LLC vs. S Corp in Missouri 2024: A Comprehensive Comparison

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LLC vs. S Corp in Missouri: Understanding the Differences

Embarking on the entrepreneurial journey in Missouri, also known as The Show-Me State, is an exciting and transformative experience. Missouri LLC and S Corporation are two popular options that often top the list of considerations for entrepreneurs. This article serves as your comprehensive guide, comparing LLC vs. S Corp in Missouri and ultimately assisting you in determining the best fit for you.

Dive into business formation with confidence and clarity as LLCBase expert analysis simplifies the complexities of LLCs and S Corps, shedding light on their unique advantages and drawbacks. So, let’s explore the fascinating world of LLCs and S Corps and set your business on the path to success in Missouri.

Compare LLC and S-Corp

What are an LLC and an S-Corp

A Limited Liability Company (LLC) is a popular legal business structure that offers a combination of benefits from both corporations and partnerships. It is specifically designed to provide personal asset protection to its owners, known as members. This protection ensures that the owner’s personal assets are separate from the business liabilities, such as debts and lawsuits.

In Missouri, forming an LLC involves several steps, including paying an initial filing fee. Additionally, LLCs in Missouri are required to pay an annual fee of $7 to maintain their legal status and stay compliant with the state regulations.

An LLC in Missouri offers an attractive option for entrepreneurs seeking a flexible business structure with added liability protection and favorable tax treatment.

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On the other hand, an S-Corporation, or S-Corp, is not a separate legal business entity like an LLC. Rather, it is a tax classification that existing corporations and LLCs can elect. A business can bypass double taxation by opting for this tax status, as the profits and losses are directly passed through to the owner’s personal tax return. Starting an S Corp in Missouri  allows business owners to report and pay taxes on their business income as part of their individual income tax filings, eliminating the need for separate corporate taxes.

In Missouri, it is crucial for business owners considering this tax classification to fully understand the implications and requirements of being an S-Corp in Missouri. This includes adhering to specific rules and regulations related to ownership, shareholder limits, and tax filing deadlines. If you want to start an S-Corp, LegalZoom will help you every step of the way!

LLCs and S-Corporations Comparison

Let’s explore the comparison between LLCs and S-Corporations to help you make an informed decision.

1. Taxation Differences in Missouri

One of the main differences between LLCs and S-Corporations in Missouri lies in how they are taxed. LLCs are typically subject to pass-through taxation, meaning the business profits and losses are reported on the owner’s personal tax return. In contrast, S-Corporations must adhere to specific tax requirements, including distributing salaries to shareholders and adhering to the state’s income tax rate.

  • Federal Taxes: When choosing between an LLC or S-Corporation in Missouri, it’s essential to consider several federal tax factors. These factors include differences in Pass-Through Taxes and Self-Employment Taxes.
  • Pass-Through Taxes: Both LLCs and S-Corporations in Missouri benefit from pass-through taxation at the federal level. Due to pass-through taxation, these entities do not pay federal income taxes as separate legal entities. Instead, their owners are required to pay federal income taxes on their share of the business income. This type of taxation prevents the company from being taxed twice. In contrast, C-Corporations in Missouri are subject to double taxation, meaning they must pay federal taxes at the entity level and their owners’ taxes.
  • Self-Employment Taxes: Many LLC owners in Missouri opt for S-Corporation taxation to reduce their self-employment taxes. An S-Corporation owner is not considered self-employed; they can become an employee of the company and receive regular salary benefits. Conversely, an LLC member must include their guaranteed payments and a portion of the LLC’s earnings when calculating their self-employment tax. Share distributions determine the corporate income of S-Corporation shareholders. For example, suppose you are the sole owner of an LLC in Missouri with an annual profit of $150,000 and a fair wage for someone in your location doing the same job as you is $100,000. Under the default LLC taxation, you must pay self-employment taxes on the $150,000 profit. However, if your company is taxed as an S-Corp in Missouri, you would be responsible for paying payroll taxes only on the $100,000 standard wage. Income tax would still apply to the remaining $50,000.
  • Missouri State Taxes: No major tax differences exist between regular LLCs and S-Corporation LLCs at the state level. For filing an annual report in Missouri, it costs $7, which can be paid to the MT Secretary of State. Additionally, before forming the LLC, you must pay $105 (by mail and $50 online).

