Starting a Business in Missouri – A Comprehensive Guide

How to Start a Business in Missouri

Our comprehensive guide is here to help you. Our dedicated resource focuses on Missouri, known as the “Show-Me State.” Our blog provides practical tips, clarifies regulations specific to Missouri, and offers valuable insights.


State of Missouri map picture for how to start a business in MissouriTop Two Benefits of Starting a Business in Missouri:

  1. Favorable Business Environment:
    Missouri boasts a strong and diverse economy, making it a good ground for startups and established businesses. The state’s low cost of living and business-friendly tax structure make it a haven for entrepreneurs.
  2. Excellent Support Resources:
    The state offers numerous resources for new businesses, including a wide range of small business development centers, innovation centers, and mentorship programs designed to help your business thrive from the ground up.


Top Two Challenges When Starting a Business in Missouri:

  1. Navigating Regulatory Compliance:
    Like any other state, Missouri has specific rules and regulations for businesses. Understanding and adhering to these can be challenging, especially for first-time entrepreneurs.
  2. Market Competition:
    Missouri’s thriving business environment means competition can be intense. Understanding your market, finding your niche, and differentiating your business are crucial to overcoming this challenge.

Regulatory Factors and Taxes in Missouri

Missouri maintains a relatively straightforward and friendly tax structure for businesses. The state’s corporate income tax stands at a flat rate of 4%, based on the federal taxable income with adjustments. This tax rate is one of the lowest in the nation, making Missouri an attractive place for entrepreneurs. It’s worth noting that the amount of tax a business pays can be influenced by various factors, such as the type of business entity and the specific deductions or credits it qualifies for.

Sales tax in Missouri also plays a vital role in the state’s taxation landscape. The state sales tax rate is currently 4.225%. However, with the addition of local taxes, the total tax rate can range between 4.225% and 10.35%. The actual rate depends on the location of the business or where the sale is deemed to have occurred.

In addition to corporate income tax and sales tax, businesses in Missouri may be subject to various other taxes. These include property taxes, primarily local taxes, unemployment insurance tax for businesses with employees, and franchise tax for certain corporations. However, each company must consult a tax advisor or the Missouri Department of Revenue to understand their tax obligations fully.

Remember, understanding these regulatory factors and taxes is crucial for making informed decisions and planning for the financial aspects of your business.

How do I Choose a Business Structure?

There are five primary types of businesses. Each type of business entity is described below.

Sole Proprietorship

A business owned and operated by one individual with no legal distinction between the business and the owner. The owner is personally responsible for all debts and liabilities of the business. Most small business owners in  Missouri use this business type.

Limited Liability Company (LLC)

A flexible business organization that combines the liability protection of a corporation with the tax benefits and simplicity of a partnership. Owners of an LLC are called members, and their assets are typically protected from the debts and liabilities of the business. You have the flexibility to define many aspects of how your business will work in your Articles of Organization.

S-Corporations

A type of corporation allows for pass-through taxation, meaning that profits and losses are passed through to the shareholders and reported on their tax returns. S-Corporations are limited to 100 shareholders and must meet specific eligibility requirements. An S-Corp can be particularly advantageous if the founders or investors have other income. If the business doesn’t generate a profit in any year, the shareholders can use the losses from a tax perspective.

C-Corporations

A separate legal entity from its owners (shareholders) means that the corporation can enter into contracts, own assets, and sue or be sued. C-Corporations are subject to double taxation, meaning that the corporation and the shareholders are taxed on profits.

A Note About S-Corps and C-Corps

For both S-Corporations and C-Corporations, your business formation documents will include Articles of Incorporation, sometimes called a Corporate Charter.  The specific requirements and format of Articles of Incorporation can vary by jurisdiction. It is advisable to consult with a business attorney or online legal service such as Legal Zoom to ensure compliance with local laws and regulations when drafting and filing these documents.

Limited Liability Partnership (LLP)

A partnership that limits the personal liability of its partners. LLPs are typically used by professional service providers such as lawyers, accountants, and architects. Each partner is protected from the other partners’ wrongful acts, omissions, and negligence, but they may still be personally liable for their actions.

