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Missouri offers a balance for entrepreneurs: large cities like St. Louis and Kansas City, mid-sized college towns like Columbia, and tranquil nature areas such as Lake of the Ozarks State Park. Even more enticing is Missouri’s business friendly tax climate, which Tax Foundation ranks #14 in the country on the strength of its top ten-rated corporate, property, and unemployment insurance tax rates.
As cash flow is one of the chief concerns of an early-stage business, not having to shill out for high taxes is a welcome break for business owners. The state is cheap to live and do business in, too, placing 7th in US News’ ranking of states based on affordability.
In hopes of simplifying the process, we’ve put together this definitive guide to starting a business in Missouri. You’ll find advice on how to draft a business plan, seek funding from investors, acquire specialty business licenses, and more.
Missouri small business statistics at-a-glance
- 523,459 small businesses operate in Missouri, which is 99.4% of the state’s businesses.
- 1.1 million Missouri residents are employed by small businesses, accounting for 47% of the state’s workforce.
- 61,000 small businesses in Missouri are minority-owned.
- 70.94% of Missouri startups are still active after their first year of existence.
- Missouri startups create 5.73 jobs in their first year, on average.
- US News ranks Missouri 4th in the nation for cost of living, and 11th for housing affordability.
- Missouri’s corporate tax rate is the 5th most business-friendly, according to Tax Foundation.
Starting a business in Missouri in 12 steps
1. Develop an idea
Every successful business starts with a good idea. Ask yourself these questions:
- Which product or service can your business provide that doesn’t already exist on the market?
- How does your business idea refine an existing product or service?
Determine your personal strengths and interests: developing an idea that suits your personality and positive traits will provide motivation to put in the long hours necessary in addressing the myriad challenges you’ll face in getting your business off the ground.
Figure out how to market your expertise: if your business idea is not something you totally believe in and can sell effectively, it will be much harder to succeed.
2. Do the research
Once you have an idea, it’s time to put it through the wringer and decide if it’s viable in the market. Conduct market research to arrive at answers to these key questions:
- Is there a demand for your product/service in Missouri?
- Who is your target market?
- Do existing businesses in Missouri offer a similar product/service?
- What makes your business unique compared to the competition?
Coming up with satisfactory answers may require refinement, or even a total overhaul, of your original idea. Be patient: you’ll only want to proceed with the next steps after determining that a niche exists in the Missouri market for your business idea.
3. Draft a business plan
Now it’s time to write the blueprint of your business. A great business plan should chart the path of your company from infancy to success while being able to attract investors to provide the financing.
Your business plan ought to include the following sections:
- Executive summary – An overview of your business and why it will be successful
- Description of business – Explain the advantages of your business and the problems it solves
- Market research – Provide research on your industry, target market, and potential competitors
- Organization and staff – Detail the nuts and bolts of your business; how it’s structured and who will run it
- Product or service description – State what you are selling or offering
- Marketing plan – Explain your strategy for attracting customers
- Fundraising – The money you’ll need in the next five years to grow your business and how you’ll spend it
- Financial forecast – Data and balance sheets providing a financial forecast for your business
- Appendix – An optional section with supporting and/or requested documents like resumes, letters of reference, permits, etc.
Plan on running your business well
4. Secure funding
Every business needs money to get off the ground. In fact 82% of businesses that fail do so because of a lack of cash flow, U.S. Bank found in a recent study. Your business plan should include a detailed estimate of the funds you’ll need to cover expenses for at least a year, so now it’s time to acquire the money.
If you aren’t wealthy enough to self-fund your business, you can choose from a number of other funding options. These include a loan from the U.S. Small Business Administration, taking out a loan from a commercial bank, launching an equity crowdfunding campaign, or securing funding from an angel investor or venture capitalist group active in Missouri.
An angel investor is a wealthy individual who invests their personal finances in a startup, typically in the beginning stages, whereas a VC is a group of investors that will fund a business throughout its existence.
Which route you choose depends on the specifics of your business: angel investors typically invest smaller sums to help get a startup off the ground, while VCs invest larger sums of money in exchange for a greater say in the operations of a business. Smaller startups usually opt to pursue funding from angel investors. Plenty of both types of investors are operating in Missouri.
Missouri Angel Investors and VCs
- Centennial Investors – An angel organization based in central Missouri seeking high-potential tech and science-based companies to invest in. Investments typically range between $150K-$500K.
- St. Louis Arch Angels – A group of accredited investors hailing from the St. Louis area that provides initial investments between $250K-$1M to early-stage Missouri companies.
- Cultivation Capital – A VC firm founded in 2012 that has invested in nearly 150 companies based primarily in the Midwest.
Additional Investor Resources
- AngelList: Missouri Angel Investors – A broad directory of 4,942 investors interested in providing seed funding for businesses in the state.
- Ozark Angels – A community-based organization dedicated to connecting entrepreneurs with investors in the Midwest region.
5. Decide on a legal business entity
The form of business entity you choose will affect many factors going forward. There are 3 main options to decide from:
- Sole proprietorship – The name for running a business by yourself. Legally, you and your business are one and the same, with no separate legal entity for your business.
- Partnership – It is legally identical to a sole proprietorship, except that it comprises two or more people.
- Corporation – A complex legal structure that is a separate entity (providing legal protection to owners) from the owner and comprises directors, officers, and shareholders.
- LLC – AKA “Limited Liability Company”, this is a hybrid entity between a sole proprietorship and a corporation that possesses advantages of both. An LLCs provides the liability protection of a corporation, yet isn’t subject to double taxation as the profits go through your personal tax return.
Nowadays, LLCs are the option of choice for small business owners as they are easy to manage and provide the benefits of a corporation while lacking their complex structure. Taxwise, they operate more like a sole proprietorship.
