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Editorial 9 MIN READ

Missouri in May 2018: $50 to form, nothing after, series LLCs on the books

A $50 online filing, no annual report for LLCs, and a new series statute that landed in August 2017 with almost no ceremony

The Editors
Staff, Incorporator.org
9 min read Updated
Contents 6 sections
  1. What the Secretary of State charges
  2. No annual report, and what that actually means
  3. The 2017 series LLC amendment, quietly
  4. The tax backdrop for a 2018 formation
  5. Who Missouri actually makes sense for
  6. Sources

Missouri LLC costs $50 if you file online and $105 if you mail the paper, and the state does not ask for an annual report afterwards. That second part is unusual enough to be the reason some founders pick the state in the first place.

This is a guide for someone completing Missouri LLC formation in May 2018. The numbers come from the Secretary of State's current fee schedule, the statute cites are the Missouri Limited Liability Company Act as it stands after the 2017 amendments, and the tax context is the rate schedule in force for the 2018 filing year with the phase-downs the legislature wrote into SB 509 and SB 884.

What the Secretary of State charges

Formation goes through the Secretary of State's Corporations Division. The filing is an Articles of Organization, Form LLC-1, four pages of boxes that ask for the name of the LLC, the purpose (a catch-all "any lawful business" is accepted), the registered-agent name and Missouri street address, whether the LLC is member-managed or manager-managed, the names and addresses of the organizers, and the duration (perpetual is the standard election).

The fee split is the feature. File online through the Corporations Division portal and you pay $50. Mail the paper form and you pay $105. The $55 spread is the largest paper-to-online differential of any state in the Midwest and is the Secretary's way of pushing traffic through a system that produces a same-day filing record rather than a two-week backlog. Unless your filer's license is hanging on getting a physical stamp, file online.

Name availability can be checked through the same portal before you submit. Missouri will not let you form with a name that is not "distinguishable upon the records" from an existing entity, which in practice means one meaningful word of difference is usually enough but a change of punctuation is not. If you need the name held before you have the rest of the paperwork, a name reservation costs $25 and holds for 60 days.

The registered agent must have a physical Missouri street address (no P.O. boxes) and consent to service of process. Any Missouri resident or any business entity authorized to do business in the state can serve. The commercial registered-agent market in Missouri tracks the national one, with priced rates from roughly $50 at the commodity end to several hundred at the full-service end.

An EIN from the IRS, Form SS-4, completes the minimum federal setup. Missouri itself does not require a state tax ID at formation; the Department of Revenue issues one when you register for withholding or sales tax, and only if the business has those obligations.

No annual report, and what that actually means

The Missouri Limited Liability Company Act, RSMo Chapter 347, is the governing statute. Unlike the companion Chapter 351 for corporations, Chapter 347 does not impose an annual registration requirement on LLCs. There is no yearly form to file with the Secretary of State, no $50 maintenance fee, no late penalty for a missed filing, and no administrative dissolution path triggered by paperwork lapse. This is rare. Most states use the annual report as a compliance checkpoint and a revenue stream, and running without one changes the cost curve on a multi-LLC holding structure in a way that is visible over a decade.

What you still owe is tax. An LLC is a tax entity only by election; the state follows the federal classification. A single-member LLC with no election is a disregarded entity on the owner's Missouri return. A multi-member LLC with no election files a Missouri partnership return, Form MO-1065, that reports income to the state and issues MO-K-1s to members. An LLC that has elected S-corp treatment at the federal level files a Missouri S-corporation return, Form MO-1120S. A C-corp elects LLC files Form MO-1120. The registered-agent and address updates that other states collect through the annual report are handled in Missouri by separate statements of change, filed only when something actually changes, for $10 each.

The corollary is that Missouri has no state-side equivalent of the "good standing" lapse that a missed annual report triggers in Delaware or Illinois. A certificate of good standing (Missouri calls it a certificate of fact) is issued when the state has no adverse record on the entity, which, in the absence of an annual report, means tax status with the Department of Revenue becomes the practical compliance surface. If the LLC has a sales-tax or withholding-tax obligation and falls behind, the good-standing certificate will not issue.

The 2017 series LLC amendment, quietly

The most consequential change to Chapter 347 in the last several years is SB 269, signed in 2017 and effective August 28, 2017, which added series LLC provisions to the act. A Missouri LLC can now establish one or more designated series under RSMo 347.186.1, each with separate members, managers, interests, assets, and purposes, and with liability protection between series when the operating agreement and records meet the statutory conditions.

The conditions are the familiar ones from the other series jurisdictions. The master operating agreement must authorize series. The Articles of Organization must provide notice that the LLC may establish series. Each series must maintain separate records that account for its own assets distinctly, and each must satisfy the notice-of-limitation-of-liability requirement. Done correctly, the debts of one series do not reach the assets of another or of the master LLC.