Distribution of Businesses

Business Type Percent of Businesses in  Missouri
Sole Proprietorship 60-65%
Limited Liability Company (LLC) 20-25%
S-Corporation 5-10%
C-Corporation 2-3%
Limited Liability Partnership (LLP) 1-2%

The percentages can change each year depending on the industry and location. The data also covers businesses registered outside Missouri but within the state.

What is an Employer Identification Number – EIN?

Definition of an EIN or Employer Identification Number

An EIN, short for Employer Identification Number, is a unique nine-digit identifier the Internal Revenue Service (IRS) assigns to businesses in the United States. It streamlines business tax administration, also called a Federal Tax Identification Number or Federal Employer Identification Number.

Do I Need One to Start a Business in Missouri?

Starting a business in Missouri typically requires an EIN. This identifier becomes necessary when you establish a business entity, recruit employees, apply for business licenses, or want to set up a business banking account.

How Do I Get One?

Acquiring an EIN is a straightforward process. It can be obtained directly from the IRS website by completing a simple online application. Immediately after completion, your EIN is issued. If you prefer, you can also submit Form SS-4 to the IRS via mail or fax. For more detailed guidance or further inquiries, the IRS can be reached at 1-800-829-4933. Additionally, more information can be accessed on their website at


https://www.irs.gov/businesses/small-businesses-self-employed/employer-id-numbers

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How to Start a Business in Missouri – Important Registrations

Registering My Business Name

The first step in establishing a business in Missouri involves officially registering your business name. This can be done through the Missouri Secretary of State’s office. They can be reached at (573) 751-4936, or you can visit their website at https://www.sos.mo.gov/

Registering a DBA (Doing Business As) If Relevant

Scenic picture of rural Missouri If your business plans to operate under a name different from the one registered with the Secretary of State, you must file a DBA, also known as “Doing Business As,” or a fictitious name in Missouri. This process allows the public to know the true owner of a business.

Missouri’s Secretary of State’s office is responsible for this registration process. You can file online or via mail, and the process generally includes a nominal filing fee. Remember to check the availability of the name before registration to ensure it’s unique.

Missouri is made up of 114 counties, each with its unique local regulations and guidelines for businesses. Depending on your business location, additional requirements at the county or city level might exist. Hence, verifying any local rules or obligations that may apply to your business is advisable.

To get detailed information about local governments in Missouri, visit https://www.mo.gov/government/city-county-government/

This resource provides a county-by-county breakdown of contact information and is a valuable tool for understanding and navigating local rules or requirements specific to your business location.

Registering for Payroll, State Payroll Taxes, and Unemployment Insurance

You must establish an account with the Missouri Department of Revenue for state payroll taxes and unemployment insurance. You can reach them at (573) 751-3505 or visit their website at https://dor.mo.gov/

Registering for Worker’s Compensation Insurance

Businesses in Missouri also require worker’s compensation insurance. You can get this insurance from a licensed provider. If you use a payroll service, they should also be able to provide worker’s comp.

Registering for Collecting Sales Tax

Missouri businesses are required to register for the collection of sales tax. This can be done on the Missouri Department of Revenue’s website:https://dor.mo.gov/business/sales/

Registering for Income Tax

For corporate income state tax, businesses in Missouri should register through the Missouri Department of Revenue. You can contact them at (573) 751-3505 or visit their website at https://dor.mo.gov/

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Registering to Pay Property Tax

Contact the local county assessor’s office if your business involves property and needs to pay property tax in Missouri. More information about this can be found on the Missouri Department of Revenue’s website:https://dor.mo.gov/personal/property/

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Permits for Starting a Business in Missouri

Do I Need a Business Permit to Operate a Business in  Missouri?

As a business owner, you’ll get more attention from the government than you ever thought possible. Many things you didn’t even know were required will be introduced to you in the form of a notice and a fine.  By looking into the requirements for your business ahead of time, you can (mostly) avoid these nasty surprises. 


