Do you want to invest or start a small business in Missouri? If YES, here is a detailed guide on how to start a profitable business in Missouri with no money. Small business is one of the bedrocks of the United States of America, and every successful state in the country climbed to that point on the shoulder of small businesses, Missouri inclusive.
Missouri is home to the bustling cities of Kansas City and St. Louis as well as several professional sports teams. Also known as the Show-Me State, Missouri can boast of more than 28 million acres of farmland and some of the best BBQs in the USA.
With the 5th lowest corporate taxes in the country, Missouri is indeed a great place to launch your small business. Entrepreneurs seeking high quality of life for low cost of living will find it in Missouri along with an abundance of art, culture, family attractions, wineries, breweries and outdoor recreation.
If you are new to Missouri and you want to start a business, or you are just curious at what the steps might be, we are providing you a simple step-by-step guide on how you can set out your own small business in this bubbling town. If you get stuck along the way, connect with a business resource in your local area for help.
14 Steps to Starting a Small Business in Missouri With No Money
Table of Content
- Choose the Right Business Idea
- 2. Plan Your Business
- 3. Choose a Name
- 4. Create Your Business Entity
- 5. Register to Pay Taxes
- 6. Create Business Banking and Credit Accounts
- 7. Set Up Your Accounting Process and Business Financing
- 8. Business Location and Zoning
- 9. Obtain Permits and Licenses
- 10. Get Insured
- 11. Reporting Your Taxes
- 12. Define Your Brand
- 13. Establish a Web Presence
- 14. Annual and Ongoing Requirements
Choose the Right Business Idea
The first step toward business ownership is deciding what kind of business to start. I mean, for you to think about starting a business, you should have an idea in mind. Look for an idea that suits your interests, your personal goals, and your natural abilities.
This will help you stay motivated when the going gets tough and will greatly improve your odds of success. To dramatically increase the odds in your small business, you can kick things off by building a game plan that hones in on your pitch, irons out a structured executive summary, creates initial budgeting forecasts, addresses ideal markets, and so forth.
2. Plan Your Business
Successful businesses are built through careful planning. Before committing a significant amount of money and other resources toward your business, critically analyze your idea and create a game plan. At a minimum, you should have good answers to the following questions.
What problem does your business solve? What will set your product or service apart from the competition?
Sales & Marketing
Who are your potential customers? How will you get their attention and convert them into buyers?
People and Partnerships
What roles will you need to hire and what professional relationships will you need to form in order to succeed?
How many clients or sales will you need in order to break even? How much money will it take to get there, and where will you get the funding?
3. Choose a Name
Once you have sorted out how you want your business to run, you need to choose an appropriate name for it. For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Missouri Secretary of State (SOS).
You can check for available names by doing a business name search on the SOS website. You can reserve an available name for 60 days by filing an Application for Reservation of Name with the Missouri SOS. You also can renew the reservation for up to a total of 180 days.
There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). Sole proprietorships and partnerships in Missouri should file a Fictitious Name Registration online with the Missouri SOS if they use a business name that is different from the names of the business owner (for a sole proprietorship) or individual partners (for a partnership).
If you plan on doing business online, you may want to register your business name as a domain name. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use.
4. Create Your Business Entity
For want of a better word, I would say this is one of the most important aspects of forming a business. You can set up your small business in Missouri under any formation style you want. Let’s go ahead and discuss them.
This business formation type is for small mom and pop businesses that are usually owner operated. To establish a sole proprietorship in Missouri, you don’t need to file any organizational documents. This is easier than most of the other formation types, but you do not get a lot of business coverage here.
To create a general partnership in Missouri, you don’t need to file any organizational documents with the state. Although not legally required, all partnerships should have a written partnership agreement. The partnership agreement can be very helpful if there is ever a dispute among the partners. To form a limited liability partnership(often used by professionals), you must file an Application for Registration with the Missouri SOS.
To create an LLC in Missouri, you must file articles of organization with the Missouri SOS. You will also need to appoint a registered agent in Missouri for service of process. In addition, while not required by law, you also should prepare an operating agreement to establish the basic rules about how your LLC will operate. The operating agreement is not filed with the state.
To create a corporation in Missouri, you must file articles of incorporation with the Missouri SOS. You will also need to appoint a registered agent in Missouri for service of process. Although not legally required, you also should prepare bylaws to establish your corporation’s internal operating rules. Bylaws are not filed with the state. S Corporations must also file IRS Form 2553, Election by a Small Business Corporation, with the IRS.
For most small businesses, registering an LLC is a great option. In comparison to other business entities, LLCs are easier to set up and manage and they have favorable tax treatment. You can set up an LLC in Missouri for as little as $50.
If you choose not to register your company as a business entity, you will be held personally responsible for the debts and liabilities of your business. In addition, unregistered business owners may need to file a Trade Name, also known as a “DBA.”
It is recommended that you check to see if the business name you are planning is available as a web domain. Even if you aren’t ready to make a business website today, you may want to buy the URL in order to prevent others from acquiring it.
5. Register to Pay Taxes
With limited exceptions, most businesses require an Employer Identification Number (EIN), also known as a Tax ID Number. An EIN is used to identify a business in its federal tax filings. Without an EIN, you can’t hire employees or open a business bank account. Note that you also won’t be able to pay your taxes.
