Starting a business of any size is always a daunting prospect, but it takes on greater significance when planning to open anything more substantial than a mom-and-pop store. For example, you’ll not only have employees to contend with, but their payroll tax and other related expenses that tend not to overburden smaller operations.
Nonetheless, while all that might sound terrifying, opening a medium-sized business isn’t insurmountable…as long as you know the correct way to go about it. This post will cover a range of requirements that you need to meet if you wish to open something other than a small, sole proprietorship.
Make Sure You Have Insurance Coverage
Whether you want to go slow and steady or go all out, you will need insurance to cover you for when life decides to throw a spanner in the works and throw a massive curveball at you because it can.
While most states only require certain insurance (mainly aimed at covering employees), it’s often best to err on the side of caution and invest in some other options.
According to Missouri state law, any business with five or more part or full-time employees (which you will have as a medium-sized business) is required to carry workers’ compensation insurance.
Fortunately, this need not be a complicated task as numerous services assist companies to find a Missouri workers’ comp quote that will fit your size and ability. Nonetheless, whatever comp insurance you go for, make sure it has some added value, such as helping you lower your premiums through workplace improvements and so on.
As the name suggests, this is pretty broad-based insurance that covers a raft of things, including but not limited to:
- Bodily injury to customers (think slips and falls etc.)
- Property damage
- Some personal injury (excluding workers’ compensation)
However, you should understand the limitations of this coverage to ensure you aren’t paying for something it doesn’t cover. It does not cover auto accidents caused by your vehicle, which many people believe it does. If your company uses vehicles to perform a task related to general operations, you should opt for additional auto insurance (Yep, these things can start to add up pretty quickly).
Commercial Property Insurance
Whether you rent or own property to run your business, it’s prudent to look at obtaining commercial property insurance. Not only will this protect you from damage to the building, but it can also cover equipment in case of damage or theft.
Business Income Insurance
The pandemic showed many businesses that you never know what’s around the corner and what might come along and disrupt the industry. This coverage is used to help you pay when things go awry and you need help to cover ongoing expenses.
Obtain An Operating License From The Missouri Secretary Of State
When starting any new company, obtaining an operating license from the Missouri Secretary of State is essential. This is required for all businesses that wish to operate in the state and provide products or services legally. The licensing process requires business owners to submit registration paperwork, including their company’s articles of organization.
After completing this registration paperwork, business owners must also obtain a business identification number from the IRS so they can file taxes each year. Once the documents are filed and approved, the Secretary of State will issue a Certificate of Authority, which allows businesses to operate officially in the state.
Failing to register with the Secretary of State may result in hefty fines, so it’s essential to be sure that your business is correctly registered before beginning operations.
Prepare Articles Of Incorporation
When you are ready to start, one of the first steps is to prepare articles of incorporation. This document will lay out important information such as the purpose and objectives of your business, the names of initial directors, and outlines applicable laws that will govern the corporation.
Articles of incorporation spell out what processes will be used for holding meetings and electing directors. They also ensure that everyone associated with the corporation knows precisely how it should operate, giving structure and stability to the organization.
Additionally, filing these documents provides public notice that the company exists and has been registered in accordance with state law.
Draft Corporate Bylaws And Shareholder Agreements
Drafting corporate bylaws and shareholder agreements is an essential legal requirement when starting a company of a certain size in the Show-Me State. Corporate bylaws outline the rules, procedures, rights, and duties of your company’s officers, directors, and shareholders. They also establish numerous rules regarding how directors will operate and in what capacity (along with other general functions like the number of meetings etc.).
Shareholder agreements outline the responsibilities of each owner of your business and are signed when investing shareholders provide capital to the company. It defines the terms under which each shareholder can buy or sell their shares in the company and outlines any restrictions placed on their voting rights or participation within the business.
Open A Business Bank Account
While not strictly a legal requirement, it’s often advised nonetheless. However, having a dedicated business bank account allows you to keep accurate records of all transactions and income and separate personal funds from company funds. Additionally, it opens up opportunities for taking advantage of certain tax deductions and other benefits only held by limited companies that would not be possible without one.
Acquire A Employer Identification Number (EIN)
There is nothing more certain in life than death and taxes, and when it comes to the latter, you’d better believe it’s certain you will pay your dues! In fact, it’s a legal requirement to gain an EIN unless you’re a sole proprietor without employees. An EIN is necessary for any commercial organization and identifies your business for federal and state tax purposes.
Starting a company in Missouri is a big undertaking, and it requires significant effort to ensure you meet the myriad legal requirements. Knowing these regulations beforehand can prevent fines and other painful penalties that could knock operations off kilter. Hopefully, this guide has provided you with an understanding of the steps required to get your business up and running legally in this state.