Starting a small business involves making a number of decisions. Among the most important of those decisions is which business structure to choose for your business. That decisions alone can dramatically impact things such as taxation, liability, and investment in your business. There are several different business structures from which you can choose, including a Limited Liability Company, or LLC. If you are considering forming a Missouri LLC, it is in your best interest to learn more about how to form a Missouri LLC and why it would be a good choice for your business.
Whether you plan to run a small, one person, business or expand into a large company with numerous employees, one thing you must do is decide what type of business entity is best for your enterprise. There are three basic types of business structures, including:
- Sole proprietorship – a sole proprietorship does not require you to complete or file any legal documents to form. Basically, if you do nothing to form another type of business entity, and run your company by yourself, you are operating a sole proprietorship. As a sole proprietor, you remain legally responsible for the debts and liabilities of the business. In addition, business profits and losses are claimed on your own personal income taxes.
- Partnership – a partnership is two or more people who operate a business together and share in the management and profits. Most businesses choose to create and execute a formal partnership agreement; however, it is not necessary to execute a formal agreement in order to be in a partnership. Like a sole proprietorship, partners are liable for the debts and liabilities of the business. Profits and losses are also passed on to the partners.
- Corporation – unlike the other two options, a corporation is a separate legal entity. As such, a corporation pays taxes; however, the shareholders of the corporation also must claim profits or losses on their taxes as well. The major benefit to a corporation is that is shields the shareholders from liability for debts or liabilities of the business.
What Is a Missouri LLC?
While there are three major types of business entities, there are also a number of hybrids and variations of the major three. A Limited Liability Company (LLC) is one of those variations. An LLC combines benefits of all three types of entities by offering the pass through taxation of a sole proprietorship or partnership along with the liability avoidance of a corporation. This way, your business avoids the double taxation of a corporation but still enjoys the shield from liability that a corporation offers to shareholders. Many people think this results in the best of both worlds.
Forming a Missouri LLC
Forming a Missouri LLC begins with choosing a name that is not already in use. To check on your desired name, you will need to go to the Missouri Secretary of State website. If the name you wish to use is not already in use you should reserve the name which will hold it for you for 60 days. If you have not already done so, you will also need to decide who the registered agent will be for your business. The registered agent is the person who is officially designated to receive legal notifications for the business. The next step is to create and file Articles of Organization with the Secretary of State. Your Articles of Organization will include things such as the LLC’s name, address and purpose along with information about the registered agent and managers of the organization. You should then create an Operating Agreement. Although an Operating Agreement is not legally required in Missouri, it is a good idea to have one as it will help define how the company is to be operated.
If you have additional questions or concerns regarding creating a Missouri LLC, contact the experienced attorneys at Amen, Gantner & Capriano, Your Estate Matters, LLC by calling (314) 966-8077 to schedule an appointment.