If you are thinking about starting an LLC in Missouri, this article is for you.
There are many advantages to having an LLC in Missouri, but also a couple of disadvantages.
One of the benefits includes limited liability protection. This article will go over all of these factors so that if you decide to start your LLC in Missouri, it will be a well-informed decision!
What Is a Missouri Limited Liability Company?
An LLC is a limited liability company. It protects the business owners from being personally responsible for any wrongdoing within the LLC, as long as they do not participate in or benefit financially from illegal acts.
A Missouri LLC is also simpler and cheaper to run than a corporation because it has fewer formalities and less required paperwork.
Another advantage over corporations or other business entities is that you can easily change the limited liability company's structure by adding new members, removing others, or changing managers.
What Are Some of the Benefits of Starting an LLC in Missouri?
Several types of limited liability companies can be formed with a registered agent for service within Missouri, each offering different benefits to its owners and their businesses.
The most common type you see every day is a limited liability company that consists of one member. It has the owner treated as a disregarded entity for tax purposes.
Another type of limited liability company in Missouri is called an "S" Corporation. But be aware that S Corporation is only IRS tax classification, not a business structure, like a sole proprietorship.
Start a Missouri LLC Today
Starting a Missouri LLC is easy. First, you need to file Articles of Organization with the Secretary of State and come up with an operating agreement.
You can do it online, and it costs $50 with an additional $1.25 for online services, or you can do paper filling for $105. By Missouri statute, you are required to have an operating agreement along with Articles of Organization.
It would be best to consider why you want to start a Missouri LLC because it's important for your business moving forward.
For example, suppose you plan on starting another limited liability company in the future or are thinking long-term.
In that case, you may want to consider starting a limited liability company instead of a corporation or some type of partnership.
There are many benefits to limited liability companies. They come in very handy when looking at tax deductions, so you should think about your business structure before you start it.
Your LLC can be member-managed or manager-managed. Depending on which structure you decide on, the person in charge will be liable for paying all state taxes.
Register a Name for Your Missouri LLC
Every business should have a name. Registration of your business name is the first step in setting up your LLC. You can do it by filing Articles of Organization with the Missouri Secretary of State office.
Once you file these documents, it will register your business with Missouri as an official business entity that can open bank accounts on behalf of itself.
When choosing a name, make sure to check whether another business is already using it in Missouri.
You can check this by searching the Missouri Secretary of State's business name database to find out for free—no charge or paid account needed!
If you don't see the business name available, then move on to reserving a business name ahead of time so that nobody else can use your preferred moniker when you are ready to start.
According to Missouri law, your name must contain "LLC" in it.
There are also some words that a name can't have, according to the state business division.
These words which are restricted and may require more documentation include:
When you are ready to start your business, it is time to file articles of an organization giving the Missouri Secretary of State all pertinent information on how you formed your company and who the business managers will be (if you have any).
You can also get a DBA (doing business as) form that allows you to use a name other than the one on your articles of organization to transact business.
For example, DBA is beneficial for sole proprietorships that don't want to use "LLC" in its name.
Hire a Registered Agent
After you've chosen a name, you'll need to hire an agent.
The business should choose an individual or company that resides in Missouri and will be available to accept any legal documents during business hours.
An agent is an individual or business entity in charge of receiving important legal documents on behalf of the LLC.
The registered agent needs to have a physical street address in Missouri where they can receive mail, official notices, and summons from court actions or lawsuits filed against your company.
In addition to serving as an address for business-related correspondence, it's also advisable for the agent to maintain a dedicated fax number and email address so that they can accept the delivery of important documents.
Although no specific laws or rules surrounding what type of business entities you must hire, many businesses choose an individual already associated with their LLC in some capacity, such as a member or manager.
It's also possible to hire a Missouri registered agent service to handle all of these tasks on your behalf.
An agent service can help you maintain compliance with Missouri business laws, so it's crucial that you hire one.
File Missouri Articles of Organization
Articles of organization must include specific details about your business to be considered valid. The Articles of Organization should list:
- Name of your LLC
- The purpose of LLC
- Name, address, and other information of your agent
- Management of LLC (will it be member-managed or manager-managed)
- Name and addresses of each organizer
- Duration of LLC (permanent or for a specified period with an end date)
- The effective date of the Articles of Organization
- The signature of LLC organizer
There are also fees associated with forming a Missouri LLC, including Articles Organization Filing Agent Fees ($50 + $1.25 for online, $105 for paper filings).
Filing Missouri LLC articles of organizations can be done by certified or registered mail and other means, depending on your choice. However, the articles should be filed in the office of the Secretary of State.
Read More: Missouri LLC Dissolution Guide
Formulate an Operating Agreement
An operating agreement is not a mandatory legal document, but it is highly recommended. It can be simple or complex, depending on what you want to include in the agreement.
Basic elements of an operating agreement are the name and purpose of your LLC, members' percentage interest in the company, managers' roles and responsibilities (if any), member meetings schedule (frequency and locations), maintenance fee payment dates, etc.
