is the name that you’ll use for all of your Missouri LLC’s advertisements, signs, and anything else you want to present to the world. Again, you’ll need to register your LLC’s trade name with the Missouri Secretary of State. Here’s the Trade Name or Fictitious Name form that you’ll need to file along with a $7 state filing fee.
3. Choose A Missouri Registered Agent
The next step you’ll need to complete on your LLC formation journey is to appoint a Missouri registered agent or statutory agent.
A registered agent must accept mail or legal documents like Service of Process from official state offices like the Missouri Secretary of State and the Missouri Department of Taxation during normal business hours on normal business days on behalf of your LLC.
It is possible to become the registered agent or statutory agent for your company yourself. However, that’s a decision you should weigh very carefully before committing to it.
First of all, if you choose to become your LLC’s registered agent or statutory agent, you’ll have to register with the Missouri Secretary of State which will put your name, address, and other personal details on the public record.
It’s also going to cost you a lot of time to act as your LLC’s registered agent or statutory agent. As a registered agent or statutory agent, you must be available during normal business hours on normal business days to receive mail or legal documents on behalf of your LLC because these are some of the legal requirements that a registered agent must fulfill. The problem is that most LLCs also conduct business during regular business hours on regular business days – and you can’t be in two places at once.
If you miss an important piece of mail from the Secretary of State or a legal document like Service of PRocess, you could be sued and not even be able to defend yourself or your LLC from the claims made against it.
You can also choose to use a professional service to fulfill your LLC’s legal registered agent requirements. Registered agent services make sure you receive all of your LLC’s important mail and legal documents (like Service of Process), while also keeping your personal information secure and off the public record. Registered Agent Services typically cost between $99-$299 per state per year.
There are a lot of risks and costs you may incur by not using a registered agent service. Your information could be used to steal your identity, you could miss important official mail and legal documents like Service of Process and then not be able to defend yourself from lawsuits, and you could even lose your business. For these reasons, I always suggest that new LLCs use a registered agent service.
If you’d like to use a professional service to make your life easier and keep your personal information secure, click here to read my guide on the best Missouri registered agent service.
4. Choose Your LLC Address
The name for your LLC isn’t the only piece of information you must enter onto your Articles of Organization form. The address that you put on the Articles of Organization form is just as important as the LLC name you will register with the Secretary of State who will put the address on the public record for anyone to access online, just like the name of your Missouri LLC. This is the address where your business will receive official mail and important legal notices, as well.
If you don’t use a registered agent service, then you could use a physical street address for your business. If your business doesn’t have a physical street address, you’ll have to use your home address or home office address. Either way, you must put down a physical address. You can’t register a PO box address on your Articles of Organization form.
But if you use a registered agent service, they’ll register an address with the Missouri Secretary of State to put on the public record that can’t be traced back to you or your home address.
5. Sign And File Your Articles Of Organization
Once everything is filled out on your form and you’ve triple-checked it for accuracy, it’s time to sign and file Articles of Organization for your LLC.
Of course, if you’re comfortable, you can sign and file the Articles yourself which will register your information with the Secretary of State Corporations Division. But you can also choose to use an LLC formation service. They’ll sign and file your LLC’s Articles of Organization on behalf of your company and register their information with the Secretary of State rather than your own.
You have a couple of filing options for your Articles of Organization. You can file online or by mail. You can file by mail by sending the form along with a payment for the filing fee. Just send it to:
Missouri Secretary of State
Corporations Division
Regular Filing(non expedite)
PO Box 778/600 W. Main St., Rm. 322
Jefferson City, MO 65102
You can also choose the online filing option. You’ll still need to pay the filing fee if you file online, which you can do with a credit card. Click here to file your Articles of Organization online.
Once you’ve finished filing the Articles of Organization form for your company, the Secretary of State will contact you via mail or email once they process all of your formation documents. This can typically take around 10 days. If you’d like to get through this process faster you could choose ‘expedited processing’.
To get the Secretary of State’s office to process your document a bit faster, you can use an LLC formation service. Many LLC formation services offer expedited processing for an additional fee and ensure the processing of your forms in around 48 hours.
Other LLC Activities
Filing the Articles of Organization for your company won’t be the only activity you’ll have to take part in to keep your Missouri LLC in good standing. You’ll need to take part in several other business-related activities as well.
