Business Formation Checklist | Scott Law Firm PC

Following is a checklist of some practical and legal steps and considerations in forming a new business in Missouri. Parts of this checklist are specifically oriented toward Columbia and Boone County, Missouri.

Business name

See the Tradenames and Trademarks page for some legal issues relating to selection of a business name.

Under Missouri law, the name of a corporation, limited liability company or limited partnership cannot be identical or “confusingly similar” to the name of any other company registered with the Missouri Secretary of State. The Secretary of State’s website lists names of existing business entities.

Fictitious name registration

If a sole proprietor, partnership, corporation or limited liability company plans to do business under a name different from the name(s) of the owner(s), the business must file a “fictitious name registration” with the Secretary of State.

Formation of sole proprietorship

Because “sole proprietorship” simply means that one individual owns a business and reports the business income (or loss) on his or her personal income tax returns, no legal steps are necessary to form a sole proprietorship.

However, a fictitious name registration may be necessary, and certain tax registrations may be required if the business has employees and/or sells goods.

Formation of partnership

General partnerships can be formed by an oral agreement between two or more people to operate a business and share in the profits and losses. However, Scott Law Firm recommends that partners enter into a written partnership agreement to avoid future misunderstandings and make appropriate provisions for management and dissolution of the partnership.

A limited partnership is required to file Articles of Partnership with the Missouri Secretary of State.

A limited liability partnership, a special form of general partnership, is required to register as a limited liability partnership with the Missouri Secretary of State and to renew this registration annually. Again, no formal written partnership agreement is required, but we recommend a written agreement.

Partnerships may be required to register a fictitious name, and certain tax registrations will be necessary.

Formation of corporation

Formation of a corporation requires filing Articles of Incorporation with the Missouri Secretary of State and various other legal steps including an organizational meeting of the Board of Directors and issuance of stock to stockholders. These are matters best handled by working with an attorney.

Corporations must obtain various tax registrations and will need to file a fictitious name registration if doing business under a name other than the corporate name.

Formation of limited liability company

The formation of a limited liability company requires preparation of Articles of Organization, which must be filed with the Missouri Secretary of State.

An LLC also must adopt an “Operating Agreement” before its formation is legally complete.

There is a great deal of flexibility in structuring the management of an LLC, so consultation with an attorney is advisable in the preparation of Articles of Organization.

City business licenses

Many cities, including the City of Columbia, Missouri, require a city business license for most types of businesses operating within the city limits.

The application form for a Columbia business license can be obtained from the Business License Office, 701 E. Broadway, Columbia, MO 65201, telephone 573-874-7378. When the application form has been completed, it should be submitted to the office along with the business’ Missouri sales tax number, the legal name of the business, and an estimate of gross sales. The business license fee is based on gross receipts plus a $20.00 investigation fee. Columbia requires some types of businesses to meet additional requirements such as filing a certificate of insurance or posting a surety bond.

Before issuing a business license, the City of Columbia investigates to ensure that the prospective business complies with all laws and regulations, including zoning, fire codes and health regulations.
County merchants license

In Missouri any business operating within a particular county is required to obtain a county merchants license if the business collects sales tax.

Application for a Boone County merchants license should be made at the office of the Boone County Collector, County Government Center, 801 E. Walnut St., Columbia, MO 65201, telephone 573-874-7590. The fee for issuing a merchants license is $5.00. Information required is the legal name of the business and its Missouri sales tax number.

Missouri sales and/or use tax number

Businesses subject to retail sales tax must obtain a sales tax number. If a business sells goods at wholesale or is otherwise subject to the Missouri use tax, it must apply for a use tax number. Some businesses need both a sales tax number and a use tax number.

For information and forms, contact: Central Registration, Missouri Department of Revenue, Truman Building, 301 W. High St., Room 330, Jefferson City, MO 65102, telephone 573-751-5860. A bond is usually required to obtain a sales and/or use tax number.

Missouri corporate income tax number

Corporations operating in Missouri are required to obtain a Missouri corporate income tax number.

After a corporate charter and corporation number have been issued, for information and forms contact: Central Registration, Missouri Department of Revenue, Truman Building, 301 W. High St., Room 330, Jefferson City, MO 65102, telephone 573-751-4541.
Missouri employee withholding tax number

Any business which has employees in Missouri must obtain a Missouri employee withholding tax number.

For information and forms, contact: Central Registration, Missouri Department of Revenue, 301 W. High St., Truman Bldg. Room 330, Jefferson City, MO 65102, telephone 573-751-5860.

Missouri unemployment insurance tax number

Any business which has employees must obtain a Missouri unemployment insurance tax number.

For information and forms, contact: Missouri Division of Employment Security, 421 E. Dunklin, P.O. Box 59, Jefferson City, MO 65104, telephone 573-751-3215 or 573-751-3340.

If an existing business is purchased, the unemployment tax account of the prior owner can be transferred to the purchaser if the business continues without interruption.

Federal Employer Identification Number

All partnerships, corporations and limited liability companies are required to obtain a Federal Employer Identification Number (FEIN).

Sole proprietorships also are required to obtain an FEIN if they have employees or if they deal in firearms or alcohol.

Contact: Internal Revenue Service, Tax Forms, Bloomington, IL, telephone 800-829-3676 (800-TAX-FORM).

Licenses

Certain types of businesses are subject to regulatory requirements which require the issuance of federal or state licenses. Examples are businesses which deal in securities, render investment advice, make alcohol or tobacco products, prepare meat products, manufacture or deal in firearms, produce drugs or biological products, or operate broadcast television or radio stations.

An attorney should be consulted well in advance of beginning business to make sure appropriate licenses are applied for and obtained.

Worker’s compensation insurance

In Missouri, any business having five or more employees is required to purchase worker’s compensation insurance, except that construction businesses must meet the requirement if they have one or more employees. Certain large businesses may qualify to “self-insure” for worker’s compensation.

Contact an insurance agent to obtain worker’s compensation insurance.

Consider other insurance needs

Even a business which has been formed in a manner that limits the individual liability of its owners should consider procuring appropriate insurance coverage. Appropriate coverages should be discussed with an attorney, accountant and insurance agent. Coverages to consider include:

General business liability insurance
Premises liability and property causality
Motor vehicle liability (make sure business use of motor vehicles is covered)
Special equipment insurance
Medical/dental insurance
Disability insurance

Open bank account(s)

Open one or more bank accounts as recommended by an accountant. If a new corporation, limited liability company or limited partnership is formed, banks will not open an account for the new entity until the required paperwork has been filed with the Missouri Secretary of State and a state registration number has been issued.

Check zoning requirements

Zoning laws specify what business activities may or may not be conducted in particular locations. Make sure that appropriate zoning exists for an intended business location before signing a lease or purchase contract.

To check zoning in the City of Columbia, contact: Protective Inspection, 701 E. Broadway, Columbia, MO 65205, telephone 573-874-7474.

To check zoning in Boone County, contact: Boone County Planning Office, County Government Center, 801 E. Walnut St., Columbia, MO 65201, telephone 573-886-4330.

Bulk sales law

If purchasing an existing business, consult with an attorney about whether compliance with the Missouri “bulk sales law” is required.

If so, the business seller must furnish a list of existing creditors and prepare a schedule of property being sold. The buyer is then responsible for notifying all business creditors of the sale.