A whopping 97.4% of Missouri’s landscape is considered rural, making agriculture and forestry one of the top industries along with manufacturing and mining and power. As the home of Boeing Defense, Space, and Security, it’s also widely regarded in the realm of aerospace and defense. Basically, Missouri is a great place for businesses that need a lot of affordable space, though cities like St. Louis and Kansas City also provide unique opportunities and a larger pool of local consumers.
If you’re looking for info on how to open a new business in Missouri, this guide can help you get started.
Benefits of Opening a Business in Missouri
Missouri may not have the largest state economy, but it is one of the friendlier states to launch a business. According to the Tax Foundation, it has the 12th-best business tax climate in the United States, and a lot of that has to do with how Missouri corporations are taxed. The state claims it’s the West North Central leader in corporate expansion and the 15th fastest growing state for tech jobs.
Missouri has some of the lowest corporate taxes in the nation, set at a rate between 4% and 6.25%. This change was administered in the 2020 tax year by the Chamber of Commerce and Industry as an initiative to help bring more businesses to the state and expand the operations of existing companies. Beyond that, Missouri’s Department of Economic Development has a number of business resources for startups and existing firms, particularly in the world of tech and IT.
Start an Entity in Missouri
ZenBusiness offers the following formation services to our customers:
- Missouri Limited Liability Company (LLC)
- Missouri Professional Corporation
- Missouri Corporation
- Missouri Nonprofit Corporation
How to Start a Business in Missouri
Missouri helps simplify the process of opening and operating a new business with their online business portal, which allows you to register for permits, hire employees, and seek government assistance. You’ll also likely need to deal with the Missouri Secretary of State, which has its own Business Outreach Office. Overall, the process is not too dissimilar from that of other states, and the following checklist can help keep you on track:
How to Start a Business in Missouri Checklist
- Create a business plan
- Choose a business structure
- Determine your Missouri business costs
- Create a name for your Missouri business
- Register your business and open financial accounts
- Market your Missouri business
Additional guidance can be found through the Missouri Department of Revenue.
1: Create a business plan
Business plans do more than just help keep a new business on track. They’re also crucial if you need to land investor funding or score a business loan. They’re an essential way to prove your business idea has a chance to be viable. When you create a business plan, consider doing the following:
- Clarify your business idea: Most businesses fail because there is no market need, so this section can help you identify what you’re offering and why consumers need it.
- Create a financial outline: How much money does your business need to operate, and what are your products’ price points? When do you expect to be profitable, and do you need outside funding?
- Choose a location: Beyond zoning laws, some locations are better or worse depending on the type of business. Per the 2000 Missouri Census, 70% of the population lives in just 2.6% of the state. The rest live in rural areas.
- Perform a market analysis: Who is your key demographic and how can you best serve them?
- Perform a competitive analysis: Who are your competitors and how can you improve upon what they’re doing?
- Search for tax breaks, local grants, and other government resources.
You can view our step-by-step guide to writing a business plan for more in-depth advice.
2: Choose a business structure
All businesses have to choose a business structure. The most common types are limited liability companies (LLCs), corporations, partnerships, and sole proprietorships. Your choice of business structure has a critical impact on taxation and potential liability.
Sole proprietorships and general partnerships are the easiest type of business structure to set up, because they don’t require registration with the state. With a sole proprietorship or general partnership, you can start doing business today. Taxes are also simple, since income is taxed on your personal tax return. However, sole proprietorships and general partnerships have a major drawback. If the business gets into financial trouble, such as being sued or going into debt, your personal assets are at risk, including your house, car, bank accounts, and even your kid’s college fund.
C corporations require more paperwork, but they offer liability protection. That means that as long as the C corporation stands, you are not personally liable for business debts, and your personal assets are safe. However, income gets taxed twice — once at the corporate level and a second time on the shareholders’ personal tax returns. S corporations only tax the money at the personal level, but they’re harder to qualify for.
The “best of both worlds” structure for many entrepreneurs is the LLC. LLCs are pass-through organizations for tax purposes. In other words, the income is taxed only on your personal tax return. However, LLCs also offer liability protection, so if the business gets into trouble, your personal assets are protected.Both corporations and LLCs must appoint a registered agent and file their corresponding articles (Articles of Organization for LLCs, Articles of Incorporation for corporations) with the Missouri Secretary of State. Filing fees vary from $50 to $105 for LLCs depending on the method, and $58 for the first $30,000 of authorized shares for corporations.
3: Determine your Missouri business costs
It’s important to understand your overall business costs before you jump in. This can help you figure out how much startup capital you’ll need and budget for the future without going broke. Remember to always add a six-month cushion in case of an emergency.
