Doing Business in Missouri: Legal Formation

Doing Business in Missouri: Legal Formation is intended to serve as a reference document and in no way attempts to provide all the information necessary to form a business structure. It is published with the understanding that MO SBTDC is not engaged in rendering legal, accounting or other professional services. The advice of an attorney and/or accountant should be sought before entering into any business activity or contract.

For personalized information and assistance on hiring employees, please locate a Missouri Small Business & Technology Development Center or call 573-884-1555.


Forms of business structure

There are four basic types of business structures: sole proprietorship, partnerships and registered limited liability partnerships, limited liability companies (LLC), S corporations and C corporations. The most common form of a new business is a sole proprietorship, a business owned by a single individual, but you should form the type of structure that’s right for you.

Fictitious name registration

Missouri law requires anyone transacting business in the state under a name other than their own must register that business name with the Secretary of State’s Office under a Fictitious Name Registration.

Considerations (tax, ownership, estate planning)

Taxes, ownership and estate planning are essential when a new business is forming and during its entire life. When a business is just starting out, it may have little or no income or assets, and the choice of structure may not affect these considerations. As the business grows, however, these issus become more significant.


A franchise is a license from a trademark or service mark permitting another to sell a product or service under that distinctive mark. It’s an arrangement where a firm that has developed a pattern or formula to conduct business extends to other firms the right to engage in that business following an established pattern.

Protection of intellectual property (patents, trademarks, copyrights)

Intellectual property, which includes patents, trademarks, copyrights and trade secrets, may be the primary assets of a business.

Acquiring or merging with an existing business

When two businesses merge, all considerations of the structure must be re-evaluated — the same questions considered when the original business was established must be asked again for the new business.

Employer identification number (EIN)

Every employer maintaining an office or transacting business in Missouri and paying wages must obtain an Employer Tax Identification Number, required by federal law.

Occupational licenses

Missouri licenses or certifies a variety of occupations and activities. The list in this section provides information on common occupations, the administering agency and their websites.

State business licenses, fees, permits and regulations

There are many licenses, fees, permits and other requirements with which businesses must comply. This section provides general overview.

Selecting the proper business structure under to operate your business is one of the most important decisions you will make. Many new business ventures develop without a great deal of planning and can result in predictable difficulties for the new business and contribute to its failure. 

Forms of business structure

Missouri law allows individuals to operate under four forms or organizations:

  • Sole proprietorship
  • Partnership
    • General partnership
    • Registered limited liability partnership
  • Corporation
    • Closed corporation (“C” corp)
    • Subchapter S corporation
    • Not-for-profit corporation
    • Professional corporation
    • Foreign corporation (e.g., out-of-state corporation doing business in Missouri)
  • Limited liability company (LLC)

Registration forms for these structures can be found on the Missouri Secretary of State’s website at

Each structure has advantages and disadvantages and there are many modifications and variations. The key to selection revolves around the concept of liability and taxation. The entrepreneur, the founder of the business, must decide which of these structures best suits his or her business. In choosing a business structure, consult with both a qualified accountant and attorney familiar with your resources and objectives.

While it is possible for a business to start under one structure and later change to another, proper planning can prevent the difficulties, expenses and operational problems which would result from such a change. Even when considerable thought and planning have been given to the initial structure, however, you should be aware that change of circumstances and conditions may require a change in structure even after your business is established and operational.

This table describes the forms of organization with some of their advantages and disadvantages.

The four types of business structures

Sole proprietorship
The most common form of a new business is a sole proprietorship. This is a business owned by a single individual.

The greatest advantage of a sole proprietorship is that no planning for structure is required, and the owner is free to operate as she or he chooses.

Some disadvantages of sole proprietorship are limited opportunity for expansion and the owner’s personal responsibility for all obligations, debts and other liabilities the business may incur. While insurance is available for these hazards, the cost may be prohibitive. Growth of a sole proprietorship will usually result in a change from this structure.

Forms required

A partnership is the joining of one or more individuals, corporations or other entities under a partnership agreement. The law does not recognize the partnership as a separate, distinct entity; rather, it considers the partnership to be all partners acting together.

