The Advantages of Forming a Missouri LLC
Brad Smith • October 25, 2019
Forming a limited liability company in Missouri is relatively new but increasingly popular.
The Secretary of State’s office says that, despite being first recognized in 1993, Missouri now boasts more than 127,000 active LLCs, with nearly 25,000 of these being formed in 2004 alone.
Here are the advantages of forming a Missouri LLC:
Limited Liability For Owners
A limited liability company provides exactly that—limited liability for owners.
Members, the owners of an LLC, are not held personally liability for the debts of the business.
In other words, the only financial risk a member makes is the amount of his or her investment.
Who Can Be Owners
According to the IRS, membership is unrestrictive. Members of an LLC “may include individuals, corporations, other LLCs, and foreign entities.” LLCs may have one to, theoretically, infinite number of members.
Beneficial Tax Treatment
Corporations, another type of business structure, are considered separate from their owners. That means the corporation’s income is taxed in addition to the money distributed to the corporations owners. This is called double-taxation.
In Missouri, business owners can avoid double-taxation
by forming an LLC since it is not considered a separate entity.
How LLCs Are Classified
The IRS says it will treat LLCs as a corporation, partnership, or as a “disregarded entity” on the LLC owner’s tax return depending on elections made by the LLC and the number of members. This affects federal income taxes.
Operating Agreements Define Rules and Regulations
Missouri statute requires all LLCs to have an operating agreement, but this internal document is not filed with the state or any other government agency. The operating agreement “establishes the rules and regulations for the conduct of the company’s business and affairs, and the rights, powers and duties of the company’s members, managers and employees.”
See our post on resources for writing a business operating agreement.
Less Formalities
Creating an LLC also requires no formalities typically associated with forming a corporation. These include:
- No annual member or manager meetings
- No minutes are required to be kept
- No elections for officers or directors
- No annual reports filed with the secretary of state
- Freely transferable member interests
- “Increased flexibility in setting the terms of the duties imposed on those managing the company;” these are more regulated for directors and officers of a corporation
The limited liability for owners and beneficial tax treatment are among some of the key advantages of forming an LLC.
If you’re interested in forming an LLC for your next great idea, contact us today to help you get started.
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