To determine how much it will cost to run your business, add up:
- Fixed expenses (like mortgage or rent and insurance payments)
- Variable expenses (like business taxes and inventory costs)
- One-time expenses (like equipment)
Most small business owners don’t have enough startup capital hanging around in their back pockets, so they’ll need to find funding. Business credit cards may work for smaller, one-time purchases, but most entrepreneurs will eventually search for a business loan. This can be done through the Small Business Administration (SBA) or a bank. Missouri also has a small business loan program.
Additionally, both Missouri and the federal government have a number of available grants and resources. The state’s Department of Economic Development has incentives and financing options listed on their website. If your business has been affected by the COVID-19 pandemic, the Missouri Department of Labor may also be able to help.
4: Create a business name
Next you’ll need a business name for your Missouri company. The key point here is that the name needs to be unique in the state of Missouri. If it’s not, your LLC or corporation filing will be rejected. To find out if the name you’ve chosen is unique, use Missouri’s online business name search tool.
For a sole proprietorship or general partnership, you’ll have to do business under your own name unless you register for a “doing business as” or DBA name. For instance, if your name is Kevin Cogswell, and your company is a sole proprietorship, it’ll have to be called “Kevin Cogswell” unless you sign up for a DBA or “fictitious name.” With a DBA, you can call your business “Cogswell’s Cakes” or any other name you like.
Per Missouri state law, any company using a DBA or fictitious name must file a fictitious name registration form with the secretary of state. Also check local business registrations to make sure your name isn’t already taken, otherwise you may face legal issues from other companies. Some corporations and LLCs also use DBA names for marketing and business purposes. For instance, a restaurant may run a catering operation on the side, using a DBA name to differentiate both business lines.The best business name is simple enough to help you form an online presence through domain registration and social media profiles. It’s also distinct enough to define your brand identity and stand out in a sea of competitors.
5: Register your business and open financial accounts
Once you have a business name, you need to finish the rest of the paperwork. There can be a lot, so it’s best to stay organized. Keep the following in mind:
- Open a business bank account
- For corporations and LLCs, register your business structure (you can register online)
- For corporations, partnerships, and most LLCs, obtain a tax ID number through the IRS website (IRS.gov). Generally, businesses can file for free for a federal employer identification number (EIN). Sole proprietors also have the option of using their social security number instead, though that can open them up to identity theft.
- Register with the Missouri Department of Revenue to pay taxes online
- Obtain the proper permits and licenses
- Obtain the proper insurance
In Missouri, not all companies need a business license. You’ll need to check with your local city clerk. For example, in St. Louis, all businesses need a Graduated Business License (GBL) and may also need industry-specific licenses. If you’re selling tangible personal property or services, you will also need a retail sales tax license unless you qualify for an exemption.
Most businesses need some kind of insurance, if only to protect the business’s assets. Most commonly, businesses have general liability insurance. If you hire employees, you’ll have to pay into things like workers’ compensation insurance and disability insurance. Depending on the business, you may need specialized insurance like a commercial auto policy or event insurance. You can find out more information through the Missouri Department of Insurance.
6: Market your Missouri business
A great marketing strategy will get consumers in the door. In 2020, the focus is heavily on digital. This includes a comprehensive cross-platform strategy on social media platforms like Facebook, Instagram, LinkedIn, Twitter, and YouTube. You may also want to enact an SEO strategy to improve your SERP ranking (i.e., where you show up in a Google Search). This is a big task, so if you’re not sure about digital marketing, consider hiring a local digital marketing agency.
Additionally, you may want to sign up for Yelp, Google My Business, Angie’s list, and other local business registrations. Print advertising can also be a good option, especially with a local approach, but it’s generally more expensive.
Examples of Good Businesses to Start in Missouri
Missouri is a growing hot-spot for technology companies, and the state has crafted numerous incentives to bring in more startups. Still, that’s not the only type of company that can succeed. Since Missouri is largely rural and has relatively low property costs, it’s a great place to start a farming or a manufacturing business that needs large warehouses or a lot of space.
In recent years, Missouri has made an effort to attract new businesses amidst stagnant growth. It only ranks 29th in economic expansion, and in many regards, it’s got a lot of untapped potential. Cheaper living and business costs make it an excellent place to launch a business that will thrive in a rural environment.
Missouri Business FAQs
How much does it cost to file in Missouri?
You can visit the Missouri Secretary of State’s website for a comprehensive list of basic filing costs for a variety of business structures in Missouri.
Is filing an LLC in Missouri expensive?
LLCs have a $50 startup fee if you’re filing online and a $105 fee to file by mail, but these are only the basic fees for filing Articles of Organization.
How much do small business owners make in Missouri?
The Bureau of Labor Statistics doesn’t have salaries listed for small business owners, but they do note that those holding management positions make a mean annual salary of $106,760. Chief executives in the state make a mean annual salary of $172,430.