On the other hand, if you form an S-Corporation in Missouri, you will also need to pay taxes. This includes the S-Corp filing fee and an annual report fee after establishing your S-Corp for one year. You must also go to the MT Secretary of State to make these payments.

2. Liability Protection

LLCs and S-Corporations in Missouri provide liability protection for their owners. This means that the owner’s personal assets are protected from business debts and lawsuits. However, S-Corporation status does not offer the same level of protection as an LLC, as it is primarily a tax designation.

The following factors exclude certain individuals and entities from becoming shareholders in an S-Corporation in Missouri:

  • Insurance businesses
  • Domestic international sales corporations
  • Partnerships
  • Corporations
  • Unauthorized immigrants
  • Specific financial institutions

While understanding the ownership requirements of LLCs and S-Corporations in Missouri is essential, seeking legal counsel when establishing your business is still advisable. For assistance with your Missouri LLC or Missouri S-Corp, consider consulting with professionals.

3. Ownership Requirements and Restrictions

LLCs and S-Corporations in Missouri have specific ownership requirements and restrictions. For instance, an LLC can have unlimited members, while an S-Corporation is limited to 100 shareholders. Additionally, S-Corporations can only have one class of stock and must follow strict rules regarding shareholder eligibility.

Easier to File in Missouri: LLCs or S-Corporations

While filing an LLC or S-Corporation in Missouri requires time and preparation, proper planning can make the process manageable. Both LLCs and S-Corporations can be filed through the Missouri Registered Agent.

To start an LLC in Missouri, you must submit the Articles of Organization to the Missouri Secretary of State. This document should contain all the necessary information for your LLC, along with the payment of the associated filing fee.

On the other hand, if you want to elect S-Corporation status for your Missouri LLC, you will need to submit additional paperwork. First, file Form 8832 with the Internal Revenue Service (IRS) to indicate your preference to tax your LLC as a corporation rather than a partnership. Next, submit Form 2553 to choose S-Corporation status.

Remember, maintaining legal compliance is crucial for your LLC. This means submitting annual tax returns and reports after establishing your business entity.

With that, we’ve carefully curated a list of the best LLC services in Missouri to support and guide you through filing an LLC and S-Corp. Check them out!

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Filing Process for LLCs vs. S-Corporations in Missouri

Forming an LLC in Missouri involves several crucial steps. To start, you must file Articles of Organization with the Missouri Secretary of State and pay the associated filing fee of $105 (by mail and $50 online). Once your LLC is established, you must comply with annual reporting and tax requirements.

On the other hand, if you want to elect an S-Corporation status for your existing LLC or corporation, the process is slightly different. Firstly, you must file Form 8832 with the Internal Revenue Service (IRS) to classify your LLC as a corporation for tax purposes. Then, you must submit Form 2553 to the IRS to choose S-Corporation status. In Missouri, the S-Corporation filing fee is $50 fo filing online, $105 for filing by mail.

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The LLC formation and S-Corporation election processes can be completed through two method that is filing online, or by mail. Online incorporation is available at Create an account/Log in to the SOS site, get the online form, fill it, and submit online, while offline incorporation can be done at Send the form by mail or drop it off in person to Corporations Unit, James C. Kirkpatrick State Information Center, P.O. Box 778, Jefferson City, MO 65102. It is essential to stay up-to-date with any ongoing reporting and tax requirements for your chosen business structure.

The filing process for LLCs and S-Corporations in Missouri varies slightly, with each requiring specific forms and fees. It’s essential to consider the unique requirements of each business structure before making a decision. Consulting with a legal or financial advisor can provide valuable guidance on which structure best suits your business in Missouri.

