Whether you’re thinking of starting a business or are looking for a more formal way to structure an existing one, forming a limited liability company (LLC) may be the answer. This structure can help minimize your personal liability for business debts or judgments while also streamlining your annual taxes. What should you know about legally launching an LLC in Missouri?
What Is an LLC?
An LLC is a corporate form that limits the owner or owners’ legal liability in the same way a corporation does. An LLC is generally simpler and cheaper to organize than a corporation.
For some professionals (like lawyers, accountants, or therapists), it’s important to form a professional LLC. This can reduce your risk of being personally on the hook for lawsuits brought by former patients, clients, or customers. But even if you’re a sole proprietorship or a non-professional corporation, an LLC can provide several other benefits.
Advantages and Disadvantages of an LLC
LLCs are different from other corporate structures like limited liability partnerships, sole proprietorships, S Corporations, and cooperatives. They come with some distinct advantages, but they aren’t always right for every business situation.
Some advantages of starting an LLC in Missouri include:
- Protection of your personal assets. If your LLC is sued and the plaintiff wins, only the LLC’s assets are subject to seizure or garnishment.
- Pass-through taxation, allowing the business’s profits and losses to pass through to the owner’s personal income taxes. In many cases, this means a lower overall tax rate.
- The simplicity and flexibility that comes from having a business that doesn’t need a board of directors or corporate officers (and can choose how it wants to be taxed).
Some disadvantages of an LLC include:
- Up-front cost (as Missouri’s Secretary of State imposes some filing fees for those trying to establish an LLC)
- Limited opportunity for outside investment (such as income from venture capitalists). For most, this inflexibility is greatly outweighed by the other advantages an LLC can present.
Starting an LLC in Missouri: How-To’s
Missouri requires LLC names to contain some specific words or abbreviations: either Limited Liability Company, Limited Company, LLC, L.L.C., or LC. Your LLC’s name can’t be the same as any existing businesses. (Check for availability on the Missouri Secretary of State’s website.)
After you’ve chosen a name for your LLC, it’s time to choose a registered agent (RA). This agent will be responsible for accepting all legal papers on the LLC’s behalf. The RA must be a Missouri resident (or a business authorized to do business in the state) and must have a physical address in Missouri. For many Missouri LLCs, the registered agent is either a corporate officer or an attorney representing the LLC.
Next, your LLC will need some articles of organization and an operating agreement. The articles of organization must include several key elements, including:
- the name and purpose of your LLC
- the name and address of your RA
- the effective date of the articles of organization
- the name and addresses of each of the LLC’s organizers
- the organizers’ signatures
File your articles of organization online or by mail with the Missouri Secretary of State.
Your operating agreement will establish the rules of your LLC—the rights, powers, duties, and liabilities of all the organizing members. Although you don’t need to file or publish this document, it’s important to have, as it will be key in settling disputes and managing the growth of your organization.
In most cases, you’ll need to get an Employer Identification Number (EIN) if your LLC has more than one member. Despite the name, an EIN doesn’t require your business to have employees, but it is required unless your business is a sole proprietorship. You can get an EIN by submitting an application to the IRS and you don’t need to pay any fee for this number.
Finally, you’ll need to investigate whether your LLC needs a local business license. Certain types of businesses (including agricultural businesses, professional businesses, and those dealing with environmentally hazardous materials) must be locally licensed to operate in Missouri. Meanwhile, both St. Louis and Springfield require most businesses to have local licenses. Check the Missouri Business Portal or call the clerk in the city where the LLC is located to learn more about your local requirements.
By following these steps, you’ll be well on your way to starting an LLC in Missouri.
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