How to File LLC Taxes in Missouri? (The Ultimate Guide)
After starting an LLC, one of the state requirements for maintaining its compliance is filing taxes with the Missouri Revenue Department.
To help you understand the filing, we solicited legal advice from our certified team of LLC lawyers and accountants who've been in the sector for more than seven years.
We spent three weeks reviewing different official tax websites, and here's a detailed guide on LLC taxes in Missouri.
- A Missouri LLC doesn't pay any taxes, but the owner must pay a 4.95% state income tax.
- All corporations and LLCs taxed as C-Corps must pay a 4% corporate income tax.
- The Missouri Department of Revenue levies industry taxes on companies that operate in certain sectors, like the tobacco or alcohol industry.
How Are LLCs Taxed in Missouri?
LLCs are taxed in Missouri as pass-through entities based on the number of members. A single-member LLC is taxed like a sole proprietorship, while a multi-member LLC is regarded as a partnership for taxation purposes.
As a pass-through entity, a limited liability company (LLC) isn't liable for paying entity-level taxes; all income flows to the members who'll pay state income tax on their returns.
The Missouri Revenue Department also accepts C or S Corp tax selection status for active LLCs.
State Taxes for Missouri LLCs
Here are the different LLC structures and their state taxes.
1. Single-Member LLCs
A single-member LLC has one owner or shareholder and is a disregarded entity for taxation because the state views the LLC and the owner as the same.
As a result, the entity doesn't pay income taxes.
However, depending on the LLC's taxable income level, the owner must pay Missouri state income tax at 4.95%.
You will also be liable to pay the 15.3% LLC’s tax withholding and federal income taxes on the business's earnings.
2. Multi-Member LLCs
A multi-member LLC has more than one shareholder and is regarded as a partnership for taxation purposes.
A partnership "passes through" any earnings or losses to its partners but does not pay Missouri taxes on its revenue.
Partnerships must file an information return with the Internal Revenue Service (IRS) to record their revenue, profits, losses, deductions, and credits.
Partners must also list partnership items on their tax returns or other information reports.
3. LLCs Taxed as S-corp
Under default status, the self-employment tax rate of 15.3% is applied to all LLC income.
A member of an S-corp is further taxed at 15.3%, but only on salaries; profits or dividends paid to members are exempt from the self-employment tax.
4. LLCs Taxed as C-corp
You must pay corporate and state income taxes if you decide to tax your LLC as a C-Corp in Missouri.
The C-corp pays its shareholders dividends, representing a fraction of its earnings.
Dividends given to shareholders are subject to two taxes:
- The U.S. Corporation Income Tax Return on Form 1120, as profit at the corporate level .
- The shareholder's U.S. Individual Income Tax Return as stock dividends on Form 1040 is submitted at the individual level .
The corporate tax that Missouri C-Corps must pay is 4%, but according to the state, the rate will reduce to 3.75% starting with the 2024 calendar year.
Federal Taxes for Missouri LLCs
An LLC has to file its taxes in Missouri and pay them to the federal government. The federal taxes include the following:
All business owners who receive wages or salary from an LLC must pay self-employment tax of 15.3%.
This tax is managed by the Federal Insurance Contributions Act (FICA), which also covers Social Security, Medicare, and other benefits.
Other taxes that Missouri LLCs may pay include the following:
1. Sales and Use Tax
If your Missouri limited liability company sells tangible items, you must apply for a sales tax license and pay sales tax at 4.225%. Sales tax is applied to purchases of physical goods or taxable services made at retail.
In Missouri, the sales tax is distributed and is used to fund these four different government areas:
- General Revenue 3.0%
- Conservation 0.125%
- Education 1.0%
- Parks/Soils 0.10%
"The Missouri use tax is assessed on the storage, use, or consumption of personal property."
- Brian Mulhall, LLC Attorney
2. State Employer Taxes
You must submit withholding taxes and pay Missouri's two-state employer taxes if you're an employer and have staff.
In Missouri, workers' compensation insurance applies to LLCs with five or more employees.
However, if your entity is in the construction industry, you're exempted from this rule because such an entity needs workers' compensation insurance if they employ one or more people.
Workers' compensation rates normally begin at $1.11 per $100. However, they vary based on your business's size, risk tolerance, and other variables.
Unemployment Insurance Tax (UI)
In Missouri, the first two or three years of a business are subject to UI tax at a new employer rate.
The general rate for UI is 2.511% and is uniform for all for-profit companies in a given sector. However, if your entity is a nonprofit, the unemployment insurance rate is 1%.
Once the employer qualifies based on the average taxable payroll, prior unemployment claims, and taxes paid in, the state calculates and determines a new experience rate for UI.
3. Local Taxes
Missouri allows each city and county to impose its local business taxes.
The average local business tax in Missouri is 8.29%. However, it can go as high as 5.763% because some jurisdictions impose a local tax on products or services.
4. Industry Taxes
The Missouri Department of Revenue (DOR) imposes industry taxes as a state general or individual tax paid to specific industry agencies.
The common industry taxes in Missouri include:
- Alcoholic Beverages Tax
- Marijuana Tax
- Tobacco Tax
- Tire and Lead Battery Tax
- Motor Fuel Tax
What Is Tax-Deductible for an LLC in Missouri?
Tax-deductible for an LLC in Missouri include standard and itemized deductions, long-term care insurance deductions, first-time home buyers deductions, and special needs adoption tax credits.
Other tax-deductible include the following:
- Achieving a better life experience (ABLE) contribution deduction
- Food pantry, soup kitchen, homeless shelter tax credit
- Domestic violence or rape center tax credit
- Diaper bank tax credit
- Maternity home tax credit
- Health, hunger, and hygiene tax credit
Do Foreign LLCs Pay Tax in Missouri?
Yes, foreign LLCs pay tax in Missouri if they operate there. These taxes include taxable income tax, sales and use tax, federal income tax, workers' compensation, and state unemployment taxes.
What Deductions Can You Claim on Tax in Missouri?
The deductions you can claim on tax in Missouri include car and travel expenses, accounting fees, laundry, and home office running costs.
Do You Need Help Filing Missouri LLC Taxes?
Accurate and timely tax filing is essential if your Missouri LLC wants to comply with state and federal tax requirements.
For this reason, we recommend using QuickBooks to record, save, and analyze financial and tax data under generally accepted accounting standards.
QuickBooks lowers the expense and difficulty of correct record keeping. Additionally, synchronizing business data from business software via their efficient phone application makes it even simpler to remain on top of necessary tax and compliance activities.