Missouri is a great choice for starting a new business for several reasons. For starters, the state prioritizes reducing the tax burden for small business owners with a modest 4% corporate income tax rate. Missouri also provides flexible regulatory structures and enticing tax incentives. Moreover, it stands as one of the most affordable US states for running a business and offers a highly educated, skilled workforce.
So, it's hardly surprising that over 520,000 small businesses thrive in Missouri. However, starting a business in this state requires careful adherence to local and state laws. You must complete paperwork accurately, secure the necessary licenses and permits, and meet other relevant requirements.
Here’s a step-by-step guide to help you compliantly start a business in Missouri.
1. Name your business
In Missouri, businesses cannot share identical or "confusingly similar" names. Before you submit any paperwork to the Missouri Secretary of State’s office, here's what you need to do:
- Look up existing business entities to see if your chosen name can still be reserved or registered.
- Make sure your business name follows the naming rules outlined by the Missouri SOS.
- Check the US Patent and Trademark Office to see if your chosen business name is already trademarked.
- Given the importance of having a website, see if your desired business name also has an available domain name—and register it if it's available.
- Register your business name officially with the Missouri Secretary of State.
- If your chosen name is available but you're not ready to register yet, you can submit an Application for Reservation of Name for a $25 fee. This prevents other businesses from using the same name before you file officially.
If you intend to use a business name that differs from your personal name or the name of your LLC, corporation, or partnership, you must file a Fictitious Name Registration (also known as a DBA name). This process typically incurs a $7 filing fee.
2. Explore your funding options
Starting a business in Missouri requires having the essential funding to sustain it. This funding can come from various sources, such as business loans, grants, investments, venture capitalists, and entrepreneurs—or even support from friends and family who believe in your business idea.
What's more, the Missouri government offers some excellent funding programs to help businesses get money. Here are a few of them:
- United States Small Business Administration (SBA): The SBA offers diverse loan options and resources to help small businesses throughout the US, including starter loans and disaster relief programs.
- Missouri Agricultural and Small Business Development Authority (MASBDA): This program helps small businesses, especially farmers and ranchers, with low-interest loans and advice.
- Missouri Small Business Development Centers (SBDC): The SBDC helps you develop a business plan and navigate funding. In addition to training, it offers businesses specialized coaching and guidance to achieve their desired goals.
- Missouri Microloan Program: This program assists new businesses that often need help getting loans from banks. It provides small, short-term loans to give startups the boost they need to start operating.
- Missouri Technology Corporation (MTC): The MTC is intended to provide money to businesses starting out in the technology sector.
- Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs: These programs give money to small businesses that are doing research and development in fields like technology and science.
3. Decide on your business structure
You’ll need to decide on the best structure for your new business before you can register it. Missouri has six available business types, including limited liability companies and corporations.
Here are the basics of forming a business in Missouri:
What is it?
Pros and cons
Unincorporated business with a single owner
✔ Sole proprietorships have a simple setup.
✔ There’s only one owner, but you can hire employees.
✔ All income is considered the owner's personal income.
✘ You take on personal liability for taxes, debts, and lawsuits.
Limited Liability Company (LLC)
Can have one owner or multiple owners who agree to own it equally
✔ This option is suitable for small businesses.
✔ It’s relatively easy to establish and legitimize your business for loans and investments.
✔ You can benefit from flexible tax options under this structure.
✔ Owners are protected from liability.
✘ You’ll be subject to self-employment taxes.
✘ Personal assets could be at risk if they’re not kept separate from the business.
Limited Liability Partnership (LLP)
For certain professions like accounting, law, and engineering—and requires a managing partner
✔ Partners are responsible only for their own mistakes (not the other partner’s).
✘ This structure is limited to certain professions in Missouri.
Separate legal entity managed by shareholders who elect a board of directors to oversee operations
✔ Limited liability for shareholders, as the corporation bears tax and legal responsibilities.
✔ Attracts investors as it’s governed by more formal regulations than LLCs.
✔ Can be structured as an S-Corp or C-Corp (more common).
✘ "Double taxation" for C-Corps—the corporation pays income taxes on its income, and shareholders pay taxes on dividends received.