You should also be aware of important Missouri taxes that may apply to your business. If you are selling a physical product, you’ll typically need to register for Missouri Sales Tax. If you hire employees, you will have to register for Unemployment Insurance Tax and Employee Withholding Tax on behalf of your employees.
6. Create Business Banking and Credit Accounts
Using dedicated business banking and credit accounts is essential for personal asset protection. When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. You can protect your business with these two steps:
- Opening a business bank account: Separates your personal assets from your company’s assets, which is necessary for personal asset protection. It also makes accounting and tax filing easier.
- Getting a business credit card: This helps you separate personal and business expenses. It also builds your company’s credit history, which can be useful to raise capital later on.
7. Set Up Your Accounting Process and Business Financing
To run your business efficiently, you are going to require a seamless accounting process, but before you come to that, you need to have an avenue from which you can finance your business. An accounting system helps you track the performance of your business and simplifies annual tax filings. Quality accounting software lets you download your bank and credit card transactions, making accounting fast and easy.
Obtaining financing for a small business can be a stressful and time-consuming process. Similar to getting a home loan, the bank is going to want lots of documentation on your personal finances in addition to a solid idea and the business plan.
As a rule of thumb, banks will want to see the owner invest 15%-25% of their money (equity) into a start-up business. That can include cash but also any buildings, tools, vehicles, inventory and equipment that will be used in the business.
It is likely that the bank will want a lien on those items. Credit score is going to play a large part in getting a loan approved. Start-up business loans are largely based on the owner’s personal credit and their personal financial statement.
8. Business Location and Zoning
If your small business is in the wrong location, you may not see a lot of foot traffic and this can even close down the business. So before you start, you must first research on the best place to set up your business. You’ll need to pick a location for your business and check local zoning regulations. That includes if you work from home. You may be able to find zoning regulations for your town or city by checking municode.com.
Did you know Missouri rubs shoulders with eight different states, it’s two biggest cities (St. Louis and Kansas City) are on east and west borders, yet it’s sporting more beaches than California? This means you’ve got massive regional access and tons of options when it comes to location. Two things matter: How many resources you have in the area to help grow the brand; and How much easier or harder the location makes it to manage the business.
9. Obtain Permits and Licenses
Note that you can’t run your business anywhere in the united states without the right licenses and permits. If you will be selling goods in Missouri, you must register with the Missouri Department of Revenue (DOR) to obtain a retail sales tax license.
If you will have employees in Missouri, you must register with the DOR for an employer withholding tax number. For both types of tax, you can register online at the DOR’s Online business Registration site or on paper using Form 2463.
If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so.
Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There is no filing fee.
For regulatory licenses and permits issued by the state, check the Registering My Business section of the Missouri Business Portal website. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses
These cover people who work in various fields. There are at least two places you can check online for initial information about this kind of licensing: the Missouri Division of Professional Registration (DPR); and the Missouri Business Portal (MBP).
The DPR website has links to detailed licensing information about each profession. The MBP has a similar set of links.
10. Get Insured
Business insurance helps you manage risks and focus on growing your business. The most common types of business insurance you should consider are:
It is recommended that all small businesses, including home based businesses, purchase a general liability policy. Businesses selling professional advice or services, such as consulting and accounting firms, should also consider a professional liability policy. In Missouri, businesses with five or more employees, excluding LLC members and corporate officers, are required by law to have workers compensation insurance.
11. Reporting Your Taxes
Missouri taxes every kind of business.
- Sole proprietorships pay state taxes on business income as part of their personal state income tax returns (Form MO-1040).
- Partnerships pay state taxes on partnership income on personal tax returns. In addition, most partnerships also must file Form MO-1065, Partnership Return of Income.
- LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, Missouri LLC’s taxed as corporations for federal tax purposes must also file a state corporation tax return.
Shareholders must pay states taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Missouri corporation taxes and a corporation franchise tax. Finally, corporations must file an annual report with the Missouri SOS.
If you have employees, you must also deal with state employer taxes. And, apart from Missouri taxes, there are always federal income and employer taxes. Check IRS Publications 334,Tax Guide for Small Business, and 583, Taxpayers Starting a Business, available at irs.gov.
12. Define Your Brand
The strongest and most memorable businesses are those built on a solid brand. When developing your brand, think about what your business stands for. What are the core values that drive your business? Customers and clients are looking for companies that have a compelling brand, as much as they are shopping for high-quality products and services. So, more than anything else, you have to make your brand stand out.
13. Establish a Web Presence
A professional website is critical to the long-term success of your business, regardless of what industry you are in. A website allows potential customers to find your business online and discover the products or services you offer, and it also enhances your business’s credibility.
In addition to a website, you should also consider other avenues for promoting your business online:
- Setting up social media profiles (Facebook, Twitter, etc)
- Creating accounts on review sites (Yelp, Google Reviews, etc)
- Registering for a local Google profile
14. Annual and Ongoing Requirements
If you finish setting up your small business in Missouri, you don’t just go and sleep. There are some requirements that have to be carried out from time to time to make sure your business registration is still valid.
Your Missouri Fictitious Business Name is valid for five years (unless you change company name or other information listed on the FBN). Renewals must be made in the six months before the date that the registration expires.
Missouri does not require LLCs to file an annual report.
Missouri corporations are required to file an annual report. The annual report is due each year by the end of the month, 3 months after the corporation was registered/incorporated. The filing fee is $20.
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