By: Rayanna Anderson
You have a great idea. You have the money and motivation to get started. You are going to start your own business. Nevertheless, what are the legal and registration requirements for you to get started?
Step 1: Decide on your type of business structure
Before you do anything else, deciding on your organization’s structure is key to formulating your business. If not for any other reason, it is required on all the other forms you fill out. Your small business structure choices include being a sole proprietorship, partnership, limited liability company (LLC) or corporation. Today’s go-to answer is probably to organize as an LLS or a Sub Chapter S Corporation, a special form of corporation. Both of these structures have some protection against personal liabilities from your business operations. In addition, your business structure determines how you are paid as an owner. This decision point may best be served by consulting with an attorney and accountant.
Step 2: Register your business name
Of course, first you have to pick a business name. This can be tricky and complicated. Make sure you explore all the potential implications of your selection. Then, check to see if someone else owns the business name by researching if the name is trademarked. Register your business name with the Missouri Secretary of State’s office. For sole proprietors and partnerships, a fictitious name registration is filed. For LLCs and corporations, the business name is typically registered when the formation paperwork is filled out and filed.
Although separate from the legal registration process above, you will want to research what website names are available for your new business in today’s market. Website name availability, called domains, can be acquired through several sites. GoDaddy.com is one of the most popular.
Step 3: Determine your taxes, license and other requirements
You will have to pay personal taxes, both federal and state, on any salary or profits you receive from your business. If you have employees, each individual completes an IRS form W-4 and Missouri form W-4 along with an I-9 to verify employment eligibility. Additionally, you will need to withhold both federal and state taxes out of their paychecks and match their FICA (Social Security and Medicare) contribution. Also, you will be liable for federal and state unemployment taxes. Many small businesses use QuickBooks accounting software to make these calculations and track the payments.
There is no general state business license, although some types of businesses in Missouri require state authorization, such as business license to sell liquor. Business license requirements vary from city to county. Check with the city or county government entities in which you operate.
If you sell a product rather than a service, you will need a Missouri sales or use tax number from the Missouri Department of Revenue.
The state of Missouri requires companies to carry workers’ compensation insurance when they have five employees or more, unless the company is in the construction industry. Construction industry companies are required to carry workers’ compensation insurance when they have one or more employees.
Make sure you understand the new regulations surrounding the Affordable Care Act. Generally, any business with fewer than 25 employee is not required to offer healthcare insurance, but may be eligible for tax credits if they choose to offer coverage.
Step 4: Get a federal employer identification number (EIN)
You only need an EIN if you have employees, have business partners or are forming an LLC or corporation. That being said, your bank may require you to have one to open a business account. Also, if you have employees, you will need a Missouri employer withholding tax number to enable you to deposit your employees’ state income tax withholdings.
Deciding to start your own small business can be one of the most exciting and rewarding decisions you will ever make. Legal and registration requirements are inevitable. Knowing what is officially required is one of your first steps to being a successful small business owner. Check out the website www.MissouriBusiness.net for additional information, forms, publications, and where to get assistance for your new business.
Rayanna Anderson, MBA, is director of the Small Business Technology Development Center and the Management Development Institute at Missouri State University’s E-Factory. Anderson writes about issues she sees regularly in her consulting with small businesses in Springfield and the state of Missouri. Email: firstname.lastname@example.org.
This article appears in the February 6th edition of the News-Leader and can be accessed online here.