After the business idea, the next hurdle is getting your company officially registered. The registration process in Missouri involves several important steps, from picking the right business structure to obtaining the necessary licenses.
Many new business owners find themselves unsure of where to start or which agencies to contact, but our step-by-step guide cuts through the confusion, giving you a direct path to register your business in Missouri properly.
Related: Starting A Business In Missouri Checklist
Step 1: Choose a Business Structure
The first step when registering a business in Missouri is selecting a business structure, sometimes called a business entity.
A business structure is how a business is legally set up to operate. This choice impacts the organization and operation of your business, as well as how it is taxed and the extent to which the owners are protected from liability. In Missouri, there are four common types of business entities to choose from: sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC). Each has its unique characteristics, with specific advantages and disadvantages.
Related: Comparison of Business Structures
Sole proprietorship: This is the most common form of business entity and is also the most simple to start and operate. It’s owned and operated by a single individual, who has full control over all business decisions. Profits and losses are reported on the owner’s personal tax return, and there is no legal distinction between the owner and the business. The primary advantages of a sole proprietorship is its ease of setup, low cost, and minimal administrative requirements. However, the major drawback is that the owner bears unlimited personal liability for the business’s debts and legal obligations, potentially putting their personal assets at risk.
How to Start a Sole Proprietorship in Missouri
General partnership: In a general partnership, two or more individuals agree to jointly own and operate a business. Profits and losses are distributed among the partners and reported on their personal tax returns. Like a sole proprietorship, a general partnership is relatively easy to establish, but each partner has unlimited personal liability for the business’s debts and legal obligations. Additionally, partners may be held responsible for the actions of their co-partners, which can be a significant risk.
Corporation: A corporation is a separate business structure that provides limited liability protection for its owners (called shareholders). Incorporating a business is more complex and costly than other entity types, with additional reporting and administrative requirements. However, the primary advantage is that shareholders are protected from personal liability for the business’s debts and legal obligations. Corporations also have a perpetual existence, which means they can continue to operate even if the shareholders change.
How to Form a Missouri Corporation
Limited Liability Company (LLC): An LLC is a hybrid business entity that combines the limited liability protection of a corporation with the tax flexibility of a partnership or sole proprietorship. Owners, known as members, enjoy limited personal liability for the business’s debts and legal obligations. While LLCs require more formalities and administrative work than sole proprietorships or general partnerships, they offer a good balance of liability protection and tax benefits for the LLC members without being as complex as the corporation.
Step 2: Select a Business Name
After choosing your business structure, the next step in registering your Missouri business is selecting a business name. The process varies depending on your choice of business structure:
For sole proprietors and general partnerships in Missouri, you can operate under your personal name or choose a fictitious name, also known as a “doing business as” (DBA) name. If you opt for a specific business name, you’ll need to register for a Missouri Fictitious Name with the Missouri Secretary of State’s office.
For example, if Sarah Smith is opening a bakery in St. Louis, she might choose to operate under “Sarah’s Sweet Treats” instead of her personal name. In this case, she would need to register “Sarah’s Sweet Treats” as a fictitious name with the state.
Corporations and Limited Liability Companies (LLCs) select their business names during the formation process and these names must be unique within the state of Missouri. To avoid delays in processing your paperwork, a Missouri business name search will verify whether the name you want is available.
Step 3: Federal Employer Identification Number (FEIN)
After setting up and naming the business structure, many Missouri businesses need to obtain a Federal Employer Identification Number (FEIN), also known as an Employer Identification Number (EIN). This unique nine-digit number, issued by the Internal Revenue Service (IRS), serves as a federal tax ID for your business.
You’ll need a FEIN if:
- Your business has employees
- You’re operating as a corporation, partnership, or multi-member LLC
While sole proprietorships and single-member LLCs without employees can use the owner’s Social Security number for tax purposes, they may still choose to obtain a FEIN.
Obtaining a FEIN is a straightforward process. The IRS provides a free online application that typically takes just a few minutes to complete. Alternatively, you can apply by mail or fax if you prefer.