All powers, liabilities and authorities of the partners are controlled and limited by the partnership agreement. However, it is possible for a partner to exceed his or her authority and for the partnership to be bound when the person with whom the partner does business is not aware of the limitations contained in the partnership agreement. Partnership agreements are in writing and, if there are limitations placed upon individual partners, such agreements should be made available to any person or company with whom the partnership does business.

There are three types of partnerships recognized under the law: general, limited and limited liability partnerships.

General partnerships
Most states, including Missouri, legislate the formation of general partnerships. Missouri has adopted the Uniform Partnership Law, which is standard but not identical in every state. Notice should always be made of the unique aspects of the law within each state in which the partnership is conducting business.

The advantages of a general partnership are that the partners may conduct any legal business and the income and expenses of the partnership are directly taxable to each individual partner based on his or her proportionate interest within the partnership. The partnership files an information tax return and pays no income tax itself.

Forms required

Limited partnerships
Laws of various states, including Missouri, permit the formation of a partnership in which the liability of most of the partners is limited. Limited partnerships must have at least one general partner who is responsible for all debts, liabilities and other obligations of the partnership.

As a general rule, the liability of the other partners, referred to as limited partners, is limited to the amount that each partner has invested or agreed to invest in the partnership. A limited partner should not take an active role in the business. By taking an active role, a limited partner risks becoming a general partner.

The advantage of a limited partnership over a general partnership is that most partners limit their liability while preserving the right to participate in profits and/or tax advantages.

While limited partnerships lost some of their usefulness under the Tax Reform Act of 1985, they still remain a very viable structure for certain types of businesses.

Form required

It is important to understand the concept of a corporation as a business structure before considering the advantages and disadvantages. A corporation is a legally created entity with right, duties, powers and responsibilities in and of itself. Each state has a section of law covering those aspects of corporations. The law is similar but not identical in each state.

A corporation cannot act except through individuals. When individuals perform on behalf of a corporation, the actions are usually attributable to the corporation and not to the individual. The ownership of property, the incurrence of debt and the performance of services and sales of goods are the responsibility of the corporation rather than the individuals in the corporation.

Shareholders contribute capital to the company and are the owners of the corporation. Shareholders are not responsible for the debts or liabilities of the corporation.

One advantage of the corporate structure is that shareholder liability is limited to the loss of the shareholder’s investment unless a shareholder accepts additional responsibility such as guaranteeing a loan to the company. Limitation of liability was the original reason for the creation of the corporate entity and it is still a basic consideration in forming any new business using the corporate structure.

An additional advantage of corporations is the ability to bring other individuals into ownership of the business to raise additional funds.

There are few disadvantages to setting up a business as a corporation. Some minor costs are incurred for incorporating and for annual filing fees within states in which the corporation is doing business.

Both state and federal governments recognize the existence of a corporation and levy an income tax against the corporation. However, a corporation may elect to be taxed as an individual. Go to Doing business in Missouri: Taxes for more information. 

Corporations are subject to the following requirements:

Forms required


Foreign (non-Missouri) corporation

General business corporations
While there are four types of corporations, entrepreneurs will most probably use the most common form, the general business corporation, also known as a for-profit corporation.

A general business corporation may engage in most activities except those specifically prohibited by law. It may not engage in business for which license are required, such as the practice of law or medicine. A general business corporation may pursue other businesses such as banking, insurance or financing if state approval is obtained.

Subchapter S corporation provides the legal protection of a corporation but for tax purposes the income or loss is passed on to shareholders in proportion to their ownership. It is important to note that to be recognized as a subchapter S corporation, the corporation must apply to the Internal Revenue Service (IRS) for S status:

To elect S status, a corporation must:

  1. Be a domestic corporation.
  2. Have only one class of stock.
  3. Have no more than 100 shareholders.
  4. Have a calendar tax year or a business purpose for adopting a fiscal year.
  5. Have only individuals and their estates and certain trusts as shareholders.
  6. All shareholders must be citizens or residents of the U.S.
  7. Not be a member of an affiliated group of corporations.

Close corporation
Missouri law allows for the creation of close corporations, or C corps. Missouri’s law is based on the Model Business Corporation Act. Missouri’s Close Corporation Law is designed to make it easier for one or a few persons to do business as a corporation. Under this law, a close corporation can choose not to have a board of directors, annual meetings or bylaws if so stated in the article of incorporation. (See Section 351.315 of Missouri Statutes for more information).

