How to start a business in Missouri in 8 steps
As one of the most business-friendly states in the nation, Missouri is a great place for entrepreneurs to start their own companies. Not only are Missouri businesses offered various ways to reduce their tax burdens, but doing business in this state is often a straightforward process. Starting a business here requires time and dedication, but the result is well worth it for most.
Before diving headfirst into the following list of steps required for a Missouri startup, take some time to think about your upcoming journey. Forming and running a company may be one of the hardest tasks a person can undertake, so business owners need to make sure they are prepared for all involved. If you’re practically losing sleep because you’re so excited to start your path to entrepreneurship, keep reading to learn what’s required to set up shop in The Show-Me State.
1) Think about the type of business you want to start
Sometimes it starts with a unique idea while other companies emerge simply from developing a clever business name. Still, no matter how you get going with your company, you’ll need to do some thinking before you step on the gas. Certain logistical facets need to be contemplated right away, as some industry professionals may work from home easier than others, for example.
Once you have your main business idea fleshed out, it’s wise to do some investigating when it comes to your competitors. Will you be the fifth Italian restaurant in the neighborhood, or will your clothing boutique be the first one in the city? Beyond simply looking at the presence of other businesses, see if you can determine areas where you can do better than the rest. No matter how much work you put into your new business, there will likely be some challenges, so if you can learn from your competitors, you may have an easier go of things.
Above all else, now is a great time to work on your business plan and put your ideas onto paper. This document will be your guide while starting your business, from marketing ideas and operations plans to figuring out your product line and more. Don’t forget to include projections about the future and consider what it might look like to scale your company in the coming years.
2) Set up your legal structure
The Missouri Secretary of State offers business owners a variety of options for selecting a business structure, ensuring you can form your company in a way that best suits your needs. After some careful research, you may want to found your business entity as one of the following types of organizations:
- Sole proprietorship: Some small business owners find that their entrepreneurial vision is best served by them alone, making a sole proprietorship the best structural option. If you don’t intend on hiring employees and want a straightforward situation when it comes to business taxes, this may be your best bet; however, sole proprietors often have a higher level of risk. Under this option, your personal assets are not protected if a customer or client sues you or you fall into large levels of business debt.
- Partnership: Some business owners find that they want to start a company with another person and whether it’s a friend, family member, or colleague, running a partnership with someone does have its perks. A general partnership works similarly to a sole proprietorship in that both parties are held equally responsible for business debts; however, they also equally share the profits. If you don’t want to be liable for any misconduct caused by your business partner, you may want to explore Limited Liability Partnerships (LLPs) instead.
- Limited Liability Company (LLC): Individuals who want a bit of a more formal business structure without having to jump through a ton of hoops may find that an LLC is the right choice. Offering liability protection in the event of a lawsuit, unlike a partnership or sole proprietorship, an LLC is a popular option among entrepreneurs. In Missouri, LLCs have the greatest amount of tax flexibility, although it’s smart to work with a CPA once you form your LLC to make sure you’re filing your tax returns correctly.
- Corporation: Larger businesses may find that forming a corporation will best suit them, but it’s important to know about the nuances that come along with this selection. Missouri corporations can opt to register as an S corporation for specific tax benefits. However, whatever type of corporation a business becomes will probably be subject to quite a bit of paperwork. Thankfully, corporations are seen as separate entities from the owners or managers, offering complete liability protection should an issue arise.
The above list isn’t exhaustive by any means, as business owners in Missouri have additional business structures to choose from. If the bulk of your funds come in the form of donations, it might make sense to register your company as a nonprofit. Other types of partnerships and corporations may also be the right fit for you, but don’t feel pressured when making this decision. In most cases, a company can change its legal structure down the line if necessary.
3) Name and register your business
Naming your business is usually one of the most enjoyable parts of the entire process, and once you have the perfect moniker in mind, you’ll want to make sure it’s yours and yours only. Depending on the business structure you’ve decided on, the business registration process may look a bit different from one company to the next.
Both sole proprietorships and partnerships aren’t legally required to register their name with the Secretary of State; however, if they want to use a DBA (doing business as), they’ll need to complete a Fictitious Name Registration. All other types of businesses will necessitate a few more steps that often include a filing fee to register the company formally.
