Starting an LLC in Missouri is a great way to guarantee you will be personally protected in the line of work. In general, opening business structures of any type is a thorough process, and the LLC is no different.
In this article, we will examine the main aspects of starting a Missouri LLC, including:
- Important business filings required to get an LLC;
- Maintenance tasks like insurance;
- Compliance filings like taxes;
- Estimated cost of formation and service fees.
Although Missouri LLC formation can be fast if you have the funds to prioritize it, the best thing you can do to ensure it goes without a hitch is to learn all you can about every step of the process.
- How to Form an LLC in Missouri: Step by Step
- First Tasks After Setting Up an LLC in Missouri
- Opening an LLC Keep Your Company Compliant
How to Form an LLC in Missouri: Step by Step
Step 1: Name Your LLC
Perhaps the first thing most owners will have to do when opening businesses is to devise a fitting name for their entity. The Missouri naming law is true for business entities of all types, including LLCs. Every business must be aware of regulations to name companies without breaking state law.
Words You Have to Use for Missouri LLC Registration
Under the Missouri Revised Statutes Section 347.020, a limited liability company name must indicate its status. In other words, you can’t avoid including the actual business structure designation when you name LLCs.
As such, every Missouri LLC name must include any of the following words:
- Limited company;
- Limited liability company;
Words You Can’t Use to Create an LLC in Missouri
Item two of the Missouri Revised Statutes Section 347.020 also details words that are forbidden to use in companies’ names. These rules mainly restrict usage of other business types in your LLC name as it could potentially deceive the public. These words include:
- Limited partnership;
- Limited liability limited partnership or Ltd.;
- Limited liability partnership;
- Other abbreviations of the mentioned business structures.
The rule also extends to specific industries which could mean varying levels of restriction for businesses operating in certain fields.
Under Missouri Revised Statutes Section 362.425, LLCs are not allowed to use words that could imply activities attributed to government agencies, banks, trust companies, and regulated industries unless granted authorization by the state of Missouri.
|If you aren’t certain whether any specific licenses apply for business activities conducted by your company, contact the Secretary of State office to ensure your company remains compliant.|
Another key rule for LLC names is uniqueness. When starting an LLC in Missouri organizers must always make sure their chosen company name is available, i.e. clearly distinguishable from other entity names registered in the state.
Research the LLC Name You Want
Before you could file articles of organization and other formation documents, it’s vital to do a proper check on your name options.
The Missouri Secretary of State provides a business entity search on their website with useful filters that helps narrow down your query. For business name searches, it filters by name, registered agent, name availability, record number, and active business entities.
If your LLC name is unavailable, it’s still technically possible to use it but only if:
- The other business entity consents (in writing) to your company using the name;
- The court issues an order allowing you to use the name provided you’ve proven you had rights to the name prior to the other business registering it.
If your LLC name is free but you want to make sure nobody takes it while you deal with formation prep, Missouri provides a name reservation option for business formations.
You can file an Application for Reservation of Name and reserve the name for 60 days until you are ready to file articles of organization. It’s only possible to re-reserve twice more due to Missouri only allowing a 180 day reservation period in total.
The filing costs $25 per name except for limited liability partnerships that have to pay $30 per filing.
|Name reservation filing can be submitted via mail or the Missouri Secretary of State’s online portal. The second option guarantees faster processing, so it’s by far the preferred method for Missouri business owners that prioritize efficiency.|
Missouri DBA: Using a Fictitious Business Name
If you are unable to use the desired name for your LLC and have to settle for something underwhelming, it’s not really an issue for your future operations. You can file articles of organization with whatever name is available and then register a DBA name or “doing business as” to use as your trade name.
Also known as fictitious business names, DBAs allow Missouri business owners to promote their services or products more effectively and generally update their business without having to amend certain legal paperwork.
As per the Missouri Revised Statutes Section 417.200, fictitious names or DBAs are defined as names used by business entities that differ from the names stated in their formation documents.
To register a DBA, Missouri business owners must file the Registration of Fictitious Name form with the Missouri Corporations Division. The filing costs $7 per DBA, but keep in mind that DBAs must be regularly renewed.
