When you have a strong business idea and a conviction to get it moving in the state of Missouri, it seems like nothing can stand in your way. However, before you get established and start making money, it’s important for you to choose the right business structure and register your business at both the federal and state level.
Missouri Means Business
Missouri is a friendly and welcoming state to entrepreneurs and small business owners. There are already more than 523,000 small businesses in the state, which collectively employ 47 percent of Missouri’s working population, which is more than 1.1 million people. Economic growth in Missouri is at a healthy 3.6 percent, making it faster than the national average growth rate of 3.4 percent.
The state is also home to several entrepreneurship programs, as well as organizations and resources designed to make it easier to start (or maintain) a business in the state. Big cities like St. Louis, Kansas City, and Branson are frequent draws for entrepreneurs, not only because of their large populations, but because of their accessibility to startup accelerators, incubators, and innovation centers.
Forming a Business in Missouri
There are many types of business structures you’ll have to choose from, each of which offers advantages and disadvantages. Your first step in this decision should be creating a formal business plan, which will outline things like how you intend to make money, the competition you’re going to face, and how you’re going to grow over the first several years.
From there, you can decide which common business structure fits your business best, with options like: sole proprietorships, partnerships, limited liability companies (LLCs), and corporations.
One of the most important factors for your decision should be taxes. Sole proprietorships and partnerships work almost identically; you’ll pay taxes as an individual on whatever money you make in the business. LLCs and corporations are treated as separate legal entities, so they’ll keep track of income, expenses, and profits separately. In Missouri, LLCs aren’t required to file annual reports or pay annual fees or taxes—though if you make above a certain income threshold, you may be taxed as a corporation. Corporations must pay taxes on eligible income, and in Missouri, the state tax rate is 6.25 percent. You will also owe individual taxes on any money you withdraw from LLCs or corporations, as salary, profits, or dividends.
You should also consider what level of liability protection you’re getting. In sole proprietorships and partnerships, you’ll be personally responsible for just about everything, including any debts or legal matters your business takes on. LLCs, as their name suggests, offer a bit more liability protection, since they’re considered separate entities. Corporations offer the most protection, and are a common choice for individuals who want the most shielding.
Finally, you’ll want to consider the complexity of each business structure—and your long-term future. Sole proprietorships and partnerships are very easy to set up, but they aren’t very scalable, so they work best for small-time operations. LLCs are a little more complicated to establish, but shouldn’t deter the average entrepreneur. They’re a perfect middle-of-the-road choice. Corporations are by far the most complicated, especially because of all the rules and restrictions they’re subject to, but they offer the most flexibility for long-term growth because they scale easily and have the option of issuing public shares as a way to raise funds.
Federal Tax ID (EIN) Number Obtainment
Before you get much further in your business’s development, you’ll need to register your business with the federal government, at which point you’ll receive your employer identification number (EIN), or federal tax ID number. As the name implies, this number is necessary for keeping track of your business’s income and taxes, as well as for hiring employees. You’ll need it when applying for your business bank account, for any loans or terms of credit, and for many other business functions.
If you’re confused about how to get a federal tax ID or how to register with the federal government, don’t worry—most new entrepreneurs are confused by the process. Fortunately, our federal tax ID obtainment service makes things simple; all you need to do is give us a few pieces of information about your business, and we’ll take care of the rest.
Missouri State Tax ID Number
Your federal tax ID functions on a federal level, but you’ll also need a tax ID number at the state level in Missouri. Though similar in nature, you’ll use your Missouri state tax ID to register for state-level sales taxes and excise taxes. You’ll also need a Missouri state tax ID when hiring employees.
Thanks to our Missouri state tax ID obtainment services, getting registered with the state of Missouri is fairly easy, and only takes a few hours. Give us a few pieces of information on your business, including its name and the names of your owners, and we’ll have you registered in a day or so.
Localized Licenses and Permits in Missouri
Not every business in Missouri will need a business license, but there are many industries and types of businesses that require licensure, permits, or other types of certifications. On a state level, you may need a license if you work in healthcare, construction, transportation, or another industry that could directly affect other citizens’ health and wellbeing. However, you should also be aware that you’ll need licenses and permits on a local level, and these vary (sometimes drastically) from city to city. Because there are so many potential variations, your best path forward is to visit your local Chamber of Commerce and see what types of licenses you may need.
Once you have your federal tax ID, your Missouri state tax ID, a solid business plan, and any relevant licenses and permits, you’ll be ready to take your business from dream to reality. And if you haven’t gotten your business registered yet, make sure to use our federal tax ID and Missouri state tax ID and registration services!