LLC vs S-Corp in Missouri


Steve Goldstein
Steve Goldstein
Business Formation Expert
Steve Goldstein runs LLCBuddy, helping entrepreneurs set up their LLCs easily. He offers clear guides, articles, and FAQs to simplify the process. His team keeps everything accurate and current, focusing on state rules, registered agents, and compliance. Steve’s passion for helping businesses grow makes LLCBuddy a go-to resource for starting and managing an LLC.

All Posts by Steve Goldstein →
Business Formation Expert  |   Fact Checked by Editorial Staff
Last updated: 
LLCBuddy™ offers informative content for educational purposes only, not as a substitute for professional legal or tax advice. We may earn commissions if you use the services we recommend on this site.
At LLCBuddy, we don't just offer information; we provide a curated experience backed by extensive research and expertise. Led by Steve Goldstein, a seasoned expert in the LLC formation sector, our platform is built on years of hands-on experience and a deep understanding of the nuances involved in establishing and running an LLC. We've navigated the intricacies of the industry, sifted through the complexities, and packaged our knowledge into a comprehensive, user-friendly guide. Our commitment is to empower you with reliable, up-to-date, and actionable insights, ensuring you make informed decisions. With LLCBuddy, you're not just getting a tutorial; you're gaining a trustworthy partner for your entrepreneurial journey.
LLC vs. S Corp in Missouri

Making choices as an entrepreneur is a big challenge, especially when choosing what business structure to form in Missouri. When it comes to a business structure, you can choose whether to have a C-corporation, S-corporation, Sole Proprietorship or an LLC in Missouri. Before you start Missouri LLC filing, you must compare which structure suits you. You might be considering two popular options: a Limited Liability Company (LLC) or an S Corporation (S-Corp). Both of these structures offer distinct advantages and protections, but selecting the right one depends on various factors, including your business goals, tax preferences, and management style.

If you are confused with Missouri LLC vs. S-Corporation, and thinking which one is better and more suitable for the business that you will form, there are a few things that you should consider. Before we get through this article, you should understand what an LLC and S-Corporation mean in Missouri.

LLC vs. S-Corp: Definition

While forming an LLC, you must follow some major steps. It is a business structure that protects your personal assets from getting affected by business liabilities. On the other hand, the S Corp is not a conventional business structure, but it is tax status that your can file with the IRS. S Corp does not provide personal asset protection like an LLC. Here are the detailed definitions of the two-

What is an LLC in Missouri?

A limited liability company (LLC) is a formal business structure that provides personal asset protection. Under this structure, the LLC owner/member can save his/her personal assets in case the business is in debt or is being targeted with a lawsuit. In some special cases, if your company is legally sued, the other party can go after your personal assets. This is called piercing the corporate veil, where you become personally liable for the company’s debt.

Forming an LLC in Missouri gives you a pass-through tax benefit where you don’t have to pay an income tax based on your business revenue; instead, the income tax will be calculated based on your personal income.

What is an S-Corp in Missouri?

An S-Corporation (S-corp) is not a type of corporate entity, unlike a limited liability company (LLC) or other business structures. It’s a tax classification that might result in significant financial savings for corporations and LLCs but in different ways. S-Corporation is similar to LLC, except that the IRS treats it as a corporation for tax purposes.

S-corp is a prominent alternative to the LLC. Unlike a conventional C-corp, S-corp is more suitable for small and medium businesses, such as businesses with 100 shareholders.

LLC Vs. S-Corporation: Which is More Preferable in Missouri?

In Missouri, forming a business is crucial since you need to be adequate in your decision, especially when you think if Missouri LLC or an S-Corporation in Missouri is preferable. An S-Corporation is a tax classification that some small businesses are qualified for, whereas an LLC is a legitimate company form. By submitting a document to the Internal Revenue Sector (IRS), corporations and LLCs can choose S-Corporation taxation. An S-Corporation can be less formal than forming an LLC and doesn’t normally provide the same protection. Also, unlike LLC, S-Corporation in Missouri doesn’t provide the same protections entrepreneurs seek from an LLC. It’s important to consider your options when launching a business from a legal and tax point of view.

It is better to consult a legal professional before you set up an LLC or S-corp. We shared basic differences and how you can form an LLC and S-corp. But it is always recommended to consult a professional before making any decision.

