Starting a corporation in the state of Missouri comes with several advantages. Some of those advantages include the low operating cost and high return on investment.
The following step-by-step guide will show you how to start a corporation in Missouri.
1. Select a name for your corporation
Forming a corporation in Missouri all starts with deciding on a business name. The business name must meet corporate naming requirements in the state.
General corporate name guidelines
Some of the guidelines that must be adhered to when deciding on a name for your Missouri corporation include:
- The name must contain the words corporation, limited, company, inc., or an abbreviation of any of these terms
- Your Missouri corporation name must not include words that could confuse your business with government agencies such as Treasury, FBI or State Department, etc
- Your Missouri business name cannot imply that it is organized for any other purpose other than what your company’s Articles of Incorporation have outlined
- Your Missouri corporation name should not imply that your business is formed for unlawful or illegal purposes
- Your Missouri corporation name should be different from existing business names in the state. This also includes Missouri reserved names
When in need of additional guidance and direction on selecting a Missouri corporation name, refer to the Missouri state statute.
The likelihood of a business name or brand being misused or stolen as a business expands is high. Therefore, it is recommended that you trademark your business name and brand to protect it from infringements. Refer to the US Patent and Trademark Office website to trademark your Missouri business name.
Some put, an entity name is your corporation’s legal name. The legal name of your corporation is the name that the state uses to identify your business and is also the name that should be included in all formation documents.
DBA (Doing-business-as) name
It’s against the law to transact business under any other name aside from your business’s entity name. If you’d like to do so, you’ll first need to register the new name. The name that business owners use aside from the legal business name is often known as a fictitious, DBA or doing business as name, or assumed name.
They need to be registered so the customer can identify the legal entities behind the names. You can file a DBA in Missouri by conducting a DBA name search using the state’s business records. Once you’ve established that the DBA is indeed available, you can register your fictitious name online or download the DBA Form and mail to the following address:
P.O. Box 778
2. Nominate a registered agent
The registered agent has an important role in your Missouri corporation. Their primary task or responsibility is to receive service of process, government correspondence, and compliance documents on your corporation’s behalf. Therefore, the registered agent needs to be at least 18 years of age or older, have a physical address in Missouri, and remain available during normal business hours.
You may select any individual to serve as your corporation’s registered agent; however, the individual or natural person must consent to the appointment.
3. Appoint initial directors at the organizational meeting
You’ll need to call an organizational meeting before officially filing your company’s Articles of Incorporation. A few tasks will need to be undertaken during the meeting, such as creating approving bylaws, selecting initial directors, determining the corporation’s share structure, and executing an incorporator’s statement.
An essential part of this process is appointing initial corporate directors. Each Missouri corporation should have at least one initial corporate director to oversee the operations of the corporation until the first shareholders’ meeting. The corporate director is responsible for adopting, amending, and repealing operational bylaws in addition to electing, supervising, and removing corporate officers.
4. File Articles of Incorporation
Filing the Missouri Articles of Incorporation or Missouri Certificate of Incorporation officially sets up your business in the state. This document should contain important information regarding a corporation, such as:
- The corporation’s name
- The corporation’s statement of purpose
- The corporation’s registered agent’s street address and name
- The number of authorized shares the company will be issuing
- The corporation’s duration and effective date
- The number of directors on the board
- The addresses and names of the company’s incorporators
Once you’ve put together the relevant information, go ahead and file the Articles of Incorporation online. You may also choose to download the Articles of Incorporation Form and have it mailed to the following mailing address:
P.O. Box 778
Jefferson City, MO 65102
5. Create and approve bylaws
Your corporate bylaws should include the following information:
- The process of negotiating contracts
- The date the shareholders’ annual meeting will be held
- How the corporate bylaws will be added and amended in the future
- How disputes will be handled
- How the corporate records will be managed and kept
- How meetings will be called
- How voting procedures will be conducted
- The responsibility of corporate directors and corporate officers
- How the corporation will be operated
- Responsibilities of the officers and directors
The bylaws do not need to be filed with the Missouri state’s office, but they are necessary for running your corporation competently.
6. Select a share structure
When forming a corporation in any state, you’ll need to choose a share structure. The unit of ownership of a corporation is represented by a share of stock. Every share of stock is indicated by a percentage of ownership of the corporation.