A regular business corporation may become a statutory close corporation if it has 50 or fewer shareholders and amends its articles, with a 2/3 vote, to state that it is a statutory close corporation.

Form required

Not-for-profit corporations
The main distinction between a not-for-profit and a general business corporation is that a not-for-profit corporation has members who receive certificates of membership, not shares. The profits and properties of the corporation do not belong to the members.

A not-for-profit corporation may pay reasonable compensation to its employees and may make a profit, which means that it has more income than expenses. Hospitals, churches, some colleges and universities are good examples of not-for-profit corporations. To qualify as a not-for-profit corporation, the company must have an ultimate purpose specified by law, such as a charitable, educational, civic, religious or cultural purpose.

Many not-for-profit corporations are tax-exempt. However, merely forming a not-for-profit corporation under Missouri state law does not guarantee that the state or federal government will treat the organization as tax exempt. Separate qualifications are required for tax-exempt status.

Forms required

Professional corporations
Professional corporations are formed for the single purpose of practicing one of the licensed professions such as law, medicine, engineering or architecture. The key feature of this type of corporation is that all stock must be owned by individuals licensed to practice the profession for which the corporation was formed. Although this type of corporate structure has limited application, it should be considered where appropriate.

Forms required

Professional corporations register with the Secretary of State using the same standard corporation form, striking out “General” and entering in “Professional.” All licensed professions need to obtain a copy of Form 76 ( from the Secretary of State’s Office and submit the form to the Division of Professional Registration to complete licensure information. The completed form must be attached to their corporation forms.

Limited liability companies (LLC)
In 1993, Missouri enacted a statute creating a new form of business entity, the limited liability company. Most other states have also created this type of business entity within the past few years. A limited liability company is a non-corporate business in which members of the company can be actively involved in management but are shielded from liabilities. A limited liability company is not a corporation, partnership or trust. It has corporate-like liability protection for the owners and partnership-like flexibility in capital and management.

Limited liability companies are relatively easy to organize and maintain. In Missouri, a limited liability company can conduct any business activity. Business owners use this type of organization because it combines the liability protection of corporations with the flexibility and tax advantages of partnerships.

A variety of different business owners are choosing to organize their businesses as limited liability companies. This type of business organization is especially attractive to family businesses or other businesses where retention of control and restrictions on transfer of ownership interests are important. Professional firms are also being organized as limited liability companies, as are real estate ventures and other businesses.

Any person may form a limited liability company by signing and filing articles of organization with the Secretary of State’s office. LLCs are also required by state law to have an operating agreement (plan on how to operate your business). For precise statutory language, refer to Section 347.081 of the Missouri Revised Statutes

Creating a limited liability company generally requires the assistance of a lawyer who has studied this type of business organization and who can shape the limited liability company to meet the needs of the owners. Limited liability companies must be properly structured and maintained for their members to be taxed as if they were a partnership or a corporation.

Form required

Joint ventures
A joint venture is a partnership of one or more sole proprietors, partnerships or corporations to perform specific goals or tasks, such as a large construction project or the development of certain products or services. One such joint venture was the General Motors-Toyota agreement for the joint production of cars to be offered through General Motors dealerships.

The advantage of a joint venture is that existing businesses can join together without forming a new entity and without having any continuing obligations to each other beyond the joint venture agreement.

The disadvantage is that unless a party with whom a joint venture is doing business is made aware of any limitations, all parties to a joint venture are liable to such third parties whether or not the liability is specified in the joint venture agreement.

Forms required

Fictitious name registration

Missouri law requires any person who regularly transacts business in the state under a name other than his/her own true name must register that business name with the Secretary of State’s Office under a fictitious name registration. For a sole proprietorship or partnership, a business name is generally considered fictitious unless it contains the full first and last names of the owner or all of the general partners and does not suggest the existence of additional owners. Use of a name which includes words like “company,” “associates,” “brothers” or “sons” will suggest additional owners and will make it necessary for the business to file and publish the fictitious business name on company letterhead, business cards, in advertising or on its product.