An LLC can have multiple DBAs should it require them, whether it’s to market different products or avoid naming restrictions like including the “limited liability company” indicator in the trade name.
For instance, you registered your limited liability company under the name “Botanical Heights Laundromat, LLC”. By using the same name as your registered DBA sans the “LLC” bit, you officially do your business under the name “Botanical Heights Laundromat”.
Moreover, should you add other services and generally expand to other areas, you could register a DBA to reflect that such as “Botanical Heights Laundry & Dry Cleaning” or “Southside Laundry”.
Step 2: Appoint a Registered Agent to Set Up an LLC in Missouri
The main function of the registered agent for businesses is receiving legal documents and official correspondence on behalf of the company. If you file articles of organization for your business without having a registered agent, your formation documents will be rejected.
In Missouri, the registered agent is referred to as the agent for service of process. This term is a reflection of one of the key duties performed by registered agents—receiving service of process directed to the LLC.
Service of process is the act of giving court summons to the defendant (in this case, an LLC) by the plaintiff to notify them that a lawsuit is being brought against them. As an individual, you would usually be served such papers personally. For LLCs, your registered agent acts as your company’s representative, so all service of process papers go to them first.
Under Missouri Revised Statutes Section 347.030, an LLC registered agent must have a physical address in the state and be available at their registered office during standard business hours.
In Missouri, a registered agent assigned to a limited liability company can be:
- An individual who is a Missouri resident;
- A domestic company;
- A foreign corporation with a permit to do business in Missouri.
To be clear, almost any individual can serve as a registered agent for LLCs or for other business structures as long as they are over 18 and a resident with a physical Missouri address. This extends to LLC owners themselves who can legally act as their own registered agent.
There are some merits to this option, namely:
- Reduced cost: No need to pay LLC registered agent service fees annually;
- Simple set-up: You can use your address and other information for receiving vital mail;
- No middle man: Every document will be sent or served to you personally.
Being your own registered agent is a tempting cost-effective option, but it can also be pretty counterproductive. The main disadvantages of this method include:
- Privacy issues: By law, every LLC registered agent must make their address and name public. As such, some of your personal information will become public via the Secretary of State’s website;
- Inconvenient schedule: Due to state regulations, registered agents must always be present at their registered address. Such inflexible hours can put an unnecessary strain on your professional activities, as well as your personal life;
- Disruptive situations: Court summons are usually served regardless of your convenience, so you could be easily interrupted in a delicate meeting with a client or a business partner. And legal troubles are never a good look in a professional setting;
- Spam and junk mail: Once your address becomes public, you will likely start getting unwanted letters and emails originally meant for your business;
- Liability risk: If you are not at the registered office to receive service of process, the responsibility is entirely yours. Not showing up in court doesn’t absolve you of liability but simply means you failed to defend yourself accordingly. As a result, the state might implement default laws.
As you can see, using a professional registered agent service is a more convenient option. Their annual fees average around $100, which might initially seem too steep, but it’s nothing compared to average rates that accountants and attorneys charge for this service. Luckily, LLC formation companies often include free registered agent trials with their packages and offer other forms of discounts for business solutions.
|For more information about potential professional registered agent service options, check out our Best Registered Agent ranking article.|
Another viable reason to hire a professional registered agent service for business purposes is to support your company’s expansion. If you want to take your LLC business to other states, you will be legally required to appoint an agent in each new state. Obviously, you can’t just do it yourself as a non-resident.
Step 3: to Get an LLC in MISSOURI File Your Articles of Organization
For LLC formations, the key step that formalizes the business entity is the filing of the articles of organization—a document that contains all essential information about your LLC. After the Secretary of State reviews and approves the articles, your LLC is considered officially open.
|Overseeing every LLC filing yourself can be pretty time-consuming. If you don’t have a lot of time to spare on these formation steps, consider hiring a professional LLC formation service to file the articles for you. You can find out more about some of the top providers in our Best LLC formation services article.|
What to Include in Articles of Organization?
To create a Missouri limited liability company, the LLC organizer must file the Articles of Organization form with the Missouri Secretary of State.