A Missouri LLC operating agreement ensures that all of the members are on the same page. For example, suppose you ever have a dispute with another member.
In that case, operating agreements give guidance to all stakeholders of your business in resolving it fairly and amicably.
Operating agreements help manage an LLC, define its purpose and structure, provide a succession of members or managers when they leave the company, etc.
That is why you should have an operating agreement, no matter how unimportant it may seem.
Obtain an Employer Identification Number
Once everything else is out of the way, you can obtain an employer identification number or federal employer identification number (EIN).
An EIN is a one-of-a-kind nine-digit identifier that identifies your business and helps the Internal Revenue Service keep track of it.
You can obtain an EIN by visiting the IRS website and filling out an SS-4 application.
There are several reasons why you need an EIN, starting with the fact that most banks require one before they will allow you to open a business checking account for your LLC.
Open a Bank Account for Your New Business
Every new business needs a bank account, even as a foreign LLC or a sole proprietorship.
There are several reasons why it is essential to have separate business bank accounts from your ones:
- You can make full use of business tax deductions and business expense reimbursements
- By opening business bank accounts in the LLC's name, you can keep your personal and business finances separate. Keeping them separate will help avoid confusion (and potential legal problems) should any disputes arise between yourself and someone else involved with or an owner of your business.
Having a business bank account will help you keep your finances separate from those of your business, which will reduce confusion if any disputes arise between yourself and other people involved with or owners of the company.
Get Business Insurance
Having business insurance is a smart business move that will benefit you and your company in the long run. It applies even when you conduct business with a foreign LLC.
Advantages of having business insurance include:
- Growing your business without fear of failure
- Protecting against lawsuits
- Increasing credibility with potential customers/clients
You can save money by getting general liability insurance or professional business insurance that suits your business type best.
If you hire employees, it is an intelligent decision to have workers' compensation insurance.
Separate Private and Business Assets
There is more than one reason why you need to keep personal and business assets separate.
If you fail to do so, your business insurance's personal liability protection will be forfeited.
This can lead to financial troubles for your business or personal bankruptcy if it becomes too great of a burden on personal finances/assets.
Missouri LLC Tax Requirements
Federal taxes are required for all businesses in the United States. Therefore, the default federal status of an LLC is disregarded entity or partnership depending on your LLC being single-member or multi-member, respectively.
If your LLC sells a physical product, you will usually want to register for a seller's permit.
You can do that through the Missouri Department of Revenue website.
This certificate will allow you to collect sales tax on taxable sales. Keep in mind that this may not only be for physical products but also certain taxable goods or services.
On the other hand, if you hire employees, you need to register for Unemployment Insurance tax.
That is done through the Missouri Department of Labor. Also, sign up for Employee Withholding tax through the Missouri Department of Revenue.
If you do not have much experience with taxes and want to do everything well, contact a professional consultant or some service who can provide you with all the help and answers you need.
How Do I Create an LLC in Missouri?
You need to form an LLC in the state of Missouri by filing Articles of Organization with the Secretary of State. Forming is a relatively straightforward process and can be done through an online formation system for your convenience.
Is an LLC Easy to Form?
Yes, an LLC is comparably easier to form than a corporation. All you need to do to start an LLC is file Articles of Organization with the Missouri Secretary of State.
This is a fairly straightforward process that you can accomplish online.
Do I Need a Registered Agent for My LLC in Missouri?
Yes, every LLC must have a registered agent in the state of Missouri.
A Registered Agent is someone who receives mail on behalf of your LLC and can be any individual or business with an office at their home address that accepts legal documents for service during regular business hours.
Are LLCs Expensive to Start?
No, LLCs are relatively cheap to start. There is a fee of $105 to file Articles of Organization with the Missouri Secretary of State or a $50 fee if you do it online, plus an additional $1.25 convenience fee for doing it online.
Can I File an LLC by Myself?
Yes, you don't need the help of an attorney when filing your LLC documentation.
You can do it yourself, and it's pretty easy! Simply download and fill out the necessary forms, make copies for your records, and submit them to the correct government agency, such as the Missouri Secretary of State.
What Is the Downside to an LLC?
The downside to an LLC is that it can be challenging to raise capital or acquire new investors. However, your personal assets are protected in the case of debt or liability issues.
Can I Be My Own Registered Agent?
Yes, you can be your own registered agent as long as you are over 18 and have a street address in Missouri.
You can even choose to elect a member of your LLC or a friend, as long as they fulfill these two requirements.
However, most LLCs prefer to use registered agent services since they have more experience and can help you more if there is any trouble.
You can form a Missouri LLC with just a few simple steps. All you need is to fill Articles of Organisation by the organizer or organizers. They can be but are not required to be members.
Articles of Organisation can be filled with the Secretary of State. Additionally, you need to have an operating agreement. It will take a couple of weeks for everything to be registered.
After that, you can obtain your EIN and open a bank account for your LLC.
The process may seem straightforward from this brief overview.
However, it would still behoove you to get professional advice on how to proceed when forming a Missouri LLC.
A lawyer will also assist with any questions about taxes and liability protection that arise during the formation process.