Missouri's enactment is notable mostly for its timing and for the jurisdictions it joins. With SB 269, Missouri became the nineteenth state to adopt a series LLC statute of some form, and one of the few to do so after the IRS proposed its series LLC regulations under Treas. Reg. § 301.7701 in 2010. Those regulations remain proposed, which is the silent caveat sitting on top of every series structure in every state. A Missouri series set up in 2018 inherits both the statutory liability protection of Chapter 347 and the still-unresolved federal tax question of how each series is treated as an entity for its own classification election. If you are reading about series LLCs this year, the series-LLC revisited piece walks through the tax side in more detail.

For a Missouri filer in 2018 the practical advice is narrow. Form the master with the series notice in the Articles, even if you think you might never use a series, because retrofitting a master with series provisions is not instantaneous. If you do form series, keep the books separate in a way that would survive a skeptical bankruptcy trustee, because that is the forum where series liability protection gets tested and the trustee's opening move is to collapse the series.

The tax backdrop for a 2018 formation

Missouri's tax code changed materially during the 2018 filing year and is scheduled to keep changing through 2020. For an LLC owner modeling the next three years, both moving pieces matter.

The individual income tax, which is what a disregarded-entity or partnership-classified LLC owner actually pays on pass-through income, sits at a top rate of 5.9% for 2018. SB 509 (2014) started a phased reduction tied to revenue triggers, and the trigger for the 2018 year did not produce a cut at the top bracket, leaving 5.9% effective for income earned this year. The same bill sets the top rate on a glide path to 5.4% by 2019 subject to the same revenue conditions, and an LLC owner forecasting 2019 income should run both scenarios. Pass-through owners also have the new federal Section 199A deduction to factor in for federal purposes; Missouri conforms to federal adjusted gross income as the starting point, which means the 199A deduction flows through to the Missouri return automatically unless the state legislates a decoupling, and as of this filing year it has not.

The corporate income tax, which matters for an LLC that has elected C-corp treatment, is 6.25% for 2018. SB 884 (2018), signed earlier this year, cuts the corporate rate to 4% effective for tax years beginning on or after January 1, 2020, and pairs the cut with a switch to single-sales-factor apportionment and a mandatory throwback rule repeal. For an LLC considering a C-corp election this year, the rate that matters is 6.25% for 2018 and 2019 and 4% after that. The decision to elect C generally turns on the federal 21% rate and the Section 199A trade-off, but the Missouri side of the math is not nothing, and the 2.25-point state-rate drop in 2020 is a real factor for a multi-year model.

No franchise tax applies to LLCs. Missouri repealed the corporate franchise tax for tax years beginning on or after January 1, 2016, and LLCs were never subject to it in the first place. The line in the Missouri tax apparatus that catches most out-of-state filers is the sales-and-use-tax nexus rule, which is about to be reshaped by the Supreme Court's pending decision in South Dakota v. Wayfair, argued in April and awaited this term. Whatever the Court does, Missouri's physical-presence rule under current law still controls for this filing year.

Who Missouri actually makes sense for

Three profiles fit cleanly.

The first is an owner who wants a low-maintenance domestic holding vehicle in a Midwest state and does not want an annual report on the calendar. The $50 online formation and the absence of a recurring filing put Missouri in a small group with New Mexico and a couple of others where the post-formation cost is functionally zero absent a tax obligation.

The second is a real-estate owner with multiple properties who wants series-level liability separation without setting up a fresh LLC per parcel. Missouri's 2017 enactment puts the state on equal statutory footing with Illinois, Texas, Delaware, and the other series jurisdictions, and the no-annual-report feature amplifies the maintenance-cost argument. The federal tax caveat applies everywhere and is not a Missouri-specific problem.

The third is a local operating business that would have picked Missouri anyway because the owner and the customers are in the state, and for whom the 2018 filing math is a small bonus. Foreign qualification into the state of operation erases the fee savings of a non-Missouri formation in most cases, and the home-state analysis still applies.

The profile that does not fit is a venture-backed company headed for institutional capital. Those companies end up in Delaware on the investor's insistence, and forming in Missouri first means a conversion later. If you know you are raising this year, start in Delaware and skip the step.

For an owner filing a straightforward single-member or member-managed LLC in Missouri in May, the sequence is: reserve the name if you need time, file Articles of Organization online for $50, draft an operating agreement that reflects the management structure you checked on the form, get the EIN, register with the Department of Revenue for whatever taxes the business actually owes, and then do nothing further with the Secretary of State until something substantive changes. The absence of the next filing on the calendar is the feature.

Sources

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