Doing business in Missouri: The basics

  • Published: Monday, Feb. 25, 2019

Owning and operating a small business can be a tremendously fulfilling and rewarding way of life, but it is not always an easy one. No one considering it should make the decision lightly. A great deal of thought and research should go into making a decision that will affect you and your family for a long time to come.

Many entrepreneurs have the motivation, desire and talent, but do not take the time to properly investigate and research the business they are interested in starting and adequately prepare to be in business.

Similar to the game of chess, success in small business starts with decisive and correct opening moves. And although initial mistakes are survivable, it usually requires skill, discipline and hard work to regain the advantage. Some of the basic skills anyone must have to run any kind of business include:

  • Basic money management skills. While you don't need to have a lot of money to start a business successfully, you do need the ability to make the most of the money that you have. Being able to focus on the bottom line and pay attention to the numbers is as essential as the ability to price your products and services, manage your cash flow, and make sure you collect payment for the work you do. If you are lacking in these skills you can get training in business courses, books and so forth.
  • A marketing mindset. You aren't truly in business until you have business. No matter how much your product or service is in demand, or how great a job you do, if people don't know about you, you won't have much business. You must be able to make your business visible to the people who need it, and this means understanding marketing.
  • Self-management skills. To make it on your own, you must become a goal-directed and self-motivated individual. You must be able to get yourself started every day, stick to business and close the door on work at the day's end.
  • Time management skills. In your business, you will need to wear many hats, from chief executive officer to janitor. You'll have to do the business, get the business and run the business. This means you'll need to manage your time effectively to make sure the most important and urgent things get done in a timely fashion.
  • Basic office organization. Since one of the roles you'll probably play is that of your own office administrator, you will need to be able to organize, equip and manage your office space so that you can work effectively in it, having a place for everything and keeping everything in its place so that you can find it easily when you need it.

Source: "The Best Home Businesses For The 90's", second edition, by Paul and Sarah Edwards, 1994, published by G.P. Putnam's Sons.

  • Show/Hide

    Why do small businesses fail?

    A study conducted by the U.S. Small Business Administration looked at reasons for small business failure. Here are the major reasons ranked according to frequency:

    • Inadequate front-end planning. No business plan prepared; no feasibility study done and no cash flow projections done.
    • Insufficient capital for startup and back up. Even the most dedicated workaholic cannot overcome ongoing capital deficiencies due to startup losses.
    • Inexperienced management. Insufficient experience in the management and day-to-day operations of the business or of any business.
    • The wrong location.Low traffic, no expansion area, changing characteristics of the neighborhood. The customers are out there, but the business is not convenient because of driving and parking distance, transportation costs and employee unwillingness to live in the community.
    • Inventory mismanagement. Too much of the wrong inventory.
    • Too much capital in fixed assets. The failure to properly anticipate the cost of equipment and real estate needed to start and expand.
    • Poor credit practices. Failure to properly extend and control credit policy and practices.
    • Unplanned expansion. If one location is doing well, a second site doesn't mean the business will do twice as well unless management is available.
    • Having the wrong attitude. Not ready to work longer and harder than ever before; too much money in trappings and appearance.
    • Inadequate records and financial knowledge.
    • Unwillingness to employ and work with a banker, accountant and a lawyer.
    • Lack of managerial foresight. Failing to build staff to compensate for the weaknesses of the founder or owner; failing to adequately compensate second-line management. One solution to these problems is education. For a wide range of business training, including individual counseling and programs for groups of business people, contact your local Small Business Development Center (SBDC).


    Find a location

  • Show/Hide

    Writing a business plan

    One of the first steps in a new venture is the development of a business plan. The business plan describes the business, its product or service, market, staffing and financing needs. A well-prepared business plan serves several purposes:

    • For the new business, it helps the owner determine the feasibility and desirability of pursuing the steps necessary to start a business.
    • For the company seeking financing, it is an important sales tool for raising capital from outside investors.
    • For an existing company, the business plan forms the basis of a more detailed operational plan and thus becomes an important management tool for monitoring the growth of the firm and charting future directions.