When forming a Missouri LLC, business owners need to submit their Articles of Organization to the Secretary of State along with a $50 filing fee when registering online. Although not legally required, it’s also smart to develop an operating agreement that outlines how you will run your LLC. Lastly, a registered agent also needs to be appointed during this step in the process, as you’ll need to designate who can receive legal paperwork on behalf of the company.
Corporations require the most paperwork to get up and running. Business owners need to submit Articles of Incorporation to the state, appoint a registered agent, and prepare bylaws that specify the company’s day-to-day operations. The filing fee to form a corporation is only slightly more expensive than for an LLC, as $58 will be due when submitting your paperwork.
4) Apply for licenses and permits
Many states require individuals to obtain a business license that authorizes them to provide goods or services, but Missouri isn’t one of them. While the state doesn’t have any formalized state-wide licensing system in place, each city or county may have its own requirements, so it’s smart to contact your local government for more information.
Some industries may necessitate that you apply for specific permits, especially if you’re opening up a restaurant, while others may be a bit more relaxed. It’s important to note, though, that anyone who will be selling goods needs to complete one extra step before moving forward. Startups with any product for sale need to register with the Missouri Department of Revenue to obtain a Retail Sales Tax License. You’ll also need to register with the DOR for an employer withholding tax number if you have employees.
5) Choose a location
Here’s where things start to become very real for entrepreneurs, as your business idea has now transformed from an intangible thought to a concrete business that occupies retail space. Selecting your business location is a huge step, and while it’s exhilarating, it’s not something to take lightly.
Make sure you fully understand all local zoning requirements before you sign a lease, and spend some time exploring the area a bit, too. Consider if you’ll be one of the few businesses in a highly residential area and observe what the foot traffic is like in front of your desired location. Early in this process, it’s smart to save as much as you can, and while you shouldn’t choose a spot based on budget alone, you’ll want to make sure you’re going to be in a place you can comfortably afford for years to come.
6) Open a bank account and prepare for future taxes
Most entrepreneurs’ goal is to make a lot of money from their business venture, so you must be prepared for the income you’re about to receive. While many sole proprietors choose to use their Social Security Number when filing their federal taxes with the IRS, anyone who hires employees must apply for a Federal Employer Identification Number. Thankfully, it’s free to obtain and can be done quickly through the IRS website.
Even if you aren’t bringing in huge profits just yet, you may want to set up a business bank account for future use. Some business owners also like to apply for a business credit card to help build their company’s credit and provide funds when the time comes to expand. Accomplishing both of these tasks will probably be a bit easier if you have a FEIN to use rather than trying to use your Social Security Number.
Once you have your banking details squared away, you may want to consider hiring a bookkeeper or tax professional to help get your books in order. Depending on the type of business structure you’ve selected, your income taxes may be paid personally or through the business, and you’ll certainly want to avoid situations where you could be double-taxed by the Internal Revenue Service. Corporations will also be required to file annual reports, making it even more imperative to stay organized for your finances.
7) Purchase business insurance
There’s no denying that starting a business takes a great deal of time, money, and effort, and it would be a shame for an unexpected situation to cause you to close your doors prematurely. No matter what industry you’re in, it’s smart to enroll in small business insurance as soon as possible in the event of a lawsuit or natural disaster.
A range of options are available for Missouri businesses and include liability insurance, workers’ compensation insurance, and much more. Find out which policies are right for you with Huckleberry, where entrepreneurs can get a free quote in just a few minutes and cross one more thing off of their to-do list.
8) Create a marketing plan, hire employees, and more
Every business owner’s journey is different, and at this point in your process, you may be looking for additional business resources. The Small Business Administration (SBA) offers guidance to local businesses and can help them determine their next steps once they’re ready to open their doors to customers.
Perhaps you’re clear on what needs to happen next, and you’re ready to implement a multi-step marketing plan to help attract patrons to your location. Or, you may want to spend your time building an amazing website for your eCommerce business and establishing a strong social media presence. Maybe you’ve tackled all of this and more, and you’re ready to hire employees to help with the overwhelming demands of your business.
From a startup that’s run in your living room to a multi-location corporation, there’s no question that running your own business is an exciting opportunity. Business owners are busy, so that’s why Huckleberry has made it easy to explore small business insurance options in Missouri.
If you have employees, make sure to enroll in workers’ compensation coverage and check out the other types of policies that could meet your needs. Your business is an investment, so it’s key that you protect it.