The state of Missouri doesn’t require LLCs to file an annual report, but there are other activities that you will need to take part in.
You’ll likely need to obtain any relevant licenses for your business to operate in Missouri, depending on the type of business you will be conducting. You’ll have to check with the county clerk for any local licenses you may need to acquire, as well as check the Missouri Business Portal for any state licenses you need to obtain.
LLCs in Missouri will have to register with the Missouri Department of Revenue if you will be collecting sales tax on your goods or services. You can register online or by obtaining a form (usually Form 2643) and submitting it by mail.
If you are operating outside of the state of Missouri, you will need to follow the process for establishing a foreign LLC, which is very similar to the process described in this article for forming a domestic LLC. The key difference between forming a foreign LLC and a domestic LLC is that a foreign LLC will have to appoint a registered or statutory agent that is physically located within the state of Missouri. You must also file an Application for Registration of a Foreign Limited Liability Company (LLC 4) which you can find here. The filing fee is $50 for online filing or $105 for filing by mail.
It’s also important that you pay your taxes and obtain a Certificate of Good Standing. If you forget any of these activities, it could result in your business not being legally allowed to conduct business in the state of Missouri.
If this seems like a lot of paperwork to file when starting an LLC, that’s because it is. If you’d like help filing these documents, you could consider hiring a Missouri PEO service and subscribing to its online legal services to keep your business in good standing with the Secretary of State’s office. This should drastically reduce the amount of document filing you have to do for your LLC.
Missouri LLC Fee Summary
How much does it cost to start an LLC in Missouri? Whether you’ve chosen to start your Missouri LLC on your own or you’ve decided to enlist the aid of an LLC formation service, you’ll have to pay a few filing fees and taxes for your LLC in Missouri. Here’s a list of some of the taxes and filing fees you’ll need to pay for you LLC.
Articles of Organization: $50 Online, $105 Paper
Name Reservation: $7
Registered Agent Fee: $99-$299
State Personal Income Tax: 1.5%-6%
State Corporate Income Tax: 6.25%
After Starting Your Missouri LLC
Congratulations! You’ve taken the first step towards starting your LLC and your business journey! It’s important that you celebrate this business victory, so enjoy a glass of champagne or wine, go out to dinner, have a night on the town or go on a weekend trip. But you can’t relax for too long because there’s still work to be done to make sure that your business has the right foundations and can function normally as an LLC.
Here are the three important steps you’ll need to complete after filing your Articles of Organization to maintain your Certificate of Good Standing and ensure that your business functions properly.
Step 1. Create An Operating Agreement
Drafting and filing an LLC Operating Agreement isn’t required by the Missouri state government, but it’s highly recommended that you execute and file one anyway.
To put it metaphorically, think of your business as an animal of some sort. The LLC would function as its skin or outer shell to protect it and the LLC Operating Agreement would function as its nervous system by telling the creature what to do and how to react to things.
An Operating Agreement is a document that acts as both a contract between LLC owners and LLC members as well as a list of precise instructions about how the business should run. The Operating Agreement should list every LLC member, then set up all of the financial, structural, managerial, and operational aspects of your business, along with the effective date of your LLC.
*IMPORTANT* Before drafting the Operating Agreement for your business, you should decide if it will be managed by a single member or if it will use a multi-member managerial system. This helps to decide who will make important decisions for your business and how. If you utilize a multi-member managerial system, they all vote on each important business decision. If you have a single-member, managerial system, one member makes all the important decisions.
The Operating Agreements should begin with a list of each LLC member, clarify which members have the authority to make high-level, business decisions and then continue to clearly indicate the ownership percentages and percentages of profits and losses of each member. Your agreement should clearly spell out the roles of each LLC member as well as their interactions and relationship with each other and the other departments. Designing your Operating Agreement this way will ensure that LLC members know their roles, which member or department they should most closely interact with, who their superiors are, and the roles and tasks assigned to each department to prevent squabbles among LLC members.
One important component of Operating Agreements is that they give instructions on what to do if an LLC member leaves or if new LLC members join the business. Many LLC owners leave this out of their Agreement, but if you add it in then your business will have a clearly-written set of instructions about what to do if there is a falling out between LLC members. Having a set of clearly-written rules for these situations is quite helpful during difficult, highly emotional times.