You may want to consult with an attorney to help decide which entity works best for your business.
6. Register your business
Once you have decided which form your business will take, you’re ready to register with the state of Missouri. The registration process varies depending on whether you are establishing a sole proprietorship, LLC, or corporation.
Missouri does not require sole proprietors to file with the state government unless they are using a business name separate from their legal name. To use your novel business name, you must make a fictitious name filing with the Missouri Secretary of State.
First, search the Missouri business name database to confirm that your chosen business name is available in the state. Next, fill out a Registration of Fictitious Name application online, or print one out, and mail it to the Secretary of State address on the application. The filing fee is $7.
LLC or Corporation
According to federal law, those forming an LLC or corporation must appoint a registered agent to handle process notices and other government correspondence on a business’s behalf. Anyone with a physical address in Missouri can be their own registered agent, although hiring a professional only costs $50-$200 a year and will ensure that paperwork is submitted correctly.
After appointing a registered agent, perform a search to verify that your chosen business name is available for use in Missouri. If the name is available, you can file the necessary paperwork to form your business in the state. For an LLC, you must file Articles of Organization, while those forming a corporation must file Articles of Incorporation.
Either form can be filled out and mailed in, or submitted online through the Missouri Online Business Filing System. The filing fee for Articles of Organization is $105, while the fee for filing Articles of Incorporation depends on the dollar amount of authorized capital, and starts at $58.
Click here for more information on fees.
7. Acquire federal and state tax IDs
Now you should obtain a Federal Employer Identification Number (EIN), which is like a social security number for a business and allows you to open bank accounts, handle payroll, and file taxes.
Each state has its own laws and taxes regarding businesses. Visit the Missouri Department of Revenue website to learn more about state-administered taxes that may apply to your business. You can also register a tax account through the DOR’s tax portal, My Tax Missouri.
Tax-ready all the time
8. Open business banking and credit accounts
Opening a bank account for your business is crucial because it allows you to separate company assets from your personal assets, and makes filing taxes a lot easier. This is a recommended step, even if you are operating a sole proprietorship.
It’s also a wise idea to obtain a credit card for your business because it will help you isolate business expenses and build up credit for your company, which may help in securing investment in later stages.
Banks operating in Missouri good for small businesses
We recommend Novo Bank
9. Get the necessary licenses and permits
Depending on the type of business you are opening, you may need to apply for a number of permits and licenses to operate legally. For example, a restaurant will need a liquor license, and a pawn shop will need a reseller’s license. The paperwork may prove a hassle, but it’s a necessary ordeal that will protect you from fines, lawsuits, and other legal hazards.
Missouri does not issue a general business license, but it does issue a large number of specialty licenses and permits for a wide number of professions. Head to 24/7 Missouri, a Missouri state government website for businesses, for a list of permits and licenses issued by the state, along with instructions on how to obtain them.
10. Choose a location
Whether you are running an online business or opening a restaurant, location is everything. Be aware of the demographics of the neighborhood or town that you are considering: Are the local residents likely to visit your business? Will nearby competitors take a share of your potential profits?
The best location to start a business in Missouri is the Kansas City metropolitan area, which offers a great balance of a low cost of living and high entrepreneurial opportunity. As home to many university campuses, Kansas City’s population is younger and better educated than the state at large, making it easier to hire employees for your business.
11. Get insured
No matter what type of business you form, buying insurance coverage to protect yourself in the case of property damage or legal action is a good idea. In fact, businesses with employees are required by the federal government to have two types of insurance, while others are strongly encouraged, or required at the state level, depending on your business type. Consult with a licensed insurance agent to find out which types of insurance you should get.
Required forms of insurance:
- Workers’ compensation: Covers medical costs and disability benefits if an employee is injured or becomes ill on the job.
- Unemployment insurance: Provides benefits to workers after a loss of job through no personal fault.
Recommended forms of insurance:
- Professional liability insurance: Covers losses as a result of property damage, medical expenses, libel, slander, and negligence claims.
- Commercial property insurance: Covers property damage to business owned properties and possessions as a result of fire, theft, or storm.
- Disability insurance: Provides short-term benefits for employees suffering an illness or injury. Required in certain states such as California, New York, and Hawaii.
12. Develop an internet presence
Establishing an identity on the web is an important investment in a business’s future development. Here are some key steps in the process:
- Register a domain name for a company website (You can use Domain.com, Bluehost, GoDaddy.com, Namecheap.com). Design the website and fill it with content.
- Create profiles on the popular social media services (Twitter, Facebook, Instagram)
- Register a Google profile for your business
- Create accounts on review sites such as Yelp, Google Reviews, and TripAdvisor
More than a website builder
Missouri small business resources
- Missouri Secretary of State: Business Services – Offers a number of services, including fictitious name registration, LLC or corporation registration, and more.
- Missouri Department of Revenue – Learn more about state business taxes, and register a tax account for your company.
- 24/7 Missouri: Register my Business – Obtain the necessary licenses and permits to operate in the state.
- Missouri Small Business Development Center – A statewide organization focused on aiding small business owners in Missouri through free consultation and connecting them with funding.
- Elevation Lab – A business incubator/training program for entrepreneurs located on the University of Missouri – Kansas City campus.
- MOSourceLink – Provides a host of resources for Missouri entrepreneurs and holds small business-focused events.
- Missouri Technology Corporation: Innovation Centers – A directory of Missouri tech business incubators.
- Innovation Stockyard – A business incubator specializing in animal health that provides a wide range of hands-on services and equipment for participants.
- T-REX – A large incubator, coworking space, and entrepreneur resource center located right in the heart of St. Louis.
Missouri SCORE chapters
The nation’s leading business mentorship network has a number of regional chapters in Missouri: