How to Start a Business in Missouri
The state of Missouri is a viable option for intending business owners to establish their own businesses. Businesses in Missouri have gradually grown in significance to the United States economy, with an increase in revenues generated from exporting their products to other parts of the world. According to data released by the United States International Trade Administration, the total revenue generated from goods exports rose from $15.7B in 2021 to $16.2B in 2022. The sectors that contributed most to the state’s revenue generation were the chemicals, transportation equipment, processed foods, machinery (except electrical), and agricultural products sectors.
In 2020, 4813 Missouri-based companies were responsible for goods exportation, of which 85% were made of small and medium-sized enterprises (SMEs). The businesses that made up a majority of this number include:
- Machinery (except electrical), with a total of 998 businesses
- Fabricated metal products, which was made up of 597 businesses
- Computer and electronic products, comprising 580 businesses
- Chemicals, which was made up of 530 businesses
- Miscellaneous manufactured commodities, comprising 470 businesses
A small business owner must take specific steps to ensure smooth business operations. These steps are:
- Consultation with professionals involved in establishing businesses: These include persons offering professional services, including accountants, attorneys, financial advisers, and other related experts. These persons will refine the business idea and ensure that the small business owner is positioned to establish a successful business in the state’s landscape.
- Creating a business entity: Small business owners must choose a business entity, file a creation document with the Secretary of State, and choose the name under which their own business will operate.
- Registration of the business for required state taxes at the Missouri Department of Revenue;
- Registration of the business with the Missouri Department of Employment Security;
- Application for a federal employer identification number, which is issued by the Internal Revenue Service (IRS);
- Obtaining Workers Compensation Insurance;
- Registration with agencies peculiar to the industry under which the business will operate;
- Obtaining the business license and all other required business permits.
Persons without knowledge of how to start a business in Missouri can follow these steps when seeking to establish a new business:
- Step 1: Performing Market Research
- Step 2: Drawing up a Business Plan
- Step 3: Acquiring a Business License or Permit
- Step 4: Securing Funding
- Step 5: Choosing a Business Structure
- Step 6: Choosing a Business Location
- Step 7: Meeting the Legal Requirements of the State
Step 1: What Kind of Business Should I Start in Missouri?
Per data released by the Bureau of Economic Analysis, the state recorded a growth rate of 2.6% in the first quarter of 2023 relative to the prior quarter. Missouri’s real GDP was valued at nearly $304B, with the most significant contribution being owed to the agriculture, forestry, fishing, and hunting industries. Other industries, such as retail trade and food services, also contributed positively to the state’s economic growth.
Also, research carried out by the Missouri Economic Research and Information Center projects that the most growth over the next decade will be recorded in the food industry, with significant growth expected from the restaurant industry.
Therefore, the choice of business to be done in Missouri is mainly based on the interests of the intending business owner and the resources available. However, with the economic growth recorded in the state’s agricultural and food sectors, starting a business centered around agriculture and food may be more favorable in the long term.
How to Do Market Research
Conducting market research is one of the most important steps every business owner is expected to take before starting their business. It can be viewed as a vital step in the pre-implementation phase of the business startup.
Market research helps the business owner understand the potential customer base their business will most likely attract. It also helps them know how they will attract their customers and the challenges they will likely face when starting and running the business. Some other information that accurate market research provides are:
- The strengths their business has, based on the available resources
- The weakness of their business
- The potential competitors they will have when the business launches
- The potential threats to the business, which could be a personal or industry-wide threat
The availability of all the above information helps the business owner make well-informed decisions before even starting up the business.
To carry out market research in Missouri, the business owner will first need to decide how they want the research to be carried out. Market research can either be done secondarily, which means the business owner will gather existing data on the business from resources (either online or offline), or it can be done primarily, which means the business owner will need to gather information on the business directly from customers.
Primary research can give small business owners better-informed results, as the person will get answers to specific questions about their own business plan. However, it can be costly and time-consuming. Such research includes surveys, questionnaires, focus groups, and in-depth interviews.