FAQs

What is the difference between an LLC and S corp in Missouri?
An LLC is a type of business entity that offers limited liability protection, while an S corp is a corporation that elects to be taxed like a partnership.
Can both LLC and S corp be formed in Missouri?
Yes, both LLCs and S corps can be formed in Missouri.
Is there a minimum number of owners required for forming an LLC or S corp in Missouri?
No, there is no minimum number of owners required for either an LLC or S corp in Missouri.
Can a single person form an LLC or an S corp in Missouri?
Yes, a single person can form an LLC or S corp in Missouri.
What are the requirements for forming an LLC in Missouri?
To form an LLC in Missouri, you must file Articles of Organization with the Secretary of State and pay a filing fee.
What are the requirements for forming an S corp in Missouri?
To form an S corp in Missouri, you must first form a regular corporation, then file for S corp election with the IRS.
What are the benefits of forming an LLC in Missouri?
Some benefits of forming an LLC include limited liability protection and flexibility in management and taxation.
What are the benefits of forming an S corp in Missouri?
Some benefits of forming an S corp include limited liability protection, pass-through taxation, and potential tax savings.
Are there any restrictions on who can own an LLC or S corp in Missouri?
There are no restrictions on who can own an LLC or S corp in Missouri.
How are LLCs and S corps taxed in Missouri?
LLCs are not taxed at the entity level in Missouri; instead, income and losses are passed through to the owners’ personal tax returns. S corps are also not taxed at the entity level, but the business must file a separate tax return.
Can an LLC elect to be taxed like an S corp in Missouri?
Yes, an LLC may elect to be taxed like an S corp, but there are certain requirements that must be met.
Can an S corp elect to be taxed like an LLC in Missouri?
No, an S corp cannot elect to be taxed like an LLC in Missouri.
Are there any ongoing filing requirements for LLCs and S corps in Missouri?
Yes, both LLCs and S corps must file an annual report with the Secretary of State and pay a filing fee.
Can an LLC have unlimited members in Missouri?
Yes, an LLC can have unlimited members in Missouri.
Can an LLC have foreign owners in Missouri?
Yes, an LLC can have foreign owners in Missouri.
Can an S corp have foreign owners in Missouri?
Yes, an S corp can have foreign owners in Missouri.
Is there a limit on the number of shareholders for an S corp in Missouri?
Yes, an S corp cannot have more than 100 shareholders in Missouri.
Can an LLC have multiple classes of ownership interests in Missouri?
Yes, an LLC can have multiple classes of ownership interests in Missouri.
Can an S corp have multiple classes of stock in Missouri?
No, an S corp can only have one class of stock in Missouri.
Can an LLC be managed by a board of directors in Missouri?
No, an LLC is typically managed by its members in Missouri.
Can an S corp be managed by its shareholders in Missouri?
Yes, an S corp can be managed by its shareholders in Missouri.
What happens to an LLC or S corp if one of the owners dies or leaves the company in Missouri?
In both LLCs and S corps, the ownership interest would typically be transferred to the remaining owners or their heirs, depending on the specific terms of the operating agreement or bylaws.
Do LLCs or S corps have perpetual existence in Missouri?
Yes, both LLCs and S corps have perpetual existence in Missouri.
Are there any unique tax benefits for LLCs or S corps in Missouri?
There may be certain tax benefits for both LLCs and S corps in Missouri, but this will depend on the specific circumstances of each business.
Can a business change its entity type from an LLC to an S corp in Missouri?
Yes, a business can change its entity type from an LLC to an S corp in Missouri, but there are specific procedures that must be followed.
Can a business change its entity type from an S corp to an LLC in Missouri?
Yes, a business can change its entity type from an S corp to an LLC in Missouri, but there are specific procedures that must be followed.
Are there many LLCs and S corps in Missouri?
There are a significant number of both LLCs and S corps operating in Missouri.
What is the difference between an LLC and S Corp in Missouri?
An LLC provides legal protection to its owners’ personal assets, while an S Corp provides tax advantages.
How do I form an LLC in Missouri?
To form an LLC in Missouri, you must file Articles of Organization with the Secretary of State’s office.
Can an S Corp convert to an LLC in Missouri?
