The most important decision you make as a business owner, whether starting a new business, purchasing a business, or reviewing a current business entity, is choosing the legal structure that will protect your personal assets. There are three business structures to consider in Missouri.
Legal Business Structures in Missouri
Each of these three business structures offers certain advantages, depending on what fits your situation.
Doing Business As (DBA) in Missouri
Filing for a DBA simply means you utilize fictitious name registration for your business with the Missouri Secretary of State’s office. For example, it may mean Sam Smith DBA Acme Brick, which indicates the legal name of the owner of this company is Sam Smith, but people find the business name, Acme Brick. When customers call the company, they call Acme Brick. This might work well if you own several businesses under the same ownership.
The biggest drawback for an individual operating as a DBA is that there is no distinction between your personal assets and your business assets. Simply put, if sued in the course of your operations, you stand to lose your personal as well as your business assets.
However, this structure might work well if you own several businesses under the same ownership, such as Smith Stoneworks LLC DBA Acme Brick. When another type of business structure is the underlying owner instead of an individual, there are protections already in place even when operating as a DBA.
Missouri Limited Liability Company (LLC)
The most popular feature of the LLC structure is personal protection from business liabilities. With a Missouri LLC in place, a lawsuit against your business may clean out your business assets but likely won’t cost you your family home.
Setting up a Missouri LLC provides operational and tax flexibility. Documented in the operating agreement, your LLC can be formed with more than one owner and have the operational flexibility of a partnership. Your Missouri LLC can be taxed as a sole proprietorship, partnership, or S-Corporation.
Corporation
Setting up your business as a corporation offers optimal protection of your personal assets. However, there are corporate formalities that must be kept current. These include annual filings with the Secretary of State’s office, annual meetings properly held and documented, and by-laws in place and current.
Consult With an Attorney to Set Up Your Missouri Business
Generally, forming a Missouri LLC is a good fit for many small businesses. However, a conversation with your attorney is a good idea.
Don’t think you’re too small to take this important step. You shouldn’t wait until you’re a certain size, have a certain amount of revenue, or begin hiring employees. We also recommend that you consult with your accountant before creating any business entity due to the individual tax implications involved.
We invite you to contact our office or call (417) 887-4170 to discuss your business entity structure. At 417 Business & Elder Law, LLC, we listen as you share your business goals and discuss the options available that best fit your needs. We then prepare and file the necessary documents you need to get your business off to the right start.
Please call our office at (417) 887-4170 if you have any questions about this article or would like to receive our mailed newsletter.