LLCBuddy Editorial Team

Tax Difference Between Missouri LLC and S-Corp in Missouri

There is a difference between LLC and S-Corporation when it comes to paying taxes. Based on Federal and State Tax differences between the two, you can determine if S-Corporation or LLC in Missouri is suitable for your business.

Federal Taxes: There are a few federal tax factors to consider when selecting whether to operate an LLC or S-Corporation in Missouri. Tax differs in terms of Pass-Through Taxes and Self-Employment Taxes.

Pass-Through Taxes: LLC and S-Corporation in Missouri are the same in terms of pass-through taxation at the federal level. LLCs and S-Corporations do not pay federal income taxes as separate legal entities because of pass-through taxation. Only their owners are required to pay federal income taxes on their portions of the business income. The company does not pay twice the tax in this kind of taxation. Unlike LLCs and S-Corporations, C-Corporations in Missouri are mandated to have double taxation. It means that they must pay federal taxes at the entity level.

Self-Employment Taxes: Most LLC owners choose S-corporation taxation in Missouri to reduce their self-employment taxes. This is because if you own an S-corporation, you are not required to be self-employed. Instead, you can join the company as an employee and receive regular salary benefits. On the other hand, an LLC member must include their guaranteed payments and a portion of the LLC’s earnings in calculating their self-employment tax. Distribution of shares defines S-Corporation shareholders in terms of their corporate incomes.

Consider the scenario where you are the only owner of an LLC in Missouri with a $150,000 annual profit. And let’s say that $100,000 is a fair wage in your location for someone doing the same job as you. Under the default LLC taxation, you must pay self-employment taxes on the entire $150,000 profit. But, if your company is taxed as a Missouri S-Corp, you will only be responsible for paying payroll taxes on the standard wage of $100,000. Income tax will still apply to the remaining $50,000.

Missouri State Taxes: At the state level, there aren’t any significant tax differences between regular LLCs and S Corporation LLCs. In terms of the annual LLC fee in Missouri, it costs $7 that can be paid to the MT Secretary of State. Of course, before forming the whole LLC, you must pay the initial fee of $105 (by mail and $50 online).

On the other hand, you also need to pay taxes if you form an S-Corporation in Missouri; besides, you must pay the S-Corp filing fee and an annual report fee after a year of establishing your S-Corp. You must also go to the MT Secretary of State to pay this.

How do Missouri LLCs and S-Corporations Handle Liability Protection?

In Missouri, you have no personal responsibility for the financial and legal liabilities of an LLC you will form. An S-Corporation does not provide liability protection because it is a tax designation rather than a distinct business entity. Whatever liability defense an S-Corporation provides is provided by the underlying business entity that chose the tax status. You will have the liability protection the LLC offers if it chooses S-Corporation status for tax purposes.

LLC Vs. S Corporation Ownership Requirements Comparison

Strict ownership requirements exist for LLCs and S-Corporations in Missouri. LLC ownership regulations are strict because a new member can only be accepted with the approval of all existing members. On the other hand, S-Corporation ownership regulations are also strict because only specific people are permitted to become shareholders. Also, an S-Corporation can’t have more than 100 shareholders and needs one class of stock.

The following are the reasons why some cannot be shareholders in the S-Corporation in Missouri.

  • Insurance business
  • Domestic and International sales corporations
  • Partnerships
  • Corporations
  • Unauthorized Immigrants
  • Certain financial institutions

Although you know most of the reasons regarding the ownership requirements of both LLC and S-Corporation, you should still seek legal advice in preparation for your business and it is best to visit LLCBuddy for your Missouri LLC or Missouri S-Corp.

Which is Easier to File in Missouri: LLCs or S-Corporations?

Filing an LLC or S-Corporation in Missouri takes time and preparation. Even though it is not as easy as it seems, something manageable still makes it not difficult. LLC and S-Corporation can be filed by Missouri Registered Agent. However, in order to establish an LLC in Missouri, you must submit a Articles of Organization to the Missouri Secretary of State. Your Articles of Organization must contain information for your LLC, along with payment of the associated filing fee.

In addition, you need to submit more papers to make the Missouri S-Corporation election. File a Form 8832 to inform the Internal Revenue Sector (IRS) that you prefer to tax your LLC as a corporation rather than a partnership. Then you will then submit Form 2553 to choose S-Corporation status.