So if your corporation decides to issue stock or only issue one share of stock, then that shareholder owns a hundred percent of the corporation. Additionally, shares are structured into classes, with each class termed a shared class.
Furthermore, each share class holds a different set of rights and privileges, and a corporation may have multiple classes, with each class holding any number of shares.
7. Obtain an EIN
An EIN or employer identification number is required by law for all Missouri corporations. This is irrespective of whether you plan on hiring employees or not. The EIN is a federal tax identification number that the IRS or federal government issues to identify business entities in the state.
Essentially, an EIN is useful in several circumstances, such as opening up a corporate bank account, filing paperwork for tax purposes, and hiring workers for your company. There are two ways to obtain an EIN.
The first method is to apply online on the IRS website, where you’ll receive your EIN immediately. The second option is to download the IRS Form SS-4, complete it, and have it mailed to the following address:
Internal Revenue Service
EMPLOYER INDENTIFICATION NUMBER Operation
Cincinnati, OH 45999
8. File Missouri state taxes
Depending on your business structure or business type, you may be required to pay one or more corporate taxes:
- Corporate income tax: While the state of Missouri does have a corporate income tax, if income from your business passes through you personally, then you are liable for taxation on your personal state tax return.
- Employer taxes: Any corporation planning on hiring employees will need to register for employer taxes in the state. This must be done through the Missouri Department of Labor and Industrial Relations website.
- Sales tax: Any corporation selling physical products will need to register for a seller’s permit via the Missouri Department of Revenue’s website. The application results in a certificate that allows businesses to collect sales tax on taxable goods.
9. Missouri business licenses and permits
There’s no need to register for the statewide business license in Missouri as they do not have one. However, this does not mean that the counties or cities where business is conducted will not require certain permits and licensing to allow you to legally operate:
- Merchant’s license: In addition to the state business tax registration, you are required to obtain a Merchants license in several counties in Missouri. This applies to corporations involved in retail sales or merchandise.
- Professional license: Professional corporations usually offer services such as electrical contractors, interior designers, accountants, and more. These corporations will require a professional license in order to legally operate and offer their services in the state.
10. Annual report requirements in Missouri
Annual reports are required by all Missouri corporations. The annual report form must be filed within 30 days of registering your Missouri corporation. After that, filing needs to be done every year in the month that the corporation was incorporated. You may file online or, alternatively, call the Missouri Secretary of State and request a paper form.
11. Costs of starting a corporation in Missouri
The filing fees below apply to all Missouri corporations:
- Name reservation: $25
- DBA name: $7
- Articles of Incorporation: $58
- Annual report: $25
- Missouri Certificate of Good Standing: $10
Next steps after forming a corporation
Once your Missouri incorporation is legally formed, you’ll need to complete a few additional steps to maintain your business:
Open a business bank account
You’ll want to separate your business from your personal and professional finances and expenses. Since your corporation is a separate legal entity, it’s advisable to do so. It also streamlines the process of accounting and tax filings.
Additionally, you won’t be able to enjoy the benefits of incorporating as a separate entity unless you separate your personal funds from your business funds.
Consider electing S corporation status
All corporations are taxed as C corporations by default. However, some corporations, especially small businesses, may benefit from electing S corporation status:
By electing S corporation status, you’ll avoid double taxation. It’s often the best choice for small businesses, and in order to do so, you need to file Form 2553: S – Corp. Election with the Internal Revenue Service
If you keep your default C corporation status, then you’re liable for double taxation, which means that the corporation pays taxes on profits and additional taxes on their distributions.
There are a few ways to limit personal liability or gain liability protection. For one, you could register your business as an LLC or S corporation. Alternatively, a C corporation may obtain general liability insurance and keep business and personal assets separate.
A limited liability company is a legally separate business entity from its owners. Additionally, it does combine elements of a corporation, partnership, and sole proprietorship. A sole proprietorship is, however, a much simpler business structure to form with less paperwork involved.
The rules for organization vary from state to state; however, C corporations, S corporations, as well as nonprofit corporations are required to have a Board of Directors by law. Rules pertaining to each state determine how many directors need to be on the board.
Several states have specific laws that make them more attractive for corporations. However, as a general rule of thumb, the best state to incorporate is where you are located and plan on doing the most amount of business.
The best type of corp for startups is C corporations. This is because there are other business structures and types of corporations; however, unlike C corps, they do come with various challenges that lots of new business owners prefer to avoid.