Step 4: Professional Licensing
Some professions in Missouri require specific licenses before practitioners can offer their services. The Missouri Division of Professional Registration oversees licensing for numerous occupations, including:
- Accountants
- Architects
- Cosmetologists
- Dentists
- Electricians
- Engineers
- Interior designers
- Nurses
- Psychologists
- Real estate agents
- Tattoo artists
Each profession has its own licensing board within the Division, with unique requirements, fees, and application processes. Before beginning practice, professionals should check with their specific licensing board for detailed information and to ensure compliance with state regulations.
Step 5: Missouri Business Tax Registration
One of the primary state registrations for Missouri businesses is the Business Tax Registration, which is required for businesses that need to collect sales tax or have employees.
This process ensures compliance with state tax regulations and is essential for:
- Sales Tax License:
- Retailers of tangible personal property
- Service providers, including those offering fabrication or rentals
- Employee Withholding:
- Any business with employees must register to withhold state income tax
To register, visit the Missouri Department of Revenue.
Step 6: Resale Certificate
A Missouri Sales Tax Exemption Certificate, also known as a resale certificate, allows businesses to buy goods without paying sales tax at the time of purchase. Instead, the business will collect sales tax from the end consumer when the product is sold.
Who needs one:
- Retailers buying inventory for resale
- Wholesalers purchasing products to sell to retailers
- Manufacturers acquiring materials for products they’ll sell
After completing the Business Tax Registration, businesses can apply for a Sales Tax Exemption Certificate through the Missouri Department of Revenue.
Step 7: Local Business Licenses
While there isn’t a statewide business license in Missouri, many cities and counties require local business licenses. Here are some common types:
- General Business License: This is a broad license required by many cities for businesses within their city limits. It serves as official permission to conduct business and often needs annual renewal. For example, Kansas City requires most businesses to obtain an annual Business License from its Revenue Division.
- Merchant’s License: In Missouri, many cities and counties require businesses selling goods to obtain a merchant’s license, which is separate from the state-level sales tax license. The City of Springfield requires most businesses selling goods within city limits to obtain a merchant’s license from the City Clerk’s office before starting operations.
- Home-Based Business License: This specific license allows individuals to operate a business from their residence, ensuring it doesn’t disrupt the residential character of the neighborhood. The City of St. Louis, for instance, requires home-based businesses to obtain a Home Occupation Permit from its Business Assistance Center.
- Contractor License: These licenses are for construction professionals, ensuring they meet local standards for expertise and insurance. Springfield, for example, mandates that contractors obtain a license from its Building Development Services department before working on a property in the city.
- Food Service License: This license ensures compliance with health and safety standards for establishments serving food to the public. In St. Louis County, food establishments must obtain a license from the Department of Public Health.
- Liquor License: This permit allows businesses to sell alcoholic beverages. Columbia, for instance, requires businesses selling alcohol to obtain a liquor license from its Finance Department.
Step 8: Local Building & Zoning Permits
Before finalizing your business location, it’s important to understand and comply with local building and zoning regulations. These rules ensure that your business operates in an appropriate area and meets safety standards. Here are some possible things to verify:
Zoning Regulations: Zoning laws dictate where different types of businesses can operate within a municipality. They specify which areas are designated for commercial, industrial, or mixed-use purpose. Some zones may restrict certain business activities or impose specific operating conditions, so be sure to check with your local planning or zoning department to confirm that your intended business use is permitted at your chosen location.
Building Permits: If you plan to construct a new building or modify an existing structure, you’ll likely need building permits. These ensure that any changes or new construction meets local building codes and safety standards. The local building department typically handles these permits.
Certificate of Occupancy: Many Missouri municipalities require a Certificate of Occupancy before a business can begin operations in a building. This document certifies that the structure is safe and complies with all relevant codes. You’ll usually obtain this from the local building or code enforcement department after passing final inspections.
Home-Based Business Regulations: Some areas have specific rules for home-based businesses. These may limit factors such as the number of employees, customer visits, or signage. For example, certain neighborhoods might prohibit businesses that generate significant traffic or noise.
Researching and addressing these factors before committing to a property or beginning any work is advisable to avoid potential setbacks or unexpected costs.
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