A startup company in Missouri has several advantages in the state right from low operating cost to tax credits and easy availability of grants and loans for business expansion. It was ranked #1 in 2014 and became the best state for banking and is considered among the top 10 states in the nation where financial sector employment growth is concerned. According to the Tax Foundation’s State Business Tax Climate Index, the overall rank of Missouri is #15 in the State Business Tax Climate Index.
Advantages of setting up an LLC or Corporation
One of the salient aspects of the “Cave State” is the “Missouri Advantage”, which stems from the low operating costs and high return on investment. This is one of the reasons why companies like Edward Jones and VA Mortgage Center are based in the state. Let’s take a look at what advantages you can benefit from when you register a new company in Missouri:
Advantage#1: Salient benefits of Corporation or LLC
- Tax Credit Programs: After you register a new business in Missouri, you will be able to benefit from the various tax credit programs offered by the state including Business Facility Tax Credit Program, Small Business Incubator Tax Credit program, Missouri Works Program – Employment Tax Credit, and Work Opportunity Tax Credit program among others.
- Pass through taxation: If you register a new company in Missouri as an S corporation then the corporation or firm will not pay any income tax. Instead, the income or loss of the corporation will be passed on to the stockholders.
- Independent Life: One of the salient advantages of an S Corporation in Missouri is that it enjoys an independent life. The death or incapacitation of a stockholder will not disturb operations of the business.
- Sales Tax Exemption For Manufacturers: One of the business incentives programs for a startup company in Missouri LLC is the exemption on state sales tax and local use tax.
- Flexible Profit Distribution: An LLC has the opportunity to select different ways of distribution of profits.
- Limited Liability: If you register a new business in Missouri as an LLC then you will be able to enjoy limited liability protection. This means claimants can sue the LLC and not the owner or investors.
Advantage#2: Business Incentives
The number of small business in Missouri grew from 507,712 in 2015 to 523,459 in 2017 while the annual growth rate witnessed by the state was from 2.3% in 2016 to 3.6% in 2017. Business and economic growth has been driven by a variety of business incentives provided through state based programs. Once you register a new business in Missouri, you will be able to qualify for most of the programs. Let’s look at some of the top programs in this state:
- Missouri Works Program: This is a program focusing on employment tax credit. The aim of the program is to help new businesses in creating jobs and also help existing businesses to expand their facilities as they can now save on state withholding tax by receiving state tax credits.
- Missouri Alternative Fuel Infrastructure Tax Credit: This is another tax credit program that you can qualify for once you register a new company in Missouri. The benefit lies in installing and operating an alternative fuel charging station or an electric car through which you can receive credits of up to $20,000 or 20% of the eligible costs.
- Missouri Youth Opportunity Tax Credit: If your business provides opportunity to Missouri youth in the form of apprenticeship or internship then the business would be eligible to receive tax credits for up to 50% for monetary contributions.
- Enhanced Enterprise Zone Tax Credits: If you register a new business in Missouri Enhanced Enterprise Zone (EEZ) then you will be able to benefit from incentives offered by the local municipalities. You can receive tax credits on eligible investments including original cost of equipment, machinery, fixtures, furniture, and land and building among others. Map of EEZ zones.
Are there any Disadvantages of Incorporating in Missouri?
When you register a new business in Missouri, you can be rest assured that there is a wide variety of business incentives to leverage but are there any disadvantages? There are limited numbers of disadvantages that are dependent on the type of business you register for example: the disadvantage of an LLC is that it will get dissolved when a member dies or if it undergoes bankruptcy. Similarly, incorporation may lead to higher overall taxes. These disadvantages are far outweighed by the benefits and advantages of forming a business in Missouri.