Do you want to start your business? Then forming an LLC is the best choice. It is one of the popular choices for people who wish to start their business in Missouri. The business structure is hybrid, which means it benefits a corporation and the partnership and sole proprietorship. There is legal protection of the corporation and the flexibility of the sole proprietorship and partnership. Let us look at brief the advantages of LLC:
- This business structure is apt to start-up and medium and small-sized business
- There is no limit on the number of owners.
- It is effortless to set up.
- It separates the legal business entity from the personal assets
- Tax filings are accessible.
With a bit of research and some knowledge, you will form your LLC, which we will do now. In this article, we will explain to you all the steps required, and by the end of the article, you will be positive enough to start your company.
Step 1: Select a Name for your LLC
One might think this step is such an easy one. We have to select a name, and that’s it. But it is easier said than done. The name of your company is an integral part of the formation of the LLC. The name is what people are going to recognize about your company. It will be the face of your company. So, it should be something unique, different, something that will catch the customers’ eyes. However, while selecting the name, also remember that it should be different. There are naming requirements that you have to follow:
- The LLC’s name should have the terms or the abbreviations; Limited Liability Company, Limited Company, L.L.C., LLC, etc.
- The name not in any way should indicate that it is affiliated with a federal or State government agency.
- You cannot put the words like university, bank unless you have the paperwork or a professional such as a doctor or a lawyer, is part of your business.
- Also, the name of the company should not be similar to other company’s names.
Now, we have talked about the name of your company that should not be similar to another. You can check the name using the business entity search on the Secretary of State’s official website. If you can’t find your name, that means it is available. However, if the name popped up, it means it is not distinctive, and you have to make some changes to make it different.
After making sure that your name is unique and different, you can also reserve the name if you want. Maybe it will take some time for your LLC to launch; in that case, if you don’t want any other person to use the name selected by you can lock it for sixty days. You can also renew it twice for 180 days. You have to fill the application to reserve the name and send it to the following address:
Secretary of State, Corporations Division
P.O. Box 778
Jefferson City, MO 65102
You can also apply online via the corporation online portal. If you reside nearby, you can directly come to 600 W. Main St., Rm. 322, and Jefferson City, MO 65102 and submit your application.
You have to pay $25 for any method you choose. The paper form will take around 3 to 5 working days, and for the online submission, the processing will start immediately.
There is one thing we want to bring your attention to; domain name. See, in the future, you may want to develop a website for your company. It is the best way for branding and marketing. And to reach a wider audience, you must have one. So, it is better to buy the name in advance to have to face hassle later.
Step 2: Appoint a Registered Agent
You have to appoint a registered agent for your company; it is mandated by law. A registered agent is a vital part of your LLC; that is why it is compulsory to have one. The agent takes care of all the legal documents on your LLC’s behalf. Any legal notice, reminder, tax filings, legal notices, and correspondence go through the registered agent. Having a registered agent will make sure that not a single document will go unnoticed. That is why the registered agent is a requirement. The State sends all communication to the LLC’s registered agent, ensuring that their correspondence is received. So, the registered agent acts as a point of contact between them.
You can hire any individual or an entity to be your registered agent. If it is an individual, then that person should be a Missouri resident and have a street address. The registered agent should be present during working hours to receive the correspondence. If the agent is a business entity, then they should be authorized to do business here in the State. If you want, you can also take the help of a registered agent service. You can also be your registered agent. But you have to keep in mind that the agent’s details are on the public record, so if you don’t want your information to be general, you can appoint anybody else.
Step 3: Submit your Articles of Organization
This document officially marks the beginning of your LLC. The articles of the organization contain the LLC details and give this information to the State. After filing this article, the State of Missouri gets the information that you are starting your LLC. If you want to form your LLC, this step is necessary; there won’t be any LLC without this. Some details should be present in your Articles of Organization; some of them are;
- The name of your LLC
- The name of the registered agent
- Mention the business is manager-managed or member-managed
- Mention the purpose of your business
- The effective date of the launch of your LLC.
- Secure your legal name for your business.
- The name and signature of the organizers.
There are three ways to submit the Articles of Organization:
You can file the Articles of Organization fastest by the online method. The filing cost is $55. You have to go to the State’s official website and log in by entering your credentials. You have to form an account if you don’t have one. After that, go to the Business entity online filing and follow all the necessary information. The processing will start instantly.
Via Postal mail
You can download the form from the website. After completing the application, you can send it to the following address along with the payment of $105:
State of Missouri
P.O. Box 778
Jefferson City, MO 65102
You can go to this address: 600 W. Main St., Rm. 322 Jefferson City, MO 65102 and can hand-deliver your application.
For the postal mail and hand delivery, the processing time is around 3 to 5 working days. So, it is up to you which method you want to use.
Step 4: Form your LLC’s Operating Agreement
It is one of the essential documents that ensure the smooth running of the LLC. Most states don’t have to form an agreement, but in Missouri, it is compulsory, which is a piece of great news. The Operating deal consists of all the details of how the company should run, the rights and responsibilities of the members, etc. The operating agreement’s primary aim is to ensure that the company’s internal operations are running smoothly. The members have to sign the deal; then, it would become a legal document outlining their company’s rules. If you don’t have any members meaning yours is a single-member LLC, this operating agreement mentions your company’s structure. It will prove that the business assets are distinct from your investments and separated from the entity. Creating an operating agreement should be the priority of the business owners. The operating agreement consists of:
- The details of duties of each member
- How the profits are to be divided
- What is the contribution of each member
- The regulations of addition or removal of a member
- The rules for dissolution
- How the bonuses will be distributed
- How to raise the capital
You can add or delete any point you want; you can alter the agreement according to your needs. Try to make the agreement inclusive. The agreement will ensure that all the members are okay with the company’s operating rules and avoid conflicts. And suppose any dispute occurs, then this agreement can be used as a piece of evidence.