Managed by one general partner and one or more limited partners
✔ Customized liability based on the control each partner exercises over the business.
✔ You’re only taxed once.
✘ More compliance and paperwork compared to general partnerships.
✘ General partner takes on unlimited liability.
Joint liability for partners; profits taxed as personal income
✔ All partners receive pass-through tax treatment.
✔ Simpler and more cost-effective to set up.
✘ This may deter potential
4. Register your business in Missouri
Wondering how to register different types of businesses in Missouri? Here's a table detailing the entire process, along with the associated costs:
How to register
General Missouri Business Corporation
File Articles of Incorporation with the Missouri Secretary of State and pay incorporation fees based on authorized shares.
The filing fee starts at $50 for the first $30,000 of authorized shares, with additional fees for each $10,000 increment, $3 for issuing the certificate of incorporation, and $5 for the Technology Trust Fund.
Similar to general corporations, but you can choose not to have annual meetings, a board of directors, or bylaws as stated in articles of incorporation. v
Same as general corporations
Obtain a certificate of authority to do business in Missouri, along with a certificate from the jurisdiction of incorporation.
$155 for a certificate of authority
Formed under Chapter 356 RSMo. Shareholders must be licensed in specific professions.
Varies based on specific profession
Sole Proprietorship/General Partnership
- Under a sole proprietorship, you don't need to file any organizational documents with the state.
- For a general partnership, state filing isn't required, but having a written partnership agreement is advisable.
- Register fictitious business names with the Secretary of State, if you’re using a name other than the owner's true name.
Fees vary; check with the Secretary of State.
File a certificate of limited partnership for original or foreign partnerships.
The fee is $105 for filing an original or foreign limited partnership.
Limited Liability Limited Partnership
- File an application for registration of limited liability limited partnership status.
Fees vary based on the number of general partners.
Limited Liability Company
File articles of organization with the Missouri Secretary of State.
Fees vary; check with the Secretary of State.
You can find a list of all the forms you need for filing on the Corporations Division's website here.
(Note that specific fees may change, so be sure to verify the current costs with the Missouri Secretary of State's office when registering your business.)
5. Decide on a registered agent
A registered agent actively handles legal documents on behalf of your business. Regardless of whether your business takes the form of an LLC, LP, LLP, C-corp, or S-corp, Missouri Law 351.370 outlines the following specific requirements for a registered agent:
- Your registered agent must be either a Missouri resident or a company that offers registered agent services.
- They need to have a physical address (a real business location) in Missouri.
- They should be available during regular business hours to receive legal documents (like tax and legal papers) on behalf of your business.
If you live in Missouri, you can do this yourself. If not, you can hire a professional registered agent, which usually costs between $50 and $200 per year. The prices vary based on how long you need their services and how quickly they can handle things.
One important thing to know: For a registered agent in Missouri to accept the appointment, they must either sign the document appointing them or send a written statement to the Secretary of State.
6. Apply for an Employer Identification Number
Before you can hire and pay employees, you need a federal Employer Identification Number (EIN). Think of it like a Social Security number for your company—it's a unique nine-digit identifier.
An EIN is important for essential tasks like opening bank accounts, applying for loans, paying taxes, and compensating your employees. The Internal Revenue Service (IRS) assigns EINs, and you can get one quickly by filling out Form SS-4.
7. Get up to speed with Business Tax Credits
In Missouri, you have to deal with more than just state and federal taxes—there are also local taxes to think about, and Missouri taxes every type of business.
To find out the exact tax rate for your area, check with your local county or city. For instance, in St. Louis, the local sales tax rate is 5.45%. In Hermann, it's 2.87%, plus an extra 0.5% special tax charged by the city.
Luckily, you can potentially lower your tax bill. Here are some business tax credits worth exploring:
- Missouri Quality Jobs Program (QJP): Offers tax credits to businesses creating new jobs, encouraging economic growth.
- Missouri Works Program: Provides tax credits for capital investments, job creation, and job retention to boost businesses.
- Neighborhood Assistance Program (NAP): Grants tax credits to businesses making qualified donations to community projects.