According to the Missouri Revised Statutes Section 347.039, the articles of organization must contain the following items:
- LLC name;
- Statement of purpose;
- Initial business address;
- Names and addresses of LLC members;
- Registered agent name and address;
- Management type (owner-managed or manager-managed);
- Duration of the company.
|The statement of purpose(s) doesn’t have to be too particular. While you can specify the exact purpose of your LLC, some Missouri business owners stick to the default statement that their limited liability company is organized to transact “any or all lawful business.” The LLC’s duration can be specific, or you can classify the company as “perpetual” without a definitive dissolution date.|
The fastest way to file the articles of organization is by sending your application online. You can also submit it by mail. You can learn more about the process in the Secretary of State’s detailed guide to Registering a Limited Liability Company (LLC).
How Much is an LLC in Missouri
The official articles of organization form states that the filing fee is $105. Keep in mind that it’s only applicable for mail filings. The fee for online applications is $50 plus $1.25 credit card convenience fee.
Missouri LLC Processing Time
The secretary of state usually processes online applications immediately. If you file your articles of organization by mail, be prepared to wait for about 6-8 weeks.
Step 4: Draft your Operating Agreement
If you’re familiar with business bylaws that regulate the inner workings of corporations, then you already have a grasp on the nature of operating agreements. An operating agreement is essentially a set of internal rules for LLCs that help standardize procedures and establish LLC members’ rights.
Drafting an operating agreement is an actual requirement for forming LLCs. Thankfully, Missouri business owners don’t need to file it with the secretary of state.
The Missouri Revised Statutes Section 347.081 details the basic outline for what an LLC operating agreement should contain, as well as how these regulations can be enforced.
A typical operating agreement may include the following items:
- Responsibilities of LLC members: This agreement clause usually describes the duties of each LLC member and the extent of their executive power;
- Rights and duties of LLC’s managers: Here, you usually state if the LLC is to be managed by its members or by managers and what exactly this position entails;
- Capital contributions and percentage interest: How much each member contributed to the LLC and their membership interest;
- Allocation of profits: The process of asset distribution, for instance, if the profits and losses are allocated based on membership interest;
- Meetings and voting rights: This section describes how executive meetings are conducted, who gets the right to vote, and the type of ruling (based on a unanimous vote, majority vote, etc);
- Membership rules: This item is vital for organizing the LLC’s structure. The operating agreement should describe the process of accepting new members, removing members, transferring membership, qualifications, training, etc;
- Tax elections: Who is authorized to make tax election for the LLC;
- Transfer of ownership and dissolution: Whether the complete ownership of the limited liability company can be transferred and how. You should also outline the process for dissolving the LLC in detail to avoid Missouri’s default laws;
- Amendment rules: How to make changes in the initial operating agreement.
Missouri is one of the few states that make the operating agreement mandatory for forming LLCs, though there is no state-issued filing form for this document. Fortunately, you can find free operating agreement templates online or get one as part of your LLC package. Some business formation services offer customized operating agreements.
Step 5: Get an EIN for Your Missouri LLC Formation
The Employer Identification Number is virtually the same as the Social Security Number, except the EIN is attached to business entities rather than individuals. The IRS keeps tax records of every registered business by using each entity’s EIN as a reference number.
This nine-digit code is not technically a hard requirement for LLC formation, and there are no rules regarding the EIN in the Missouri revised statutes sections. However, a great majority of businesses will have to obtain an EIN sooner or later. If you aren’t sure whether you need an EIN at this stage, consider the following:
- Is the company classified as a single-member or multi-member LLC?
- Do you plan to hire employees for your business?
- Does your LLC use a corporate tax system?
If an LLC has only one owner, it’s possible to use the owner’s SSN instead of EIN while doing company taxes. That said, the EIN is a great tool for protecting your personal data, as well as separating your personal and business assets.
Additionally, most banks will require an EIN for opening a business account. Having a separate bank account for your LLC is crucial for maintaining the liability protection this structure grants its owners, hence why obtaining an EIN directly ties into your legal security.
