The Limited Liability Company (LLC) is a popular business entity choice structure for many businesses starting in the state of Missouri. The LLC provides personal liability protection and has the potential to save money on taxes. With a little research, you can learn how to form an LLC in Missouri without an attorney.
Unlike a sole proprietorship or partnership where the small business owner can be held personally liable for lawsuits against the business, the LLC is a separate legal structure, protecting the business owner’s personal assets.
Besides the liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration, and management flexibility.
Steps to Form a Missouri LLC
Let’s break down the steps to complete the Missouri LLC formation process.
Total Time: 10 minutes
Step 1: Choose an LLC Name
The first step in forming a Missouri Limited Liability Company is to make sure the name you want is available.
It’s critical to do a name search before registering an LLC name, as the name of each LLC must be distinguishable from other entity names registered in the state of Missouri. The Missouri Secretary of State makes it easy to search and verify if your LLC name is available. Here is more information on how to do a Missouri LLC name search
In addition to the name being unique, the entity designator (identifier used at the end of the business name) can only be one of the following names or abbreviations:
– Limited Liability Company
– Limited Liability Co.
– Limited Company
– L. L. C.
– L L C
– L C
A comma may be used after the business name and before the designator. “Cowboy Cleaners LLC” and “Cowboy Cleaners, LLC” are both acceptable.
There are a few other naming guidelines to be aware of in Missouri, such as not using words that may imply the business is a part of a state or federal government agency like the name of a state department, FBI, or Treasury.
Also, unless additional paperwork is filed with the state, a business can’t use words of bank, university, or any licensed professional such as an attorney or doctor unless the business is licensed to provide those services and a licensed individual is part of the LLC.
If you plan to use a different name from the one that you register (perhaps you want to run multiple businesses under the LLC), you can use a fictitious name (sometimes referred to as a trade name, assumed name, DBA, or Doing Business As name). To register a fictitious name, file the Registration of Fictitious Name, along with the $7 filing fee with the Secretary of State.
You may also want to see if a domain name is also available to have a matching website address.
Step 2: Appoint a Missouri Registered Agent
Every LLC in Missouri is required to have a Registered Agent. A Registered Agent will act as a central point of contact to receive legal documents, tax notices, summons, subpoenas, etc., on behalf of the LLC.
The basic requirements to be a Registered Agent in Missouri include:
– The agent must be a Missouri resident at least 18 years of age or a commercial Registered Agent service with a registered office in the state.
– The agent must have a physical address in the state (PO Boxes aren’t allowed).
– The agent must generally be available during normal business hours at the address provided to receive service of process.
Learn more about the requirements for a Registered Agent in Missouri
Any individual meeting the requirements can be the agent; however, the agent’s name and address become public record, and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when doing business from home or still employed. Hiring a registered agent service like Northwest Registered Agent to be the Registered Agent will reduce unwanted phone calls and mailings.
Step 3: File the Missouri Articles of Organization
The paperwork to officially create an LLC in Missouri is called the Articles of Organization. To submit the paperwork, either file online through the Missouri Secretary of State’s website. If you would rather file by mail, download the Missouri Articles of Organization (Form LLC-1)
If you have questions, contact the Missouri Secretary of State, Corporations Division at 617-727-9640.
When filling out the Articles of Organization, there are a few sections and terms that can be confusing. Let’s go over a few of these sections to help get your LLC started right.
Domestic or Foreign LLC –
Most new businesses are going to select Domestic as this refers to the initial state of formation. Some businesses will need to file for a Foreign LLC if they have significant activities in another state, such as operating a warehouse or employing staff.
Duration: In this section, you can indicate how long it will remain in existence. Most LLCs will choose a Perpetual duration; however, some businesses (usually investment-related) will have a specific closure date.
Managed by: This section asks if the LLC is Member-Managed or Manager-Managed.
– Member-Managed LLCs have an active involvement in the day-to-day operations of the business.
– Manager-Managed LLCs are hired by the members to run the LLC, similar to a CEO of a corporation.
Most LLCs are member-managed.
Purpose: Provide some basic information about what the business does. You will need to provide some basic information; otherwise, the LLC filing will be rejected. If you want to keep the business purpose more open-ended, you can add “and engage in any lawful business activity for which a Limited Liability Company may be organized in Missouri” in addition to the original purpose statement.
Effective Date: If you want the LLC to start on today’s date, leave this field blank, otherwise enter a date less than 90 days in the future to start.
Series LLC: A Series LLC provides liability protection across multiple asset groups or businesses, each of which would be protected from liabilities from the other series. The Series LLC is not a common choice and is most common with real estate investment companies.
Organizers – An LLC Organizer is someone involved with the formation of the Articles of Organization. The Organizer may or may not become a member, such as a mentor, attorney, or accountant, but the initial members will all be listed as organizers.
You don't have to form your LLC by yourself or pay an attorney!Forming an LLC is a little intimidating, especially when it’s your first time. Professional entity formation services help guide you to make sure it’s done right. Check out our reviews of popular LLC formation services to learn more.