Yes, an S Corp can convert to an LLC in Missouri.
Do LLC members have to pay Missouri state taxes?
LLC members are subject to Missouri state taxes on their share of profits.
Can a single person form an LLC in Missouri?
Yes, a single person can form an LLC in Missouri.
Can an LLC in Missouri have more than one owner?
Yes, an LLC in Missouri can have multiple owners, also known as “members.”
Do S Corps receive any state tax benefits in Missouri?
Missouri does not have state-level S Corporation income tax.
Can an S Corp switch to being taxed as an LLC in Missouri?
An S Corp cannot be taxed as an LLC, but it can convert to an LLC.
Does Missouri require S Corps to file annual reports?
Yes, S Corps in Missouri must file annual reports with the Secretary of State’s office.
How are LLCs and S Corps treated for tax purposes in Missouri?
LLCs are taxed as a “pass-through” entity, whereas S Corps pay corporate taxes, but their net income passes through to the shareholders.
Can an LLC in Missouri have a single member and still have limited liability protection?
Yes, a single-member LLC in Missouri still receives the benefit of limited liability protection.
What is the age requirement for forming an LLC or S Corp in Missouri?
There is no age requirement for forming an LLC or S Corp in Missouri.
Can an LLC in Missouri have a corporation as a member?
Yes, an LLC in Missouri may have a corporation as a member.
Can a corporation in Missouri form an S Corp?
Yes, a corporation in Missouri can form an S Corporation.
Are there annual fees for forming and maintaining an LLC or S Corp in Missouri?
Yes, there are annual fees for forming and maintaining an LLC or S Corp in Missouri.
Can an LLC elect to be taxed as an S Corp in Missouri?
Yes, an LLC may elect to be taxed as an S Corp in Missouri.
How much does it cost to form an LLC in Missouri?
The cost to file Articles of Organization to form an LLC in Missouri is $50.
What is the maximum number of members allowed in an LLC in Missouri?
There is no cap on the number of members allowed in an LLC in Missouri.
How are LLCs and S Corps taxed differently federally?
LLC profits and losses are “passed through” to the owners’ personal income tax returns, while S Corps pay corporate taxes and only the remaining net income passes through to the owners.
Can an LLC in Missouri have an S Corp as a member?
Yes, an LLC in Missouri may have an S Corporation as a member.
Are LLC owners called shareholders or members in Missouri?
LLC owners in Missouri are referred to as “members.”
Can Missouri S Corps have different classes of stock?
Yes, Missouri S Corps can have different classes of stock.
Can an S Corp in Missouri have more than 100 shareholders?
No, an S Corp in Missouri cannot have more than 100 shareholders.
Can an LLC need to register for a sales tax ID in Missouri?
Yes, LLC members may need to register for a sales tax ID number with the Missouri Department of Revenue.
Are there residency requirements for LLC members or S Corp shareholders in Missouri?
There are no residency requirements for LLC members or S Corp shareholders in Missouri.
How do I get started forming an LLC or S Corp in Missouri?
Contact the Secretary of State’s office for more information and to obtain the necessary forms to get started forming an LLC or S Corp in Missouri.
Can an LLC own property in Missouri?
Yes, an LLC may own property in Missouri.
Are operating agreements required for LLCs in Missouri?
No, operating agreements are not required for LLCs in Missouri, but it is recommended to have one in place to avoid disputes amongst members.

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Conclusion

Navigating the world of business structures and filings may seem daunting, but with the right information and guidance, you can confidently make the best decision for your unique entrepreneurial journey. Remember, the path to success is paved with well-informed choices and a clear understanding of your business goals. So, take the time to research, consult with professionals, and weigh the pros and cons of LLCs and S-Corporations in Missouri.

As you embark on this exciting adventure, remember that a strong foundation built on sound legal and financial principles will be the backbone of your thriving enterprise. Embrace the challenge, stay curious, and always remember your passion and vision. Visit LLCBase today to access valuable resources, expert guidance, and personalized support tailored to your needs. Don’t wait any longer – let us help you realize your entrepreneurial dreams. 

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