At the State Level:

Certain businesses may require state-level permits or licenses to operate in Missouri. You can find general information on the state’s licensing requirements on Missouri’s official government website https://www.mo.gov/

For more specific inquiries, it’s best to consult with the Missouri Department of Revenue https://dor.mo.gov/
or call at (573) 751-3505

Secretary of State’s Office https://www.sos.mo.gov/  or call at (573) 751-4936).


Check With Your City:

Businesses often need to apply for local permits or licenses, which can vary by city. Contact your local city hall or visit their official website to learn about the city-specific requirements. For example, if your business is in Kansas City, you can consult Kansas City’s official government website https://www.kcmo.gov/

Check With the Federal Government

Certain industries may be subject to federal regulations and may require federal permits or licenses to operate. It’s a good idea to consult the U.S. Small Business Administration (SBA) 
https://www.sba.gov/business-guide/launch-your-business/apply-licenses-permits to check if your business falls under federal jurisdiction.


Check With Your County:

Requirements at the county level can also come into play, as Missouri’s 114 counties may have regulations or requirements for certain types of businesses. It’s always advisable to check with the administrative office of your respective county or visit their official website to understand any county-specific requirements fully.

Given the vast number of counties in Missouri, it’s beyond the scope of this guide to list contacts for all. However, you can start by visiting the Missouri Association of Counties’ website http://www.mocounties.com/, which offers an interactive map and directory of all Missouri counties. This resource can help you find the relevant contact information for your county’s administration office.

For example, if your business is in St. Louis County, visit their official website https://stlouiscountymo.gov/ or call their administrative office at (314) 615-5000 for county-specific requirements.

How do I learn about any special permits I need for my business? 

To understand the specific permit requirements for your business, a great place to start is the U.S. Small Business Administration (SBA)’s guide on federal business licenses and permits https://www.sba.gov/business-guide/launch-your-business/apply-licenses-permits

Additionally, industry-specific associations often have resources to help businesses understand the unique requirements of their industry. For example, if you are in the restaurant business, the Missouri Restaurant Association https://www.morestaurants.org/ can guide the specific permits required for food businesses.

Your local Chamber of Commerce is another excellent resource. They often have detailed information on local permits and licensing requirements. The Missouri Chamber of Commerce and Industry https://mochamber.com/ is a good place to start.

Also, consider consulting with a business attorney or an advisor familiar with Missouri’s business regulations. They can provide customized advice based on your business type and ensure you comply with all required regulations.

Financing Options for Entrepreneurs in Missouri

Starting a business can be an exciting yet challenging venture. While you might consider using personal assets or credit cards as a quick financing solution, it’s important to remember that these methods can carry significant risks and need to be more to cover your startup costs fully. Exploring all available options is crucial to safeguard your finances and ensure your business has sufficient capital funding options.

Financing a New Business

Finding credible funding sources is critical to starting and maintaining a successful business. Beyond personal assets, businesses can tap into many other funding options. These options may include venture capitalists or angel investors, who offer financial backing in exchange for equity or a share of your business. Grants and investments can also provide the capital without repayment or giving up part of your ownership.

The key lies in thorough research and exploring all your options to find the financing that best suits your business needs.

SBA Loans and Microloans

The US Small Business Administration (SBA) provides various loan programs, including the microloan program. Microloans are small, short-term loans that can provide immediate funding for small businesses, helping them meet their capital needs and thrive. For more information on the SBA microloan program, visit their website here: 


https://smallbusinessplans.com/sba-microloans-for-small-businessess-and-startups/

SBA Microlenders in Missouri


Justine PETERSEN

1023 North Grand Boulevard, St. Louis, MO 63106 

Phone: (314) 533-2411 

Website:


https://www.justinepetersen.org/


Missouri Women’s Business Center

800 North Providence Road, Suite 210, Columbia, MO 65203 

Phone: (573) 777-5235 

Website:


https://www.mowbc.org/

AltCap

Ruben Alonso III

3200 Wayne Avenue, Kansas City, MO 64109

Phone:
(816) 216-1851

Email: ruben@alt-cap.org

Website:


https://www.alt-cap.org

State and Local Grants and Incentives

Missouri provides various state and local grants and incentives to help businesses launch and expand.