You have a Missouri LLC, now what???
Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.
Prepare a Missouri LLC Operating Agreement
The operating agreement is a legal document that governs the framework of an LLC. This document covers items like ownership rights, member responsibilities, how profits and losses are distributed, and more.
Most states do not require an LLC to have an operating agreement, but it is still worth considering. Without an operating agreement:
- The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
- Member’s personal liability protection may be diminished.
- Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.
Obtain an EIN
The EIN or Employer Identification Number (also called a Federal Employer Identification Number or FEIN) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes. The EIN will be needed to hire employees, open a bank account, register for business licenses and permits, build business credit, file federal and state taxes, and more.
There is no cost for the EIN when registering through the IRS. The number is available immediately when applying through the IRS website; however, you can also register by phone, fax, or mailing IRS Form SS-4.
Related: How to Apply for an EIN
Elect the LLC’s Form of Federal Income Taxation
One of the significant benefits of the Limited Liability Company is the tax flexibility it provides. When applying for the Employer Identification Number, you will choose how the entity will be taxed for federal income tax purposes. While there are some limitations, an LLC may be classified for federal income tax purposes as a:
- Sole proprietorship
While this may sound confusing, this refers to how the LLC is taxed, not the legal structure.
Related: How can an LLC be taxed?
By default, the taxation of an LLC is called pass-through taxation, which means the profits or losses of the LLC flow through to the members.
Single-member LLCs will, by default, be taxed as a sole proprietorship. The members can also elect to change the taxation to a C-corporation or an S-corporation.
Multi-member LLCs will, by default, be taxed as a partnership. The members can also elect to change the taxation to a C-corporation or an S-corporation.
In general, the difference between being taxed as a corporation and being taxed as a sole proprietorship or partnership is that the profits and losses are passed to the member’s federal income tax returns based on their percentage of ownership. As a result, the owner will pay self-employment taxes on all business profits. As an alternative, electing to be taxed as a corporation allows the members to take a reasonable salary and then pay payroll taxes. Any remaining profits are distributed and aren’t subject to payroll taxes, resulting in potential tax savings.
Before electing how your LLC will be taxed, consider talking with an accountant to assess which one will be best for you. Some tax elections, such as the C corporation, may be detrimental for some people due to double taxation.
Open an LLC Bank Account
Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.
Several documents will be needed to open a business bank account, such as:
- A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
- Copies of the original formation paperwork from the state showing the creation of the LLC.
- Driver’s licenses of the members.
- In some circumstances, a Missouri Certificate of Good Standing may be needed to prove the LLC is active and in good standing with the state.
Apply for Business Licenses and Permits
Depending on what your business does and where it is located, there will likely be various business licenses and permits, so your business is in compliance to start. Some common registrations include:
- Business License – Some cities require businesses to obtain local licenses before they can start. A good first stop is the County Clerk’s office.
- Professional License – Certain services such as barbershops, accountants, salons, and others must be licensed.
- Sales Tax License – To sell products and certain services, registration with the Missouri Department of Revenue will be necessary.
Get Business Insurance
Even with the liability protection of the LLC, business insurance is important to protect the business. The most common types of insurance include:
General Liability Insurance – covers damages owed and medical expenses for accidents that happen at your place of business.
Business Property Insurance – replaces damaged, stolen, or lost business property. This includes your physical business location, equipment, supplies, and anything else you used to run your business.
Business Vehicle Insurance – covers company vehicles and may also include coverage for personal vehicles used for business-related activities. Many personal policies won’t cover your vehicle if there is an accident while being used for business purposes.
Workers Compensation Insurance – mandatory in most states if you have employees, this insurance covers medical expenses that occur because of an accident or injury that happens to one of your employees while they’re at work.
Common Questions To Starting An LLC In Missouri
How much does it cost to start an LLC in Missouri?
The state filing fee to start an LLC in Missouri is $50 for online filings and $105 for mailed-in forms.
Is there a yearly fee for an LLC in Missouri?
Unlike most states, there is no annual report or annual LLC fee in Missouri.
How long does it take to start an LLC in Missouri?
LLCs formed online are processed immediately, while mailed-in forms can take up to 1-2 weeks.
Do I have to pay to hire a registered agent?
No. Anyone can act as a registered agent, provided they are at least 18 years old, reside in the state, and are generally available to receive documents during normal business hours.
If I have an LLC, is a business license required?
It’s sometimes thought that the LLC and business license are the same, but they aren’t. An LLC is referred to as the business entity, which is how the business is organized to conduct business. A business license is an approval from a government entity to legally operate.
What is a Foreign Limited Liability Company?
A foreign LLC refers to an LLC that is physically operating in states outside of the state where it was formed. Physically operating means having a presence, such as having an office or employee in the state. The LLC will need to register as a foreign LLC in each state that it plans to operate.
What is a Professional Limited Liability Company?
Businesses that require occupational licensing in Missouri, such as accountants, architects, veterinarians, etc., will want to file for a Professional Limited Liability Company (PLLC) instead of an LLC. Filing for a PLLC is very similar to that of the LLC.