Congratulations you’re starting a business in the state of Missouri. Firstly you need to determine what your business structure is going to be. You’re likely here because you’re considering the Limited Liability Company (LLC) as your business entity of choice.
Now let’s get started: How do I form an LLC in Missouri?
“The LLC is one of the most popular structures. However that doesn’t mean it’s right for your business. Let’s look at the basics of an LLC.”Good advice
What is a Limited Liability Company
A limited liability company or LLC is a hybrid business structure that provides the limited legal liability of a corporation and the operational flexibility of a partnership or sole proprietorship.
However, the formation of an LLC is more complex and formal than that of a general partnership, but less complex than a corporation.
Disclaimer: These are the general guidelines for forming an LLC in Missouri and does not constitute legal advice.
What are Limited liability company (LLC) advantages
- Most common business structure created for small businesses
- Separate legal entity
- Taxed as a sole proprietorship if only one owner or as partnership if there are multiple owners
- Unlimited number of owners (unless you elect an S-Corp tax status)
What are Limited liability company (LLC) disadvantages
- Can be costly to form
- Personal tax liability
- Legal and accounting assistance is recommended
Here are your steps to starting an LLC in Missouri:
1. File articles of organization with the Secretary of State
2. Create an operating agreement
3. Obtain an Employer Identification Number (EIN)
4. You may be required to register with the Missouri Department of Revenue and/or the Missouri Department of Labor
5. Check for local city and county offices for licenses and permits
Let us take a look at those steps in a little more detail.
1. Filing your articles of organization
What are the articles of organization?
This is the document that outlines the basic details of your company and provides information to the state of Missouri that you are starting an LLC. Without this step, you don’t have an LLC.
Articles of organization are submitted to the Corporations Division of the State of Missouri either online or by mail. The filing fee is $105 or $50 if submitted online.
Secure your legal name for your business.
Create a legal name for your company. There are already hundreds if not thousands of LLCs in the state of Missouri and you must choose a unique name. But how can you double-check to see if anyone else is using your business name?
By using the quick name search on the State of Missouri website.
Missouri State Naming Guidelines
- Your name must include the phrase “limited liability company” or the abbreviation “LLC”
- Your name cannot include words that confuse your business with a government agency like the state department, treasury or FBI
- Some businesses may have to file additional paperwork and licensed individual such as a doctor or lawyer to be part of your LLC
How will you manage your LLC?
Determine if your business is member-managed or manager-managed. Consider these factors when deciding on your business structure.
- Any member can bind the company to obligations with third parties
- For LLCs with a small amount of members
- The members are involved in day-to-day operations
- A vote is required for all major business decisions
- Also known as “decentralized management” because the administrative power is equal among all members instead of just one manager
- Large number of members in the LLC
- The members are not involved in day-to-day operations
- Allocates administrative power to one or more specific managers instead of all of the members
- Does not require all members to vote on business decisions, just the specific managers
Choosing a registered agent
You are required to nominate a registered agent when registering your LLC in the state of Missouri.
So what is a registered agent? A registered agent is a person or business that agrees to send and receive legal documents on behalf of your LLC. A registered agent must be a resident of Missouri or a corporation authorized to transact business in Missouri. You may elect yourself as a registered agent or someone else within your company.
As required by law, the Missouri Secretary of State’s office sends notices, reminders and correspondence to the registered agent at the registered office address. The registered agent is designated by law to receive service of process and legal notices on behalf of the business entity.
A post office box, UPS mailbox or other rented mailbox is NOT allowed as a registered office address. The registered agent must be physically located at the registered office address for the LLC.
Pay your filing fees
There is a fee to file your articles of organization. If you file online, the fee is $50 or $105 by mail. The filing fee is not refundable.
● File your articles of organization by mail:
State of Missouri John R. Ashcroft, Secretary of State
PO Box 778 / 600 W. Main St., Rm. 322
Jefferson City, MO 65102
Check for state licenses
The state may require additional licenses or business registration paperwork to be completed depending on your particular business industry.
2. Create an operating agreement
It is required by the state of Missouri to have an operating agreement.
What is an operating agreement? It’s an internal document that outlines how your LLC will be run, the financial obligations of the members, along with the managerial rights and duties.
Though it is required by the state to have an operating agreement, it does not have to be filed with any state offices.
This document makes sure that all business owners are on the same page and reduces the risk of possible future conflicts.
Your operating agreement needs to include:
- Company name, headquarters, and address where mail may be sent
- List of owners and their percent of ownership (should equal 100 percent) with address, telephone number and email address
- Minority investors
- What happens in case of death, disability, divorce or departure of a member
- Procedures for raising additional capital (debt or equity)
- Distributions, including whether or not you want a capital fund set up and amounts
- Level of control for operational members (sign checks, order inventory, hire/fire, etc.)
- Exit strategy – do you want to build the business and sell or is this a long-term commitment?
An operating agreement can be as detailed as you want it to be—and it can actually be helpful to your business, giving you some handy guidelines and policies should an uncomfortable situation arise.
That said, it’s best to have your operating agreement in place before your business begins operating—and it should be agreed upon by all parties.
3. Obtain an EIN
LLCs must obtain an Employer Identification Number (EIN) from the U.S. Internal Revenue Service. You use this number in place of your personal Social Security Number to protect against identity theft. You need an EIN to open a business bank account for your LLC, federal and state tax purposes and when you hire employees for your company.
It doesn’t cost anything to apply for an EIN. Apply for an Employer Identification Number (EIN) online.
4. Register your LLC for Missouri state tax
Now that you have a legal business, it’s time to pay your Missouri business taxes. Contact the Missouri Department of Revenue to complete tax forms based on your business activity including products sold and used in your business. You can register online.
You can also register with the Missouri Department of Labor simultaneously if you will have employees.
There are tax assistance offices across the state of Missouri providing services for business owners including volunteer-based tax preparation.
5. Check for city/county licenses and permits
It is important to check with your town and county governments where you intend to do business to determine licensing, registration and permitting requirements.
The Missouri Small Business and Technology Development Centers (SBTDCs) also offers a guide to licenses and permits that includes where to find out information on Occupational Licenses. Finally, check with the Missouri Division of Professional Registration.
The Missouri Department of Agriculture maintains information about licenses and permits specific to agriculture.