  1. Missouri Department of Economic Development
    The department offers several programs to support small businesses, including grants and loans. Visit their website at

    https://ded.mo.gov/

    for more information.
  2. Missouri Technology Corporation
    This corporation provides investment in tech startups in Missouri. More information can be found on their website at

    https://www.missouritechnology.com/

Angel Investor Groups

Angel investors can be a significant source of funding for startups and growing businesses. These individuals or groups offer capital in exchange for equity in the company. In Missouri, there are several active angel investor groups. Groups like the Arch Angels in St. Louis and the Women’s Capital Connection in Kansas City have supported local startups. 

When considering angel investors, you must be prepared for rigorous scrutiny of your business plan and financial projections. As with all investment forms, it’s crucial to conduct due diligence and ensure that any investment terms align with your business goals.

Missouri’s entrepreneurial ecosystem is well-supported, and with the right mix of capital resources, small businesses, and startups can find the financial backing they need to succeed. Whether through state-backed programs, SBA loans, or private investments, a wide range of financing options are available. By examining all these avenues carefully, entrepreneurs can secure the funding they need to bring their business dreams to life in Missouri.

Remember, each type of funding comes with its requirements and considerations, so it’s essential to understand these thoroughly before proceeding. However, with the correct information and guidance, you’ll be well-equipped to make informed decisions enabling your business to thrive.

Benefits of a Well-Structured Business Plan

A well-structured business plan is a linchpin for businesses operating in Missouri. It does more than outline the business; it serves as a guide, helping entrepreneurs navigate the market, seize opportunities, and manage potential risks. With its diverse economy encompassing manufacturing, technology, healthcare, and agriculture, Missouri provides a thriving, business-friendly environment, which can be fully leveraged through a meticulously designed business plan.

A well-structured plan can help set a clear strategic course for growth. By defining your unique value proposition, identifying the target market, and examining the competitive landscape, the business plan ensures you’re fully prepared to take your venture to new heights. Additionally, it’s essential in securing funding. Lenders and investors in Missouri need to see that you have an understanding of your business, a growth plan, and strategies to tackle potential challenges.

On a regulatory level, a business plan can aid in maintaining compliance. Missouri’s specific regulations vary based on the business type and its location, and navigating this complex landscape becomes more straightforward with a detailed plan. For your business plan to remain effective, reviewing and updating it regularly is crucial, considering the changing business landscape in Missouri.

Meeting Lender and Investor Expectations

Navigating the financial landscape is crucial in securing funding for your business in Missouri. Lenders and investors are placing their trust in a business concept and the people behind it, which underscores the importance of demonstrating your understanding of the business and having a clear growth plan.

A business plan plays a pivotal role in showcasing financial acumen. Whether you’re approaching a bank in St. Louis or an angel investor in Kansas City, they need to be assured that you comprehend the financial aspects of your business, have realistic financial projections, and have a strategy to meet these expectations. A detailed business plan can convincingly provide this information.

Clear communication is another essential aspect of meeting lender and investor expectations. It is crucial to articulate your business idea and plans effectively. By simplifying complex concepts and using concrete examples, you can convey your ideas in a more relatable manner. The ‘Show-Me’ attitude of Missouri implies that potential investors expect more than words; they look for well-researched facts and figures to illustrate your plans and their viability.

One way to stand out to investors and lenders in Missouri is by demonstrating your dedication and enthusiasm for your business. This, combined with a solid business plan, can significantly increase your likelihood of meeting their expectations and securing funding.

Where Can I Find a Mentor to Help Me Succeed?

In the dynamic business world, guidance from experienced mentors can be a game-changer. These professionals can provide invaluable insights, practical strategies, and tailored advice fitting Missouri’s business landscape.