Secondary research, on the other hand, comes cheap and fast, but the results are not usually as accurate as the results obtained from primary research.
The business owner must also use competitive analysis to find a market advantage. The competitive analysis helps the individual assess characteristics like the market share, strengths and weaknesses, opportunities, barriers, and competitors.
Individuals may also get information on small business data and trends online from official and third-party websites.
Step 2: How to Write a Business Plan
Writing a business plan is an integral step in the business creation process. A business plan is a written document giving an overview of necessary projections made for the future of the business. A business plan aims to answer the following questions:
- How will the business become profitable?
- How will important goals be achieved?
- What are the business targets, and how will they be met?
Every business plan is made up of seven key sections, which are divided as follows:
- The first section is known as the executive summary. This is a summary of the key points listed in the business plan. It gives an overview of what is contained in the larger part of the business plan.
- The second section is known as the business description. This is where the person provides information on the business and the products or services to be rendered to customers.
- The third section shows the marketing strategies. Here, the individual will need to discuss how they will reach their potential customers and get them to use their product or service.
- The fourth section shows the competitor analysis. This is where the individual documents all the information gathered on the existing competitors within that market and potential competitors who are likely to come into that market later.
- The fifth section shows the business’s managerial, design, and developmental plans. This describes how the individual intends for the business to operate.
- The sixth section shows the current and potential risks that the business is likely to be faced with. This helps the business owner decide which risks they are willing to take and which they will avoid.
- The final section of the business plan contains the financial projections and statements of the business.
Business ideas and plans are iterative and not rigid. Therefore, they are expected to be reviewed regularly and progressive changes are made where and when due.
Step 3: Do I Need a Business License in Missouri?
The Secretary of State, who is in charge of the operation of businesses in Missouri, does not issue business licenses to individuals. Therefore, Missouri does not issue a statewide business license, with the exemption of the sales tax license (seller’s permit), which is to be obtained by businesses that involve selling or renting tangible goods or taxable services. The seller’s permit is usually issued by the Missouri Department of Revenue.
Many business owners in Missouri obtain licenses from their respective cities or counties. Information regarding the issuance of business licenses is typically available on the county clerk’s website. Some businesses are also exempted from the collection of licenses, depending on the city or county where the business is to be opened.
The requirements for obtaining a business license may also vary by county in Missouri. However, there is some basic information that business owners will be required to provide for their licenses to be processed. This includes the business email address, trade name, true name, structure address, number of employees, business owner information (name, social security number, address, email, and phone number), business contact information, driver’s license information, EIN/Fed or ID/SSN.
How Much Does a Business License Cost in Missouri?
Since Missouri does not issue a statewide license, individuals will need to purchase a city occupation license to operate in the city where their business is set up. The fee for this license is as follows:
- For gross annual receipts of $25000 or less, the fee is $75
- For gross annual receipts above $25000, the fee is $75 with an additional $0.31 on every $1000 made on the base $25000
How to Register for a Sellers Permit in Missouri
The seller’s permit or sales tax license is a license that must be obtained by registering with the Department of Revenue. According to Chapter 144 of the Missouri Revised Statutes, sales tax is imposed on a business if the business involves selling tangible personal property or taxable services. This may include telephone services, restaurants, fitness centers, etc.
Registering for a seller’s permit in Missouri can either be done online at the Department of Revenue portal or by downloading a copy of the registration form on the same webpage and sending a filled copy of the form to the department’s office.
The completed copy of the registration form is to be mailed to;
P.O Box 357
Jefferson City, MO 65105-0357
Phone: (573) 751-5860
Fax: (573) 522-1722
The two methods of registering for a seller’s permit will require the provision of the business owner’s details as well as the details of the company. Individuals who want to register for a seller’s permit should, therefore, ensure the availability of information like the business owner’s name, phone number, address, social security number, and email address. Also, the individual should have the business name and other details like location and number of employees.
Step 4: How Much Does it Cost to Start a Business in Missouri?
Missouri does not have a stipulated amount required for business owners to start their businesses. The only requirement is to have enough money to pay the necessary documentation and licensing fees. It is also recommended that they have enough capital to start the business through personal funds, grants, or loans.
How to Get Business Funding in Missouri
Business funding in Missouri can be obtained in the form of business grants, business loans, or funding from investors. Depending on the kind of business funding the business owner needs, proper research will need to be conducted to determine if they are eligible for such funds and what will be required of them to get them.
How to Self-Fund a Business in Missouri
Self-funding a business means that the funds required to finance the business will be borne by the owner(s) of the business. Depending on the type of business entity, self-funding may be direct, where the owner simply puts in their money and knows that the financial outcome of the business is theirs to bear, or it may require some partnership agreement, where the business partners will need to clearly state how every party will be affected by any outcome of the business.
How to Find Investors in Missouri
Investors in Missouri could be private or public. Public investors are essentially the governmental agencies that seek to help growing businesses with funds to help grow their businesses. In contrast, private investors are privately owned companies or people who put their funds into businesses to gain interest in them when they become profitable.
To find investors in Missouri, business owners must ensure that they have a well-documented business plan and pitch to market their business to potential investors and get them to put their money into it.
Investors have their separate requirements for businesses that want to be invested in. Therefore, finding investors will also mean that the business owners will need to know what is required by an investor and try to get their business to meet the requirements.
How to Get a Loan to Start a Business in Missouri
Business loans can be acquired from the state through the state’s Small Business Loan Program. This grant is maintained and conducted by the Missouri Department of Economic Development (DED), and it is a small-interest business loan that has been designed to help propel early business startups to the next phase of their business development.
For individuals to be eligible for this business loan, they have to meet the following criteria:
- The total number of employees in the business, including the business owner, must not exceed 15
- The business must be located within Missouri.
- The business must be Missouri-owned
- The business must be registered with the Secretary of State.
- The business must receive tax clearance from the Department of Revenue.
- The business must not involve gambling, check cashing, alcohol, and tobacco distribution, day labor services, radio or television agency, or speculative real estate.
Individuals who wish to apply for the loan will be required to provide the details of 2 character references who will serve as guarantors. Afterward, this DED will check the business to confirm if it meets the eligibility requirement. The business owner will also be required to provide their business plan, proposed use of funds, and tax clearance from the Department of Revenue.
The DED will examine the business and provide a preliminary analysis of the business’s ability to repay. If the company meets the required standard, the DED will recommend it to the Missouri Development Finance Board (MDFB).
The Missouri Development Finance Board will then examine the company and determine if the loan will be approved or rejected. If approved, the MDFB will issue the loan documents and finalize everything concerning the loan issuance.
How to Find Missouri Business Grants
Business grants are usually given to business owners to help them start up their businesses as a form of investment. Missouri and the local cities or counties offer businesses these grants to help them with their businesses.
Individuals will need to search for the grants open within their locality, confirm if they are eligible, and provide the required documents to get the grant.
Can I Start a Business with No Money in Missouri?
No, money is needed to start up a business in Missouri. The business owner will be required to pay for necessary things for the company’s smooth operation within the state. Hence, starting up a business in the state requires capital.
Step 5: Choosing a Business Structure in Missouri
Business structure or business entity in Missouri refers to the organizational makeup of the business. In Missouri, business entities can either be statutory or non-statutory and until affirmative steps are taken to make the business a statutory entity, the business will operate as a sole proprietorship or a general partnership.
Non-statutory business entities include the following types of businesses:
- Sole proprietorship: This is a business where one person is in charge of the entire functionality of the business. The person makes all the decisions, takes all the profits, bears all the risks, and suffers all the risks. The businesses most suited for sole proprietorship are retail traders, repairs and maintenance services, small-scale home businesses, freelance businesses, and tutoring services.
- General Partnership: This business entity is formed when a sole proprietor takes on a partner or when two or more people team up to create and run a business together. Typical examples of businesses that function as general partnerships are law firms, medical practices, and architectural firms.
Statutory business entities in Missouri include the following types of businesses:
- Corporation: This kind of business functions with the input of shareholders, incorporators, directors, and officers. Examples of business corporations are Apple, Amazon, and Google.
- Subchapter – S Corporation: This is a type of business that operates like a corporation but is being taxed like a partnership firm.
Each type of business structure has its function, taxation method, and operation method. Therefore, it is essential that this stage of business creation, which involves choosing the business structure, is carefully thought out.
Individuals are advised to communicate with a lawyer, asking questions about what would require them to take up a particular business structure and the cost it would incur. The type of business an individual intends to operate also plays a part in the decision-making process, as some types of businesses are only suitable for certain business structures.
How to Start a Sole Proprietorship in Missouri
The sole proprietorship business entity is widely regarded as the simplest form of business to adopt and maintain. It is a business where one person is responsible for everything that pertains to it. In Missouri, sole proprietorships can be formed without the involvement of the Secretary of State. The office of the Secretary of State does not even receive any filings related to establishing this type of business.
The only requirement by the state of Missouri for businesses functioning as this type of business entity is that if the business is transacting under a name that is different from their own true name, they will need to register with the Secretary of State as a Fictitious Name, as is the case with other types of business entities. Fictitious name registration can be done online at the Secretary of State’s business portal.
How to Start a Corporation in Missouri
Corporations are widely regarded as the most complex of the Missouri business entities. This kind of business entity is legally separated from its owners and has a double taxation feature that can only be avoided by corporations that are eligible through specific IRS filings. The management and maintenance of corporations typically involve four categories of people:
- The incorporators who sign and file the articles of incorporation used for creating the corporation
- The shareholders who actually own the company. The portion of the company that each shareholder owns is seen in the amount of stocks or shares they own in the company
- The directors who control the property and business of the corporation. They are usually voted onto the board by the shareholders
- The officers who function as prescribed by the corporation bylaws
A corporation can only be said to have been established when it has been properly filed at the office of the Secretary of State.
Pursuant to Section 351.055 of the Revised Missouri Statutes, the following content, known as the articles of incorporation, are required for the creation of corporations:
- The name of the corporation
- The address of the corporation, including its street and number
- The number of shares of each class, if the aggregate number of shares that the corporation has authority to issue exceeds 30000 shares, or the par value exceeds $30000
- The name and physical business or residence address of each incorporator
- The purpose for the creation of the corporation
- The number of directors to form the board of directors
- The extent (if any) to which a shareholder is allowed to acquire more shares in the corporation
It is also important to note that the filing fee for corporations will cost $50 for the first $ 30,000 of authorized shares, with an increase of $5 for each additional $ 10,000 of authorized shares.
How to Start an LLC in Missouri
The Limited Liability Company, known as LLC, was first recognized by Missouri in 1993 and has since become increasingly popular, with a rise in the number of businesses that are registered as LLCs.
An LLC is similar to a corporation in that the members of an LLC are not responsible for debts incurred by the company, and their financial risk solely depends on the amount of investment made. However, it is different from corporations in that the income and losses of the company flows directly to the members, thereby allowing them to avoid the double taxation that is enforced on corporations.
A limited liability company can only be said to have been formed when the articles of organization have been properly filed at the Corporations Division.
Pursuant to Section 347.039 of the Missouri Revised Statutes, the following content is included in the articles of organization:
- The name of the limited liability company
- The purpose of creating the LLC
- The address, including the street and number of the registered office
- The name of the registered agent at the office named above
- A statement showing who is responsible for the management of the LLC, which could be the managers or the members
- The events by which the LLC will be dissolved or the number of years by which the LLC is expected to last
- The name and physical business or residential address of each organizer
The articles above are usually filed by the organizers, who may or may not be the members of the LLC.