Form required


Tax considerations are essential when forming a new business and during its entire life. When a business is just starting out, it may have little or no income or assets, and the choice of structure may not seriously affect its tax liability. However, as the business grows, tax implications become more significant.

Choosing a particular structure does not necessarily determine how the business will be taxed. While a corporation can elect to be taxed as an individual, there are strict limitations placed upon such an election. Since the income of a sole proprietorship is taxed directly to the individual proprietor, sole proprietors should keep open the option of incorporation, which would change the tax impact on the business.

Corporate taxation allows choices and time must be taken to understand these choices. Obtaining professional tax advice is highly recommended.

The most complicated tax structurally is that of a partnership. Usually professional advice is required for the structuring of a partnership to take fullest advantage of the opportunities available under the tax laws.

For a more detailed discussion of tax issues, Doing Business in Missouri: Taxes.


Entrepreneur should also determine who will own the business and to what extent. Ownership gives the right to share in the profits but, under certain structures, also gives the responsibility for the debts and obligations of the business. This is particularly true in sole proprietorships and partnerships.

As the business grows and matures, it may be necessary to allow additional individuals to participate in ownership. The corporate structure is best suited for adding owners. Additional stockholders can usually be added if desired by management. Adding a new partner to a partnership usually requires the consent of all other partners as well as the execution of a new partnership agreement.

Estate planning

An often-overlooked factor in choosing the business structure is estate planning. Planning for death or retirement is a prime concern for a new or growing company. The structure that gives the most latitude for estate planning is the corporate structure.

Going out of business

Generally speaking, there are two reasons for ending a business. The first is voluntary termination of the business by the owners at a predetermined time even though the business is solvent. Little consideration of a structure is needed in a voluntary termination since all the structures allow the owners to liquidate the assets and terminate the business. There is an election that a corporation can make to minimize the tax consequences. Professional help should also be sought in this instance.

The second is involuntary termination, which occurs when a business is unable to pay its obligations or when it has more liabilities than assets. Usually creditors force the termination of the business. Professional help is required in this case because, generally speaking, a change in the company’s structure during insolvency is improper and might subject the individuals to additional personal liabilities.

As soon as it becomes apparent that a business is insolvent, owners and employees must cautiously discharge all their duties to the various creditors in a nondiscriminatory way, whether the business is a sole proprietorship, a partnership, a corporation or a limited liability company.

Corporate officers and directors may incur personal liability by knowingly disposing of assets when the business is insolvent. The general rule is that officers and directors of a corporation, limited partners in a limited partnership and employees of a sole proprietorship (other than the sole proprietor) are not personally responsible for the debts of the business but that they may become liable if certain creditors receive preferential treatment when the business is insolvent.

There are also provisions in the Internal Revenue Code that make the individuals in charge of the business personally responsible for unpaid taxes. The same is true of limited partnerships if a limited partner takes an active role in the business, insolvent or not.

Regardless of the business structure, once a business becomes insolvent, great caution must be exercised and professional advice should be obtained. 


A franchise is a license from the owner of a trademark or service mark permitting another to sell a product or service under that distinctive mark. Put another way, a franchise also has been defined as an arrangement whereby a firm (franchiser), that has developed a pattern or formula to conduct a particular kind of business extends to other firms (franchisees) the right to engage in that business, provided they follow an established pattern. In return, the franchiser undertakes to assist the franchisee through advertising, promotion and other advisory functions. As a general rule, the owner of the trademark or service mark has an obligation to the general public to monitor and control the quality of the product or service that is being marketed.

The federal government and the state of Missouri, through the Secretary of State’s office, provides for protection of trademarks and service marks through registration.

Protection of intellectual property


A business cannot obtain a monopoly by actions that keep out competition under antitrust principles. However, if a business creates a new product, and the product meets certain tests, that creative contribution can be covered by a patent that grants a monopoly for 20 years. The monopoly granted takes nothing from what already existed and is of limited duration. And the invention becomes public property upon expiration of the patent. Filing a patent is a fairly complex process, and seeking professional assistance is advised. See the U.S. Patent and Trademark Office for details:

Trademark and service mark

A trademark identifies the source or origin of products or goods being marketed. A service mark identifies the source of origin of a service. Words, symbols, logos and slogans are commonly used as trademarks or service marks and, if the marks are used in commerce, may be registerable on the Federal Register.