Missouri boasts a strong network of organizations dedicated to nurturing the success of its entrepreneurs. Here are several options worth considering:

  1. Missouri SCORE: As an affiliate of the U.S. Small Business Administration (SBA), Missouri SCORE is a superb source of complimentary business mentoring. They also present cost-effective workshops and resources to assist businesses at all stages.
    Contact Info:
    Phone: (866) 726-7340
    Website: https://www.score.org/stlouis
  2. Missouri SBDC: Offering diverse services such as business plan creation assistance and financial analysis, the Missouri Small Business Development Centers (SBDC) is valuable for budding and existing businesses.
    Contact Info:
    Phone: (573) 341-7584
    Website: https://sbdc.missouri.edu/
  3. Women’s Business Center: This specialized organization empowers women entrepreneurs by providing practical business development training, personalized counseling, and networking opportunities.
    Contact Info:
    Phone:(816) 822-8083
    Email: info@onekcforwomen.com
    Website: https://onekcforwomen.com/womens-business-center/
  4. MO SourceLink: Focused on fostering innovation and growth, MO SourceLink connects entrepreneurs with various resources, programs, and events designed to inspire and equip.
    Contact Info:
    Phone: (866) 870-6500
    Website: https://www.mosourcelink.com/

By tapping into these resources, entrepreneurs can acquire the necessary knowledge and support to navigate Missouri’s business environment successfully.

The Economy of Missouri

Understanding the Economy of Missouri is a crucial part of starting a business. The state’s economic dynamics can provide insights into entrepreneurs’ potential challenges and opportunities. Market conditions, income levels, and consumer behavior all play vital roles in the survival and growth of a new business.

Economic Overview

Average Household Income

Missouri’s average household income is around $63,594. It signifies that the consumer spending capacity may be moderate compared to other states. However, it also presents opportunities for businesses offering affordable products and services or targeting middle-income consumers.

Average Level of Education

In Missouri, approximately 30.8% of the population aged 25 and over have completed high school, while around 48.5% hold a bachelor’s degree or higher. These figures highlight a relatively educated workforce and consumer base, potentially impacting the types of businesses that can thrive in this state. Companies providing specialized services or products might find a receptive audience within this demographic.

Consumer Spending per Capita

The consumer spending per capita in Missouri is around $44,990. This figure suggests that consumers in Missouri have a fair amount of disposable income to spend on goods and services. It’s a significant metric that can guide a business in understanding the buying power of the local population and strategizing its product offerings and pricing accordingly.

Top Industries in Missouri:

Missouri’s economy is diverse and robust, providing a fertile ground for businesses across various sectors. A significant contributor to the state’s GDP is the agriculture industry. Missouri’s vast farmlands are key players in producing soybeans, corn, and cattle, accounting for a substantial portion of the state’s output.

Missouri’s manufacturing sector is a significant contributor to its economy in addition to agriculture. The industry mainly focuses on producing transportation equipment and food products, generating billions of revenue for the state and creating many job opportunities.

Healthcare in Missouri is also a significant player in the economy. It employs many individuals and is essential for public health and as a cornerstone of the state’s financial activities.

Finance and insurance also play crucial roles in Missouri’s economic scenario. Major financial corporations and an extensive network of local and regional banks support this sector, further enhancing the state’s economic diversity.

The tech industry in Missouri is on an upward trajectory, indicated by a steady increase in tech-related jobs. This growth symbolizes the state’s trend toward digitalization, which opens exciting avenues for tech entrepreneurs.

Understanding Missouri’s economic composition and industry trends is crucial for business success. These insights offer potential entrepreneurs a strategic advantage in establishing and growing their businesses in the state.