The fastest way to get an EIN is to apply online on the IRS website. The same IRS form SS-4 can be submitted by mail, though this method is rather slow. This service is also free, so don’t be tempted by “affordable” business formation service packages that insist on charging for the EIN feature.
First Tasks After Setting Up an LLC in Missouri
Once you handle the main formation steps, including the operating agreement and tax ID, it’s time to take care of your LLC’s compliance and daily operating procedures.
Open a Business Bank Account
Opening a separate bank account for business entities like LLCs and liability limited partnerships is entirely optional. There are no provisions in the Missouri revised statutes mandating LLC owners to open a business account, but this step is something few entrepreneurs choose to ignore.
The key advantages of having a separate bank account for business entities including LLCs are:
- Account management: When it’s tax season, you will have to sort out all your business transactions from your personal ones. It could be harder to do if you use your personal account for all your LLC activities;
- Source of credit: Having a separate LLC account automatically raises your chances of obtaining future credit with your bank;
- Personal asset protection: It’s harder to prove that you and your LLC are not one and the same in the court of law if the LLC’s finances are mixed up in your personal bank account.
It’s the third item on the list that remains the most essential for businesses defined by their limited liability structure, including LLCs and sometimes limited liability limited partnerships.
The entire point of forming LLCs is to shield the business owners from personal liability if the company itself is sued. Limited liability companies create a clear distinction between company assets and personal assets by implementing the concept of “the corporate veil” initially only used by corporations.
When the corporate veil is “pierced” due to the lack of liability protections, your personal securities and property can be repossessed for paying off the LLC’s debts. In other words, when you use your personal bank account for your LLC, it simply eliminates the personal liability protection.
Get Business Insurance For Your Missouri LLC
Just as you’d prefer to fall back on personal insurance like health or car insurance, businesses must have a safety net of their own. Chances are, your Missouri LLC might even qualify for a mandatory insurance policy depending on your payroll structure.
The most common types of insurance are:
- General business liability insurance: Protects against general risks like property damage and personal injuries;
- Commercial auto policy: Covers risks if you use vehicles to ship goods while operating your business;
- Workers compensation insurance: Under the Missouri Revised Statutes Section 287.030, every business (LLC, corporations, limited liability limited partnership, etc.) must obtain this insurance if they employ five or more workers;
- Professional liability insurance: For professional service providers that wish to protect their practice from personal loss claims and damage suits;
- Business income coverage: Covers businesses during industry slowdowns or temporary shutdowns;
Business property insurance: Pays out damages related to business property like office spaces, warehouses, manufacturing facilities, and equipment.
Opening an LLC Keep Your Company Compliant
Every Missouri business, from corporations to limited liability limited partnerships, have a set of obligations to fulfill to remain lawful. Compliance rules for LLCs may vary depending on the industry and location such as license requirements or tax duties.
Business Permits and Licenses
It’s impossible to generalize Missouri license requirements due to business diversity. You can find out what licenses may apply to your LLC on the Registering My Business page. The Missouri Business Portal in general provides useful guides to permits and license regulations in the state. Apart from state licenses, your business will likely need to get cleared by county and city authorities. You can find out about local licenses from your county or city rep.
State taxes tend to be very different from federal tax requirements. In Missouri, every LLC that sells goods and services must register for sales tax with the Missouri Department of Revenue (DOR). Other types of state taxes can also be managed through your DOR account.
Limited liability companies that have workers qualify for employer payroll taxes and unemployment insurance taxes. If your LLC is eligible, you must register for these taxes with the Missouri Division of Employment Security (DES).
Federal LLC Tax Filing Requirements
The LLC business structure has a “pass-through” classification by default unless elected otherwise. Pass-through status means that the federal income tax doesn’t apply to the business the same way it does to C-corps. Instead, every member reports LLC’s income and losses on Schedule C using form 1040 aka their personal tax returns.
LLCs also have FICA tax duties. Even if you don’t employ workers, your company will need to pay Social Security and Medicare taxes at the federal rate. If you do have workers, it’s your responsibility to withhold these taxes from your employees’ paychecks.
A limited liability company is a welcoming legal structure for many businesses. Start an LLC is easy. Select your state to start.
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