- Enhanced Enterprise Zone (EEZ) Program: Offers tax credits and benefits to businesses in economically distressed areas.
8. Stay on top of filing requirements and taxes
To stay compliant with the state of Missouri, you must adhere to specific filing requirements and tax obligations:
- Annual report filing: Annual reports are crucial compliance documents in Missouri, keeping the Secretary of State informed about a business's changes over the past year. Corporations must submit these reports within three months of their anniversary month to continue business operations. LLCs and partnerships are exempt from this requirement.
- Income taxes for sole proprietorships: For sole proprietors, business income is typically reported on their personal income tax return. Visit the Missouri Department of Revenue for guidance on filing your individual income tax return.
- LLC annual taxes: Missouri LLCs must pay annual taxes to maintain good standing. These taxes continue as long as your LLC is active. You can find more details about rates and fees on the Missouri Department of Revenue's website.
- Partnership taxes: In the case of partnerships, both limited and general partnerships are typically treated as pass-through entities for taxes. This means the partnership itself doesn't pay taxes; instead, profits and losses pass through to individual partners. Partnerships may need to file certain forms and reports to report their income and ownership interests. You can find more information here.
Specific filing requirements and tax rates may vary depending on your business's circumstances and activities. It's essential to keep checking relevant state agencies for the most accurate and up-to-date information to ensure your Missouri business remains compliant.
9. Find a payroll solution
When hiring employees or contractors in Missouri, it's necessary to remember some key factors. For instance, you need to classify your workforce correctly to avoid fines. Overtime regulations and entitlements are another consideration; the state requires employers to pay 1.5 times the regular rate for overtime hours.
Using payroll software can help you streamline payment processes for employees and contractors alike. A solution like Rippling automates payroll tasks, ensuring accurate and timely payments while keeping you compliant with overtime laws. With Rippling Time & Attendance, you can effortlessly monitor your employees' hours and receive alerts when they approach overtime.
Once hours are approved, Rippling handles the payroll calculations swiftly with just one click, including net pay and taxes.
Even if you're hiring globally, Rippling offers solutions to:
- Pay employees in different tax regions and currencies in a single pay run.
- Include hourly workers, salaried employees, and contractors in your payroll.
- Manage your global workforce, systems, and data all in one place.
10. Support and scale your growing business with Rippling
As your business grows, an HRIS (Human Resource Information System) becomes an essential ally. It serves as an all-in-one software solution for streamlining tasks like recruiting, onboarding, running payroll, and managing benefits.
In fact, using an HRIS early on can make scaling your Missouri business a breeze, especially if you’re planning to expand globally. Once you reach this stage, Rippling offers a comprehensive solution for managing your global workforce within a unified system. You can:
- Hire, pay, and manage your employees, whether they work in Kansas City or anywhere else in the world.
- Stay proactive in addressing local, state, and federal compliance issues with a well-defined action plan for each.
- Consolidate all employee benefits, such as health insurance, 401(k), and commuter benefits, into one system.
- Automate tasks like enrolling new hires, updating deductions, and managing COBRA.
- Maintain up-to-date recruiting data, from open positions to new hires, while automating every facet of the hiring process.
- Establish a single, reliable source for HR analytics, policies, and other important information.
FAQs about setting up a business in Missouri
Do I need a business license in Missouri?
When you start a business in Missouri, you'll likely need to get one or more business licenses or permits. For example, nearly every Missouri business needs a sales tax license.
Do I need a business bank account when launching a business in Missouri?
For legal reasons, most business owners must keep their personal and business finances apart. To achieve this, employers can use separate bank accounts for business transactions.
Do I need to get business insurance?
Yes. In Missouri, if your business has five or more employees, you are obligated to get workers' compensation insurance. If you're in the construction industry, you'll need coverage even if you have just one employee.
What are Missouri's state payroll taxes?
Missouri's state payroll taxes include:
- State Income Tax (withheld from employee wages)
- Local Income Tax (for residents of Kansas City and St. Louis)
- FICA Taxes (Medicare and Social Security, with employer matching)
Keep in mind that there may be a potential reduction in income taxes soon; the top income tax rate may reduce to 4.8% in 2024 if revenue conditions are met.
Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.