Finding it difficult to understand the legal requirements for setting up your LLC in Missouri? Do not worry. We have your back.
We will take you through the process of setting up your LLC in Missouri. We will also help you by providing the necessary links to State resources. By the end of this article, you will be all set to incorporate your business in Missouri.
Name your Missouri LLC
Irrespective of the nature of a business entity, the name is the starting point. A good name will help your LLC to have brand value in the market. Therefore, the name you select should be attractive and catchy enough to bring in customers.
While naming your LLC, you must follow all the naming guidelines the State of Missouri has laid down.
§347.020 of the Missouri laws tell us how to name an LLC.
The first requirement is that the name you choose should have the words “limited liability company” or one of its abbreviations (LLC or L.L.C.).
The name selected should not be identical to the name already registered by any corporation, LLC, limited partnership, LLP, or any other business entity, either domestic or foreign.
The name should be distinguishable, which means that the use of articles, i.e., “a,” “an,” and “the,” will not be a distinguishing feature. Similarly, punctuation marks or words like “and,” “or,” etc., will not distinguish your LLCs name from the existing names.
For example, the name George and Stephen Drinks, LLC will not be considered distinguishable from an already existing company named George Stephen Drinks, LLC.
However, there is an exception to this. Suppose the other company agrees in writing to change its name that is distinguishable by filing necessary documents and giving its name to your LLC. In that case, you are good to go ahead. Another possibility is furnishing a final decree of a court of competent jurisdiction establishing your right to use the name, which is already registered with the State.
The name should also not include words and phrases like “corporation,” “incorporated,” “limited partnership,” etc., or any of their abbreviations as the company is registered as an LLC.
The name you select for your LLC should not give the impression that your entity is a government agency. Therefore, you cannot use terms like “F.B.I.” or “Treasury.”
Similarly, usage of certain words, like “Bank” or “University,” is restricted and involves obtaining the written consent of concerned authorities and additional paperwork and compliance requirements.
Does Your Business Require a DBA?
DBA stands for Doing Business As. The law in the State of Missouri does not mandate you to have a DBA. It is optional. However, DBA becomes essential for businesses who want to change their business name and start conducting business with another more relevant name or better represent their business. In Missouri, a DBA is called a “Fictitious Name.”
A DBA is best used for branding purposes. One such example is the Nike brand. The company was initially named Blue Ribbons Sports. Saying I bought a pair of Blue Ribbon shoes doesn’t sound that cool, right?
You need to apply to the Secretary of State’s office to register your DBA. It is valid for five years, and you will subsequently have to file for renewal.
Doing a Name Search and Name Reservation
Before finalizing a name for your LLC, you must ensure that the name you selected is not similar to an existing business. The State provides a database of names in which you can search for the name you have selected to ensure that some other entity has not taken it up. You can perform the search using the Business Entity Search portal of the Missouri Secretary of State’s website.
If you are not ready to incorporate your LLC immediately, you can reserve your chosen name. Missouri allows you to reserve a name for 60 days. You can extend the reservation two times. That means you can keep the name reserved for 180 days and not more than that.
Registering your business domain
As you can reserve the name for your LLC with the State for specific days, you can also reserve the website domain for your business. You might not have plans to take your business online, but due to the rising dominance and usage of e-commerce, you might think of this in the future.
So, why not get the best possible domain name for your website? So before you select a name for your LLC, it is recommended that you ensure that the domain name you need is also available.
You can check currently available domain names.
Choose a Registered Agent in Missouri
You must select a registered agent before your company can start functioning. A registered agent is an individual or another business entity responsible for receiving all the crucial documents and communications on behalf of your LLC.
A registered agent will also remind you of essential filings and deadlines. Missouri law mandates that your company have a registered agent.
Who Can Be a Registered Agent?
§347.030 lays down the eligibility for becoming a registered agent. The agent you select for your LLC must be:
- An individual State resident (above 18 years) or
- A business entity that has obtained authorization to conduct business in the State.
The registered agent should be available during business hours on all working days.
Individual v. Registered Agent Service
You can appoint yourself or any of your friends or family as the registered agent of your LLC. Alternatively, you can also hire a professional service. However, it is advisable to opt for a professional as the job requires diligence. Even a careless mistake might cost you dearly.