Step 5: Obtain an Employer identification number for your LLC
EIN or Employer identification number, a nine-digit number that can be used instead of the social security number for all your business purposes. It helps you to:
- Open a bank account: you can open a business bank account which will help you distinguish the business assets from your assets.
- Obtain loans for your business
- Obtain the business credit card
- File the State Taxes and the Federal taxes
- Hire personnel
- If applicable, handle employees payroll
- Apply for commercial enterprise licenses
You do not have to have employees to get the EIN. This number is also used to file taxes and used by the IRS to track your record. You can get this number from the internal revenue service. EIN is also known by some other names such as:
- EIN Number
- Employer ID Number
- Employer Identification Number
- Federal Employer ID Number
- Federal Employer Identification Number
And many more are there, but they all mean the same thing. You can apply for the Employer identification number from the IRS in three ways:
You can obtain the Employer Identification number by visiting the official website from Monday to Friday. You can apply between 7 am and 10 pm. The online method is the quickest, as the moment you submit your application, you will receive your number.
The second method is via Fax. If you want to fax the application, you can download Form SS-4 from the official website. Take a print and fill out the form. After completing it, you can send it to (855) 641-6935. This method is not as fast as the online method, and it will take four working days to get your EIN.
Via postal mail
The third method is to send the application via mail. For this, you have to download Form SS-4, take a printout, and complete the form. After that, you can post the application to the following address:
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
This method takes time to process, and it can take around four weeks.
Step 6: License and Permits
The first five steps have officially marked your LLC. But before bringing your LLC to the floor, you have to be careful about the other vital details. Such as applying for licenses and permits. Different businesses require different permits and approvals from the government, be it federal, state, or local. Working in the absence of an appropriate license could lead to legal action. So, it is always better to be informed and follow the rules. We can understand this with an example. Suppose you want to open a restaurant. You will require a business license, a health permit, and a food and service license for that restaurant.
Similarly, suppose you want to open a food truck, you will need a food retailer license. So different businesses have different requirements. If you’re going to get the information, you can check out the Professional registration and licensing page. There you will get all the information regarding these licenses. The state and local governments also might have some license requirements specific to their locality. So it is better to get in contact with them and get all the necessary details.
After licensing, let us look at other requirements that you should be aware of before commencing your business.
Step 7: Federal, State, and Local Taxes
You have to pay taxes at three levels: Federal, State, and Local. If you don’t want to lose your good status with the government, don’t avoid taxes. Avoiding taxes is illegal so remember to file them in time.
Federal income taxes
Here we want to enlighten you that the LLC does not pay the tax straight to the federal government. They are termed pass-through units. What does that mean? That means the taxes are passed through the owners. The owners have to mention the gains and losses of the business in their income tax returns. The LLC has a flexible tax structure. If you want, you can tax your LLC as a corporation. In that scenario, a separate corporate income tax has to be filed.
State and Local Taxes
State taxes function the same way as Federal taxes. Here also, the business taxes are passed through the owner’s income tax returns. The State of Missouri also provides relief to the owners by not charging the franchise tax’s privilege.
Also, some local governments might charge some tax that will depend on where your LLC is located. So, you have to contact the local authority to get more information.
Apart from the Federal and State taxes, some additional taxes are levied upon your LLC. You only have to pay these taxes if you meet the requirements. For example, an LLC hiring employees have to file for unemployment insurance taxes. Or if an LLC sells goods and stuff, they pay for the Sales tax. Similarly, there are different criteria for these additional taxes. You can visit the State of Missouri’s official website to get more details.
Step 8: Annual Report
Most of the LLCs are required to submit the report every year or every two years. But Missouri doesn’t have this province. You do not have to send the yearly report to the Secretary of State, but you do have to inform them if there are substantial changes in your company. These changes include the appointment of a registered agent, change of office address, or any other essential changes.
Before concluding, we would like you to look at some of the essential steps that should be taken after LLC’s formation.
- Keep the personal and business entity separate. If you mix professional and personal, personal assets such as a car, home, and other valuables may be at risk if your LLC is issued. So, to keep them separated, you can open a bank account solely for business purposes. In this case, your business assets will not mingle with the personal assets. And if your company is in financial trouble, in debts, or issued by someone, your personal property will remain protected.
- We have already secured the domain name for your website in the first step. Now it is time it implements it. You have to make a website for your company. A website plays a crucial role in growing a business. The customer will have a go-to point from where they can get all the necessary information. If you don’t have a website, you’re missing out on potential customers. Nowadays, creating a website is a smooth process with technology; it will be a breeze.
- You have to get a credit card. It works in the same way in keeping your personal and business expenses apart. It also aids in establishing your LLC’s credit history, which can be beneficial when applying for business loans.
Finally, we have reached the end of the article. Now, you are entirely ready to step into the world of business. If you follow all the steps diligently, then in no time, you will own your business. It is time to step outside and make your dream a reality.