Every LLC in Missouri is also expected to have an operating agreement. This operating agreement is an internal document that establishes the rules guiding the code of conduct of business affairs, and it also states the capacity in which every member, manager, and employee is expected to function.
How to Start a Business Partnership in Missouri
Business partnerships in Missouri are businesses that operate with the conjunction of at least two people. There are two categories of business partnerships in Missouri, which are
- General partnership
- Limited partnership
This type of partnership is similar to a sole proprietorship business in that registration of the business with the Secretary of State is not required. This type of business is initiated when a sole proprietor partners with a person or people or when people come together to create a business.
Similar to sole proprietorship, the only thing that is required to be filed is the fictitious name with which the company conducts its business.
Pursuant to Section 358.440 of the Missouri Revised Statutes, a Missouri general partnership may elect to be a limited liability partnership upon the provision of the following information during registration:
- The name of the partnership
- The address of the registered office
- The name and address of the registered agent
- The number of partners in the partnership as of the day of application
- A statement showing the functions of the partnership
- Any other information the partnership wishes to include
It is also recommended that the partnership has a partnership agreement that will detail the delegation of duties to the partners and also how the income is expected to be shared.
A limited partnership is a business that is formed to eliminate the personal liability risk for some partners in the partnership. This type of partnership has 2 types of partners: the general partners and the limited partners. The general partners have the same characteristics and face the same liability risks as the ones in the general partnership, while the limited partners are protected by statute from liability. It should be noted that every limited partnership must have at least one general partner.
To establish a limited partnership, a certificate of limited partnership must be filed at the Corporations Division. Pursuant to Section 359.091 of the Missouri Revised Statutes, the certificate must contain the following:
- The name of the limited partnership
- The address of the registered office
- The name of the registered agent at such office
- The name and mailing address of each general partner
- The events at which the limited partnership must be dissolved or the number of years the limited partnership is expected to last
- Any other matter the general partners wish to include
It is also recommended that there is a partnership agreement in the limited partnership.
How to Start a Non-Profit in Missouri
In Missouri, a non-profit is a business that has been set up to better the community. This may include churches, civic associations, political groups, and trade organizations.
Pursuant to Section 355.881 of the Missouri Revised Statutes, non-profit corporations that are registered to do business in Missouri are to be designated as either public benefit or mutual benefit.
Per Section 355.011 RSMo, the following documents must be included in the articles of incorporation and need to be filed with the Secretary of State for a non-profit business to be established:
- The name of the corporation
- A statement showing if the corporation is of public benefit or mutual benefit
- The address of the initial registered office
- The name of the initial registered agent
- The name and address of each incorporator
- Statement showing whether or not the corporation will have members
- Provisions showing how assets will be distributed upon dissolution of the corporation
- The purpose for which the corporation was established
- The names and addresses of the initial directors
Traditionally, non-profit corporations are tax-exempt, but that is not the case in Missouri. For non-profits to be tax-exempt in Missouri, they will need to apply to the IRS for recognition of federal tax-exempt status as a charitable organization.
Step 6: Choosing a Business Location in Missouri
The choice of business location in Missouri is dependent on the business owner and the business entity. Some businesses are more suitable for a certain location than others. Therefore, every business owner is expected to understand the business they want to create and the location that would be best suited to host that kind of business.
Business owners are also expected to research the cost and requirements of starting up a business at a chosen location before proceeding.
What Kind of Business Can I Run From Home in Missouri?
Missouri grants its residents the right to run a business from their homes, subject to the laws that govern its operations. While most cities in the state have their peculiarities regarding what is permitted and what is not, Missouri has a more generic law on what kind of home-based business is permitted and which ones are not.