Network to Grow Your Business in Missouri

  1. Identify Complementary Businesses: Businesses are not isolated but rather intertwined in entrepreneurship. By identifying companies that complement each other, businesses can gain significant advantages. This can lead to the development of mutually beneficial relationships that improve the business’s offerings and expand its reach in the market. For example, a bakery could partner with a nearby coffee shop to create a complete customer experience. The key is to find synergies that benefit both businesses, adding more value to customers and strengthening the business community in Missouri.
  2. Leverage Workforce Talent: Missouri has a diverse and talented workforce, a vital resource for any business. Leveraging this talent can significantly enhance your company’s competitive edge. Tapping into local universities, vocational schools, and workforce development programs is crucial to recruit skilled employees. Additionally, offering competitive salaries, training, and a positive work environment can help attract and retain top-tier talent. Qualified employees can drive innovation, productivity, and, ultimately, the success of your business.
  3. Collaborate with Industry Leaders: Engaging with industry leaders can provide insights into market trends, best practices, and strategic direction. Collaboration can range from informal mentorship to formal partnerships. Industry leaders can offer a wealth of knowledge and experience that can accelerate business growth and stability. Furthermore, collaborations can open doors to new networking opportunities, potential clients, and partnerships. Working with industry leaders in the dynamic Missouri business environment can significantly enhance your business’s credibility and competitive positioning.

Workforce and Talent

Missouri has a talented workforce for starting a businessUnderstanding the demographics, workforce, and talent landscape is critical when launching a business in Missouri. These statistics provide essential insights into the availability of skilled workers, wage standards, and potential customer profiles. By understanding this, companies can make informed decisions about hiring, pricing, marketing, and more.

Unemployment Rate

Missouri’s unemployment rate, as of now, hovers around 2.5%. This relatively low unemployment rate suggests a robust job market, indicating that businesses may need competitive strategies to attract and retain the best talent.

Minimum Wage

Missouri’s minimum wage is currently set at $12 per hour. As a business owner, it’s important to factor this into your cost calculations when planning your labor budget. Remembering that a fair wage can significantly contribute to employee satisfaction and retention is essential.

Average Age and Demographics

In terms of age and demographics, Missouri has a median age of around 38.5 years. Approximately 50.9% of the population are females, and 49.1% are males. These demographics can significantly impact your business, depending on the type of products or services you’re offering. For instance, if you’re in the healthcare or personal care industry, the sizable female population might influence your marketing strategies.

Breakdown of People with Various Levels of Education

When we look at the education levels of Missourians aged 25 and above:

  • Approximately 30.8% hold a bachelor’s degree or higher.
  • About 48.5% have a high school diploma or equivalent.
  • 8.1% of people with no schooling

The availability of a well-educated workforce is beneficial for businesses needing specialized skills or knowledge. Meanwhile, those without a diploma still play a vital role in sectors where vocational skills are more important than formal education.

Top Areas of Skilled Workers for Residents of Missouri

Missouri’s diverse economy provides numerous opportunities across numerous sectors, each requiring distinct skill sets. Some top areas where Missouri has a high concentration of skilled workers include Healthcare, Advanced Manufacturing, Financial Services, Information Technology, and Agribusiness.

In the Healthcare sector, opportunities abound for various medical professionals like doctors, nurses, therapists, and technicians. With the continuing growth of this industry, aspiring healthcare professionals can look forward to diverse career paths and a stable job market.

Advanced Manufacturing is another sector employing a large number of skilled workers. The manufacturing industry’s evolution, driven by technology, requires workers with robotics, programming, and advanced machinery operation skills. Careers in this field offer the chance to be at the forefront of technological innovation.

Missouri’s robust Financial Services sector offers many opportunities for those skilled in financial analysis, investment strategy, and risk management. This sector provides roles critical to the functioning of both businesses’ and individuals’ financial health.

In the Information Technology sector, skilled professionals are in high demand. Opportunities are particularly rich for software developers, data analysts, and cybersecurity experts. This sector’s rapid growth provides numerous career advancement possibilities and the chance to work on cutting-edge technology.

Finally, Agribusiness, Missouri, offers a range of opportunities from farm management to food science and technology. Skilled workers in this sector contribute to Missouri’s status as a national leader in agricultural production.

In conclusion, Missouri’s diverse economy provides opportunities across various sectors. Each area offers unique advantages, promising rewarding careers for those with the necessary skills and dedication.

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