Should I Form an LLC in Missouri?
Many business owners often wonder about the benefits of forming a Limited liability Company (LLC).
Perhaps the most frequently asked questions I get from business owners are:
Forming an LLC, no matter the business size, offers several advantages. I’ll go over them here.
You may have started your small business under your own individual name and filed a fictitious name registration (also known as DBA or doing business as) for your business name with the Missouri Secretary of State’s office. This has not technically formed a separate business entity. A DBA does not distinguish between your business assets and personal assets.
Simply put, if you are sued in the course of your operations, you stand to lose your personal as well as your business assets as a sole proprietor or DBA.
LLCs in Missouri are similar to corporations in that they offer certain liability protections to the owners by separating business from personal assets. However, LLCs have fewer corporate formalities and greater tax flexibility.
This is one of the key reasons that I advise clients to consider forming a Missouri LLC at the initial stages of starting their new business. You shouldn’t wait until you are a certain size, have a certain amount of revenue, or begin hiring employees. Don’t think you are too small to take this important step.
The most popular feature of a Missouri LLC is that your personal assets are separate from your business liabilities. With an LLC in place, a lawsuit against your business may still be able to clean out your business assets but likely won’t cost you your family home.
For example, you might have to sell your business equipment, office space, and computer equipment to fulfill a debt that, for whatever reason, you couldn’t pay. Once the business assets are sold, if there is any more outstanding debt, the lender or investor won’t be able to liquidate your personal home or vehicle to satisfy the debt.
Missouri LLCs can be formed with more than one owner and have the operational flexibility of a partnership or corporation. If this option is chosen, I can’t stress enough the importance of consulting an attorney to draw up an operating agreement to determine the ownership, voting structure, and basics of operation. Additionally, a buy-sell agreement can be prepared setting out what would happen upon the disability or withdrawal of an owner. Few people go into business expecting things to go awry. However, it is good business practice to have strong legal agreements in place between business owners from the beginning.
At our law firm, we can help you understand the advantages of forming a Missouri LLC and discuss the options available to best fit your needs.
Please call our office at (888) 887-4170 if you have any questions about this article.
Many business owners often wonder about the benefits of forming a Limited liability Company (LLC).