Since a trademark or service mark must identify source or origin, it cannot resemble another mark to confuse source or origin. If a proposed mark is generic or merely descriptive of the goods or service, it is not capable of identifying source or origin and cannot function as a trademark or service mark.

Form required

Contrary to popular belief, registering a trademark or service mark does not create the mark. Ownership originates by virtue of use of the mark. Consequently, the date of first use of a mark can be crucial, and any business adopting a new mark would be well advised to incorporate the mark promptly in a correct manner of trademark or service mark usage.

In the case of a trademark, the creation results from using the mark on or in connection with the sale of goods. For a service mark, use can be on or in connection with the sale or advertising of the services. Under U.S. law, such use is required before the mark can be registered. Accordingly, the first rights in a trademark or a service mark are necessarily common law rights acquired by virtue of use of the mark.

Because of the additional rights granted under the Federal Trademark Act, most trademark and service mark owners proceed without delay to register their marks. The principal and important advantages of federal registration are that the owner of a registration is presumed to be the owner of the mark covered by the registration and does not have to prove that ownership to make a case of trademark infringement. Federal registration also includes the right to sue in federal court for infringement of a trademark or service mark. In addition, the transfer rights in a trademark or service mark are more specific and the rights transferred are broader if the mark is registered.

(Information for this section was provided by the Missouri Bar Entrepreneurial Law Committee.)

For more information on patents, trademarks and service marks, please consult with a patent attorney or other qualified individuals. You can also contact the U.S. Patent and Trademark Office for details:


Copyright protects original works of authorship, while a patent protects inventions or discoveries. Ideas and discoveries are not protected by the copyright law, although the way in which they are expressed may be. A trademark protects words, phrases, symbols or designs identifying the source of the goods or services of one party and distinguishing them from those of others.

Your work is under copyright protection the moment it is created and fixed in a tangible form that it is perceptible either directly or with the aid of a machine or device.

To fully avail yourself of copyright protections, it’s best to “notice” your copyright.

The copyright notice is that little phrase, usually at the bottom of a work, that includes the name of the copyright’s owner, the year of copyright, the little copyright symbol (or the word “copyright”) and a phrase describing the extent of the copyright. A proper notice looks something like:

Copyright © 2016 Jane Smith. All Rights Reserved.

In creating your notice, be sure not to leave out any of this information. Omitting information might reduce your remedies against infringement.

You can also register your copyright with the U.S. Copyright Office ( Copyright registration isn’t legally required as a condition of copyright protection. Many choose to register their works because they want to have the facts of their copyright on the public record and have a certificate of registration. Registered works may be eligible for statutory damages and attorney’s fees in successful litigation. A copyright may be registered at any time within the life of the copyright. 

Acquiring or merging with other businesses

The corporate form is the most flexible structure for acquiring or merging with other business. This is true even if the other business is a sole proprietorship or a partnership. When two businesses merge, all considerations of the different structure must be re-evaluated. The same questions that were considered when the original business was established must be asked again for the new business.

Purchase of existing business

Before you purchase an existing business, be sure that you obtain a certificate of no tax due from the Missouri Department of Revenue from the previous owner of the business ( Without this document, you may also be purchasing existing sales tax and/or withholding tax obligations.

Missouri State Tax Rule 12 CSR 10-3.500 states:

  1. Every person purchasing a business or stock of goods shall immediately notify the Director of Revenue of the business name, owner’s name, date of purchase and type of business or stock of goods.
  2. All successors/purchasers shall withhold enough of the purchase money to cover the amount of taxes, interest or penalties due and unpaid by all former owners or predecessors, whether immediate or not. The money should be withheld until the former owners or predecessor produce a receipt from the Director of Revenue showing full payment has been made to the state or a certificate stating that no taxes are due. The certificate of no tax due should apply to all periods through the date of closing. Otherwise, the successor/purchaser shall become personally liable for the unpaid tax, penalty and interest accrued.

Example: Mr. Smith purchases a business from Mr. Jones for $50,000. He acquires the entire inventory. He does not ask Mr. Jones for a certificate of no tax due. Mr. Smith comes in to apply for a Missouri tax I.D. number and receives it. However, after receiving his license for the business he finds Mr. Jones has sales tax delinquencies totaling $20,000 that Mr. Smith must pay because he is now successor. Mr. Smith is now paying two people for the business — Mr. Jones and the Department of Revenue.