Do not forget that you must submit annual tax returns and reports after creating your LLC in order to maintain legal compliance.

Important Information

Who Pays More Taxes, an LLC or S-Corporation?

Taxes differ for LLC and S-Corporation in Missouri because it depends on the tax purposes and how much profit will be generated. Usually, LLCs are frequently taxed at personal rates and LLC owners can elect to be treated as a separate company with its own federal tax identification number.

On the other hand, owners of S-Corporations must receive a salary that includes Social Security and Medicare taxes. The owner, however, can get dividend income or some of the leftover profits, but not as an employee; thus, they won’t be subject to Social Security and Medicare taxes on that money.

Should I Convert an LLC to S-Corporation?

Since your business assets are separated from your personal assets if you’re a sole proprietor, it may be advisable to form an LLC. You are not restricted to modifying the structure of your LLC to an S-Corporation. Although an S-corporation must have a board of directors, a maximum of 100 shareholders, and adhere to more regulations, it would be ideal for more companies with more shareholders.

How to Structure an LLC to S-Corporation?

To structure an LLC to S-Corporation in Missouri, you must submit Form 2553, Election by a Small Business Corporation, to the IRS in order to choose S-corp taxation. Filing a form 2553 should be done 75 days after the formation of your S-Corp, or not more than 75 days after the beginning of the tax year in which the election is to take effect.

If your LLS-Corp has passed the deadline of 75 days, you must also file Form 8832, Entity Classification Election, in order to opt to be taxed as a corporation. Then you would send Form 2553 and Form 8832 jointly by certified mail from the USPS. In Missouri, you can file your form 2553 in the Department of the Treasury Internal Revenue Service Center – Kansas City, MO 64999 Fax: 855-887-7734.

FAQs

What is the difference between an LLC and an S-Corp in Missouri?
In Missouri, LLCs are organized under the Missouri Revised Statutes, while S-Corporations are incorporated under the Missouri Business Corporation Act. LLCs have a more flexible management structure and pass-through taxation, while S-Corporations have a more formalized structure and provide the possibility of double taxation.
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. The filing fee is $50 and must include the name of the LLC and the names and addresses of the organizers.
What is the cost to register an S-Corp in Missouri?
The cost to register an S-Corp in Missouri is $62. The filing fee is payable to the Secretary of State’s office.
What are the advantages of forming an LLC in Missouri?
LLCs provide greater flexibility for the owners in terms of management structure and taxation. Additionally, LLCs are generally easier and less expensive to form and maintain than S-Corps.
What are the advantages of forming an S-Corp in Missouri?
S-Corps provide greater protection from personal liability, and may offer the possibility of double taxation, which can be beneficial for businesses with high incomes. Additionally, S-Corps have a more formalized management structure which can be beneficial for larger businesses.
What is an LLC in Missouri?
A Limited Liability Company (LLC) is a type of business entity in Missouri that combines elements of a partnership and a corporation. It is designed to provide protection to its owners from personal liability for business debts and obligations.
What is an S-Corp in Missouri?
An S-Corp is a type of corporation in Missouri that is taxed under Subchapter S of the Internal Revenue Code. It offers the same limited liability protection as an LLC but is typically more complex to set up and maintain.
Are LLCs in Missouri subject to double taxation?
LLCs in Missouri are not subject to double taxation. The LLC is a pass through entity for tax purposes, meaning that all profits and losses flow through to the owners, who then report them on their individual tax returns.
Are S-Corps in Missouri subject to double taxation?
S-Corps in Missouri are not subject to double taxation. Profits and losses flow through to the owners, who then report them on their individual tax returns.
How do I form an S-Corp in Missouri?
To form an S-Corp in Missouri, you must file articles of incorporation with the Secretary of State, obtain a registered agent and obtain an IRS tax identification number. You must also complete other required paperwork.
What are the filing fees for forming an LLC in Missouri?
The filing fee for forming an LLC in Missouri is $50.
What are the filing fees for forming an S-Corp in Missouri?
The filing fee for forming an S-Corp in Missouri is $50.
What are the annual fees for LLCs in Missouri?
The annual fee for LLCs in Missouri is $50.
What are the annual fees for S-Corps in Missouri?
The annual fee for S-Corps in Missouri is $50.
Are there any other associated fees for LLCs in Missouri?
Some LLCs in Missouri may be required to pay an additional annual fee of $25 to the Secretary of State.
Are there any other associated fees for S-Corps in Missouri?
Some S-Corps in Missouri may be required to pay an additional annual fee of $25 to the Secretary of State.
How long does it take to form an LLC in Missouri?
It usually takes about 5-7 business days to form an LLC in Missouri.
How long does it take to form an S-Corp in Missouri?
It usually takes about 5-7 business days to form an S-Corp in Missouri.
What are the reporting requirements for LLCs in Missouri?
LLCs in Missouri are not required to file annual reports with the Secretary of State.
What are the reporting requirements for S-Corps in Missouri?
S-Corps in Missouri are required to file annual reports with the Secretary of State.
What are the tax rates for LLCs in Missouri?
LLCs in Missouri are pass through entities, meaning that all profits and losses flow through to the owners, who then report them on their individual tax returns.
What are the tax rates for S-Corps in Missouri?
S-Corps in Missouri are pass through entities, meaning that all profits and losses flow through to the owners, who then report them on their individual tax returns.
Can an LLC in Missouri have more than one owner?
Yes, an LLC in Missouri can have more than one owner.
Can an S-Corp in Missouri have more than one owner?
Yes, an S-Corp in Missouri can have more than one owner.
What is the minimum number of members or shareholders required to form an LLC in Missouri?
The minimum number of members or shareholders required to form an LLC in Missouri is one.
What is the minimum number of members or shareholders required to form an S-Corp in Missouri?
The minimum number of members or shareholders required to form an LLC in Missouri is one.
Can an LLC in Missouri issue stock?
No, an LLC in Missouri cannot issue stock.
Can an S-Corp in Missouri issue stock?
Yes, an S-Corp in Missouri can issue stock.
What is the liability protection for LLCs in Missouri?
LLCs in Missouri offer protection from personal liability for business debts and obligations.
What is the liability protection for S-Corps in Missouri?
S-Corps in Missouri offer the same limited liability protection as an LLC.
Is there a minimum capital requirement for LLCs in Missouri?
No, there is no minimum capital requirement for LLCs in Missouri.
Is there a minimum capital requirement for S-Corps in Missouri?
No, there is no minimum capital requirement for S-Corps in Missouri.