A professional registered agent service ensures that you don’t fail to duly respond to any notice or other communication that may be sent to your LLC. Receiving certain documents like a lawsuit notice in front of your employees could be awkward. Your registered agent will receive them and deliver them to you discreetly.
If you plan to expand your business to other States, you can seek the services of a registered agent, as most of them have a presence across the country.
If you become a registered agent for your LLC, you will have to be available daily during office hours. Professional help lets you focus your energy and time on core business areas.
File the Articles of Organization with Missouri
Articles of Organization is a legal document that is to be filed with the office of the Secretary of State. This is the most important and official document that registers your LLC with the State.
Once the filing of this document is completed, your LLC is registered and is recognized in the eyes of the law. There are certain basic details that you need to provide while filing this document. These details are:
- Name of your Entity
- Business Purpose
- Registered Agent Name and Registered Office Address
- Governing Authority Type
- Names and Addresses of Organizers
- Effective Date
You have to file this document with the Secretary of State. You may choose to file it online or via mail.
Option 1: File Your Articles of Organization OnlineFile Online – OR –
Option 2: File Your Articles of Organization by MailDownload Form
State of Missouri Secretary of State
P.O. Box 778 / 600 W. Main St., Rm. 322
Jefferson City, MO 65102
Fee: $50 online; $105 by mail
As of now, the State does not have any provisions pertaining to expedient processing of your Certificate of Organization.
Public Notice of Formation
As of now, the State does not have any provisions pertaining to a mandatory public notice of formation for your LLC.
Create the Operating Agreement for your Missouri LLC
An operating agreement is a legal document. It lays down the rules of your LLC’s internal operation and functioning.
Unlike many other States, Missouri mandates an Operating Agreement. As per Revised Statutes Section 347.081, an operating agreement may contain any provision that is not contrary to the law.
The provisions should be related to the conduct of business and affairs of the LLC. As there might be additions or deletions in terms of members, etc., to the LLC, an operating agreement would standardize the process and the allocation of rights and duties, ensuring that disputes do not arise amongst the members. Though the law mandates having an operating agreement, it is not required to be filed with the State.
There are no prescribed templates for an operating agreement in North Dakota, and you may draft one according to the needs of your business. However, irrespective of the nature of your business, it shall be advisable for your operating agreement to cover the following matters:
- Organization Details
- Duties of Members and Managers
- Management and Voting
- Capital Contributions
- Division of Profit and Losses
- Bookkeeping Procedures
- Procedure for adding new members
- Requirements concerning Meetings and Procedures thereof
Writing The Operating Agreement Yourself vs. Hiring a Service
You can write the operating agreement yourself in consultation with the other members. For this purpose, you can purchase templates that you can customize to draft the operating agreement of your LLC. It is, however, recommended that you seek the help of an attorney or a professional in preparing your operating agreement.
When disputes arise, and matters come before the court, the language of your operating agreement may ultimately decide the lawsuit’s fate. Attorneys, being experts in the State laws, will help you draft an operating agreement that suits the needs specific to your business model.
Limits of Operating Agreement
There is no fixed format for this agreement. You have all the freedom to include the terms of the agreement you feel are necessary for your LLC. However, you cannot include something prohibited by the laws of Missouri.
Obtaining an EIN for your Missouri LLC
EIN (Employer Identification Number or Federal Identification Numbers or FEINs) is an identification number allotted by the IRS. The IRS uses the EIN to identify an operating business entity for taxation purposes.
It will be necessary for your LLC to have an EIN to open a bank account, file tax returns, and hire employees. The IRS issues an EIN, and you can apply for it online or through the mail.
File Annual Reports in Missouri
An annual report is a document used by the authorities to get the latest and updated information about all the business entities operating in the State. Unlike many other States, Missouri does not require LLCs to file Annual Reports.
Tax liability for your Missouri LLC
The way your LLC will be taxed depends upon the number of members in your LLC. There are four ways in which LLC will be taxed:
- Sole proprietorship: a business owned by a single person
- Partnership: a business owned by multiple people
- C – Corporation: income is split or segregated for taxation
- S – Corporation: tax liability is split between the business and its owners
Federal Tax Liability
Federal tax liability is fixed and dealt with by the IRS. The IRS does not have a separate taxing structure for LLCs. An LLC can be taxed in three ways: an individual, a corporation, or a partnership.