All purchasers have a duty to discover whether taxes are due and unpaid by any former owners or predecessors, whether immediate or not, and ignorance will not relieve a purchaser from successor tax liability. Reliance on an affidavit pursuant to Missouri’s Bulk Transfer Act, stating that there are no creditors of the business, will not relieve a purchaser from successor tax liability.

To prevent this problem, obtain a certificate of no tax due from the seller before you purchase the business (

If you have any questions concerning successorship, contact the Missouri Department of Revenue at

Employer Identification Number (EIN)

Every employer maintaining an office or transacting any business in Missouri and paying wages to a resident or nonresident individual must obtain an Employer Tax Identification Number, required by federal law if you are an employer, partnership, limited liability company or corporation. Some entities, such as financial institutions, also require a business to have an identification number.

To apply for an EIN go to

Occupational licenses

The state of Missouri licenses or certifies a variety of occupations and activities. This chart provides information on the more common occupations, the administering agency and their website for additional information on licensing requirements.

Occupational licenses chart

State license and permit requirements

There are numerous state licenses, fees, permits and other requirements with which businesses must comply. This section is only intended to give you a general overview of the requirements.

State business licenses, fees, permits and regulations

Some professions are regulated by state boards and require licenses at a personal and/or business entity level. For more information contact the Missouri Division of Professional Registration at

The Missouri Revised Statutes ( can be explored to learn about required license and permits for specific businesses.

Motor vehicle licensing and registration

Missouri law defines a commercial motor vehicle as a motor vehicle designed or regularly used for carrying freight and merchandise or more than eight passengers. Vanpools (used to transport employees to and from work) and shuttle buses (used to transport customers to and from your place of business) are not included in this definition and may be registered as regular motor vehicles.

Under this definition, all trucks are commercial vehicles in Missouri because they are designed to carry freight.

A commercial motor vehicle whose operations are confined solely to a 25-mile area around a single municipality is defined as a local commercial vehicle. These definitions are used to determine registration fees for the various types of vehicles.

Unless your commercial vehicle is licensed for less than 12,000 pounds and is not regularly used for commercial purposes, you must display the following information on your vehicle or vehicles:

  1. The name of the owner
  2. The address from which you operate the vehicle or the number issued to the carrier by the Missouri Division of Transportation
  3. If it is a local vehicle, the word “LOCAL.”


You do not need to have your vehicle inspected if:

  • Your commercial vehicle is used for interstate commerce and is registered with the Missouri Highway Reciprocity Commission.
  • The vehicle was originally issued a registration for less than one year.
  • You are registering a vehicle that has not been in Missouri in the past 60 days.
  • You have a registration receipt showing that the license plate being renewed was properly transferred within the past six months.

You will need a statement saying that the vehicle has not been in Missouri and that you will have the vehicle inspected within 10 days of bringing it to Missouri. When driving your commercial vehicle, you must abide by Missouri law concerning license plates, license plate lights, load projections from the vehicle, towlines and slow-moving vehicle signs. These laws are found in Chapter 301 of the Revised Statutes of Missouri.

You can find a brief summary of these and other motor vehicle and driving laws in the Missouri Driver Guide, published by the Missouri Department of Revenue (

Commercial drivers licensing

Missouri drivers who transport people or property for hire must carry a Class A, B, C or E driver’s license. The class you and your drivers require depends on the class of vehicle you intend to use commercially.

If you are hiring drivers who will be driving class A, B or C vehicles, you should obtain a Commercial Drivers Licensing manual from the Missouri State Highway Patrol or the Missouri Drivers License Bureau (

Local licenses and permits

Contact with local (county, city, township) government agencies early in the planning stages of your business is very important. This contact will provide you with information essential to your business operations.

Most cities, and some counties, require businesses to be licensed. Check with the city business/merchant license office and/or the county collector’s office for requirements in your area.

Local zoning regulations

Be sure to check with the local city and/or county planning/zoning department to make sure that the site you have selected for your business is zoned to accommodate the activities of your business. This is especially true if you plan to operate your business from your home.