Also Read

Why Missouri LLC Vs S Corp is So Important

One key difference between a Missouri LLC and an S Corp is the way in which they are taxed. LLCs are pass-through entities, which means that profits and losses are reported on each member’s individual tax return. This can be advantageous for businesses that want to avoid double taxation, as income is only taxed once at the personal level. On the other hand, S Corps are also pass-through entities, but they are subject to specific tax rules that can offer potential tax savings for business owners.

Another important factor to consider when choosing between a Missouri LLC and an S Corp is the level of liability protection that each structure provides. LLCs offer limited liability protection, which means that the personal assets of members are generally protected from business debts and liabilities. This can give business owners peace of mind knowing that their personal assets are safe in the event of a lawsuit or other legal action. S Corps also offer limited liability protection, but they may have stricter rules regarding corporate formalities that need to be followed in order to maintain that protection.

Additionally, the management structure of a Missouri LLC versus an S Corp can be an important consideration for business owners. LLCs offer flexibility in terms of management, as members have the option to either manage the business themselves or to appoint a manager to handle day-to-day operations. S Corps, on the other hand, must have a board of directors and officers who are responsible for managing the company. This can be a more formal arrangement that may not suit the preferences of all business owners.

Overall, the choice between a Missouri LLC and an S Corp can have a significant impact on the structure and operation of a business. Knowing the key differences between the two structures can help entrepreneurs make informed decisions that best align with their goals and priorities. It is important for business owners to consult with legal and tax professionals when considering the formation of a new business entity, as the decision can have lasting implications for the success and growth of the company.

Conclusion

Even though you can choose a different corporate structure, consider whether it will primarily assist your organization. Striking the perfect balance between corporate benefits and legal protection that suits your particular needs is important. In forming an LLC or S-Corp in Missouri, you must be aware that every detail is well-formed so that starting your business will be successful. And, if you would like us to help you form a Missouri LLC and S-Corp in Missouri, read our other business guides.

Leave a Comment