If the LLC is a single-member one, the IRS ignores the LLC’s tax structure and taxes it as an individual. The LLC’s income will be reported to the member’s personal income at the end of the year. You will have to fill out certain forms for this purpose.
If your LLC is a multi-member one, which is ordinarily the case, you will be taxed like a partnership by default. In this case, apart from filing Form 1040, you’ll have to file your partnership return in Form 1065 and provide information in the K-1 of each partner.
State Tax Liability
You must register for a seller’s permit if your business sells physical products. A seller’s permit allows you to collect sales tax from the consumers and pass it on to the government. Goods like physical property, furniture, home appliances, etc., are subject to sales tax. However, certain exemptions exist, like prescription medicines, gasoline, etc. To know more, read the list of taxable services in Missouri.
You can apply for your seller’s permit online. There is no fee for application and no expiry period for the permit. However, if you are a business that purchases goods for resale, you are not required to pay the sales tax. Instead, you can produce a resale certificate before the seller, and you will be exempted. You can apply for the resale certificate online.
You can file your sales tax return online. If your firm collects sales tax of less than $33.33 per month, you should file the return annually. You should file the return quarterly if you collect tax between $33.33 and $500 per month. If you collect $500 monthly, you should file your return monthly.
For annual filing, the deadline is 20th January of the year following. The deadlines for quarterly filings are 20th April, 20th July, 20th October, and 20th January for the previous quarters, respectively. For monthly filing, the due date is the 20th or the next business day from the 20th of the following month.
The State charges a penalty for late filing at the rate of 5% per month and up to 25% of the total tax to be returned. It also charges a 5% penalty on the tax amount not paid if the return has at least been filed. So, for example, if the amount of tax was $200, and you filed the return for only $150, you will be liable to pay a 5% penalty of the left amount, i.e., $50.
If you’re an employer, you must register for Unemployment Insurance Tax with the Department of Labor and Industrial Relations. You will also need to register for Employee Withholding Tax on your employees’ behalf.
Permits and Licenses
Depending on the nature of your business and the location, you might be required to register for certain specific permits and licenses. Accordingly, your business will be subject to three licensing jurisdictions: Federal, State, and Local.
Federal Licensing requirements will depend on the business activity carried on by your LLC. If your company is engaged in any area of business regulated by the Federal Government, you will be required to obtain relevant Federal Licenses and Permits.
ome business activities requiring Federal Licenses and Permits are:
- Alcoholic beverages
- Firearms, ammunition, and explosives
- Fish and wildlife
- Commercial fisheries
- Maritime transportation
- Mining and drilling
- Nuclear energy
- Radio and television broadcasting
- Transportation and logistics.
At the State level, your LLC will be required to obtain a seller’s permit if you are engaged in business in Missouri and planning to sell or lease taxable services or goods. You can visit the Department of Revenue website to get your sales tax license. Additionally, certain professions are required to get specific State Licenses. You can refer to the Missouri Division of Professional Registration to determine if your LLC needs any additional permits or licenses.
For more information regarding;
Business Bank Account & Phone Number
While running your business, you will have to make many transactions daily. It is always prudent to open a separate Bank Account for your LLC. Having a different account helps you to avoid mix-ups and helps ensure that your personal assets are not affected in case of insolvency or lawsuits. You will require the following documents for opening the account:
- Articles of Organization.
- EIN confirmation letter or Verification letter.
- Two Identification proofs.
- Operating Document.
- Declaration of Beneficial Ownership: This form is provided by the bank, which discloses the owners of the LLC.
It is essential to keep your personal and business financials separate. It is equally important to keep your contact information separate. Using your phone number for your LLC can prove to be very inconvenient. Therefore, it is best either get a separate phone number for your business or hire a phone answering service. Doing this would protect your privacy, look professional and reduce the risk of missing important calls.
Missouri is an excellent choice for your LLC. The State has low operating costs and offers several tax credits and incentive schemes for small and medium businesses.
Missouri Works Program, Missouri Youth Opportunity Tax Credit, and Enhanced Enterprise Zone Tax Credits are a few such incentive schemes. Get in touch with your local county or city government office to determine if your LLC is eligible for any of these incentives.
Congratulations! You have the necessary information to start your business journey in Missouri. The resources made available to you will help you in setting up your LLC. All the best, and we wish for the success of your LLC.