Residents of Missouri can operate a home-based business if:
- The total number of employees or clients onsite per time does not exceed the stipulated occupancy limit for residential dwelling
- The business is limited to the sale of lawful goods and services
- The business does not lead to on-street parking or cause traffic
- The business activities occur inside the residential dwelling or within its yard.
- The business activities are not visible from the street.
How Do I Start A Small Business From Home in Missouri
The necessary requirements for starting a business from home in Missouri largely depend on the city or county where the business is to take place. For instance, home-based businesses within Jefferson County are regulated by the Jefferson City Zoning Code. The city requires that all home-based business owners within the city obtain a Home Occupation Permit in addition to the business license.
Starting a Business Online in Missouri
The state of Missouri does not have any outlined laws binding the conduction of a business online. However, it is expected of online business owners that they abide by the state or national internet laws and that their business is a business recognized and supported by law to be conducted within the nation.
Step 7: Legal Requirements for Starting a Business in Missouri
To start a business in Missouri, the individual will be required to provide some documents, depending on the type of business it is. However, some things that the individual may expect to do are:
- Obtain a business license from the local city or county
- Choose a business entity. This is because, during the business creation process, the business owner will be required to provide information like the business name, business address, type of business entity, and whatever information may be peculiar to the chosen business entity
- Obtain a workers compensation insurance from the Missouri Division of Workers Compensation
- Register with the agencies that may be required by their business industry
How to Get an EIN Number in Missouri
The employer identification number is a unique number that is assigned to every business entity within the state. Registration for the EIN number in Missouri can either be done in person at the office of the Internal Revenue Service or online at the IRS website.
An individual can apply for an EIN number online if their business is located within the United States. The person must also have a valid taxpayer identification number like their social security number, and they are limited to one EIN per responsible party per day. The responsible party is the person who owns or controls the business entity.
Individuals are also advised to thoroughly understand the online application process, as progress cannot be saved later, and the application must be completed in one session. A session ends after 15 minutes of inactivity, and the person will need to start over.
After the validations have been completed, the employer identification number will be received immediately. It can then be downloaded, saved, and printed.
How to Get a Missouri Registered Agent
A registered agent is a resident of Missouri and whose business office is identical to the registered office of the business entity. The registered agent is given certain types of documents on behalf of the business.
In Missouri, any resident within the state who is 18 or older can act as a registered agent for a business. Therefore, to get a Missouri registered agent, a person has several options, including employing the services of anyone who stays within the state and can function in that capacity or employing the services of one of the several companies established to act as registered agents for businesses.
Patents, Trademarks, and Copyrights in Missouri
Registering a mark by a business at the Secretary of State’s office secures certain rights for the business in Missouri. If this is done, it ensures that no one else can use that mark for 10 years, subject to certain conditions, unless the owner of the mark authorizes them.
Pursuant to Section 417.016 RSMo, individuals may register a mark upon providing the Secretary of State with the following:
- The name and business address of the applicant
- The goods or services in connection with how the mark is used
- The date when the mark was first used anywhere, and the date when the mark was first used in the state by the business owner or their predecessor in business
- A statement declaring that the applicant is the owner of the mark and that nobody else is permitted to use that mark, except they are consented by the applicant
Applicants are also expected to pay a sum of $50 to the Director of Revenue for their application to be processed. The Secretary of State will then review and process the application and will inform the applicant if their application has been approved or rejected.
Missouri Business Tax
The Department of Revenue monitors Missouri business tax, and they tax businesses based on the type of business entity they are.
Businesses must register their business with the Department of Revenue for different tax types. These types are sales tax, vendor’s use tax, customer’s use tax, withholding tax, unemployment tax, tire and lead acid battery fee, and corporate income tax.
Registration can be done online by providing the individual and business details.
Are Business Records Public in Missouri?
Per Section 610.010 of the Missouri Revised Statutes, any state record retained or maintained by a governmental body is open to the public for inspection, including business records within Missouri. However, there is some sensitive information contained in the business records that are exempted from public disclosure, and this includes the individual’s social security number.