The Operating Agreement is a very important document for your LLC during its beginning stages. It explains the functions of your LLC members, how much they’ll be paid, and provides comprehensive instructions about how the business will be run. Here’s why you should write your Operating Agreement with the instructions and suggestions I’ve provided:
To clarify, the rules set forth for your business in the Operating Agreement are the specifications for the operation of your business and your business is required to operate according to the framework laid out in your Agreement, so a poorly-written Agreement means your business growth could be stifled. You can easily botch the Operating Agreement for your business by forgetting to leave room in the document for things like business growth, change, or innovation. A well-written Agreement means you should be able to sit back and watch as your business thrives without being chained down by the instructions in a poorly-written Operating Agreement.
If you haven’t written an Operating Agreement before, there are a couple of options for you.
Northwest Registered Agent provides a free Operating Agreement template on their website, which you can get here. If you want assistance with the wording, some LLC formation services will include one in their LLC formation package. If you want to form your own LLC and just want qualified legal assistance with the operating agreement, some online legal services can also assist in doing it right the first time.
Step 2. Apply For An Employer Identification Number
If you plan to hire employees or open a bank account that is solely for your LLC, then you’ll need to apply for an Employer Identification Number (EIN). An EIN qualifies your business for certain permits and licenses. Of course, your small business isn’t required to hire employees to qualify or register for an EIN – an EIN is simply a federal tax identification number for businesses.
An EIN is a number used to identify businesses in a similar way that a Social Security Number is used to identify individuals. You can apply for an EIN through the Internal Revenue Service (IRS). Applying for an Employer Identification Number (EIN) is also surprisingly simple to do as well.
Many LLC formation services in the state of Missouri will apply for an EIN for your LLC on your behalf as part of their services, which takes a lot of the work out of applying for an EIN. But you can also apply for an EIN yourself without the help of an LLC formation service. All you have to do is go to the IRS website here Monday-Friday between the hours of 7:00 am and 10:00 pm, fill out and submit the EIN application.
Step 3. Open A Business Bank Account
The last step you need to take to make sure that your business will be able to properly operate and function is to open a bank account dedicated to its business transactions.
Many small business owners overlook this step but it’s an important one. They run both their small business and personal transactions through their personal accounts and assume that having one bank account will save them some trouble. But there are two major reasons why you shouldn’t do this.
The first reason is that opening a dedicated business bank account is massively helpful when filing taxes. Many small business owners assume they’ll be able to remember which transactions were personal and which were related to their business for tax filing purposes. But tax season usually comes months after these purchases were made, and it’s a lot harder to remember things several months later. So, just open a separate bank account for your business because it’s much easier to file tax information when you’ve got a dedicated business account.
The second reason is you don’t want to leave yourself vulnerable to lawsuits. If you conduct business transactions through your personal bank account then your information is vulnerable, and so is everything in your bank account. This means that not even the asset protection that you enjoy when you form an LLC can help you if you conduct business in this manner.
In short, to make filing taxes easier and protect your personal assets, open a bank account that’s dedicated to your LLC in Missouri.
To open a bank account for your Missouri LLC, you’ll need what’s known as a “bank kit”. A bank kit contains things such as a copy of your Articles of Organization, Operating Agreement, Certificate of Good Standing, and your EIN as well as your company’s initial resolution. In short, you’ll need to collate all of the formation documents that you’ve been obtaining and filing so far.
If you’d like to get someone to gather all of these documents for you, hire an LLC formation service. Many LLC formation services in Missouri create bank kits as part of their services.
In Summary
You’ve already taken a major step towards business independence when you made the decision to form an LLC in Missouri, so congratulations!
If you’ve chosen to forego a Missouri LLC formation service (which typically charges a fee as low as $0 plus state filing fees), here are the five steps you’ll need to take to form an LLC in Missouri:
- Obtain the Articles of Organization form
- Name your LLC
- Choose your Registered Agent
- Choose your LLC address
- Sign and file your Articles of Organization
It can be quite easy to become inundated by the sea of red tape, mountains of forms, the sheer volume of filing, and all of the legal jargon you’ll have to learn to start an LLC in Missouri. But the sense of accomplishment and success you’ll feel when you complete everything on your own is well worth all of the trouble!
Congratulations on making the decision to form an LLC and good luck with your business journey!