    A business plan is the written expression of your business idea. It is obviously important to anyone thinking of starting a business, but is also useful for those already in business. The process of writing down everything involved in bringing the idea to reality requires dealing with all the varied aspects of that business. It forces you to take an objective look at the entire idea and should permit you to see areas that need re-thinking. The plan will help you sort through things logically and should result in a sound, usable plan with which to work.

    Please refer to Business Plan for a more complete discussion of business plans.

  • Show/Hide

    Record keeping

    Every business, no matter what size, must keep written records of the transactions that take place.

    In addition to avoiding costly errors, good records tell you if you are making a profit or losing money, provide you with accurate tax information, and give you the information needed to see if and where improvements can be made. These records will be required by your financial institutions and local, state and federal government agencies, as well as for your own information. The IRS allows you to choose the method of record keeping that is best suited to your circumstances.

    If you are already in business and not keeping records, start immediately. After you get your system set up, you might want to work backwards to the first of the year so that you have as complete information as possible for your year-end records. If you are starting a new business, you will need an estimate of income and expenses to secure financing if needed; or, if your own resources are adequate, you will still want to know how you are doing financially. To determine if a profit is being made, you'll need to figure your startup costs and your operating costs. Startup costs are the one-time expenses necessary to start your business, such as equipment expected to last a long time. Operating costs are those that keep recurring, such as purchasing materials needed for making the product.

    Once your record keeping system is set up, record all transactions promptly. It is also a good idea to establish a definite time each week or month to pay bills, reconcile the bank statement and do other tasks.

    "Accounting" does not necessarily mean "keeping books." What you really need is some organized method to track all of the business activity generated by each of your transactions and will provide you with the reports and information required by taxing and regulatory authorities.

    Sound accounting practices can mean more profits. The record keeping system need not be elaborate. Too many records can be as ineffective as too few. The system used should:

    1. Maintain a record of all business transactions through:
      1. Daily (or periodic) summary of cash receipts
      2. Disbursement journal
      3. Business checkbook
      4. Employee compensation record (including withholding, Social Security and other taxes)
      5. General ledger (a summary of all subsidiary ledgers, including cash receipts, disbursements and other transactions); asset register (including depreciation when applicable), which should also include accounts receivable, accounts payable and an inventory system. Reflect periodic operating results and financial condition in a manner understandable by management.
    2. Protect the assets of the business from errors, fraud and carelessness. Provide a basis for business planning by showing the results of past decisions and facts needed for future decisions.

    The system also must be designed to generate information that is periodically required by taxing and other regulatory authorities.

    There are numerous computer software programs on the market as well as accounting forms and systems. Many trade associations offer standard accounting systems for member businesses.

    The Missouri Small Business Development Centers frequently teach classes on record keeping. See class descriptions.

    If you wish, you can consult an accountant for assistance in setting up an accounting system, or hire one to do your books for you. If you need assistance in locating an accountant, contact the Missouri Society of Accountants.

    Checklist for good records

    • Open a business checking account. Don't use your personal checking account for your business. The cost of another account is minimal compared to the confusion of business matters in your personal account.
    • Pay all bills by check. Note what was purchased with each check. This is your record of having paid bills and enables analysis of expenditures.
    • Use petty cash sparingly. Only when absolutely necessary should you make payments from petty cash and then be sure you have receipts including the purpose of all expenditures. Then write a check to petty cash to keep the checkbook complete.
    • Record all sales. Use sales tickets, duplicate receipts, copies of invoices, cash register tape or some other system that itemizes each sale. This enables analysis of sales and provides a record of who has paid or not paid.
    • Endorse all checks immediately. Endorse checks "for deposit only" to your account in your bank.
    • Deposit receipts often. Don't keep cash or checks around your place of business. They invite theft, they can get lost, and the money should be put to work for you immediately.
    • Label bank deposit slips completely. They provide a good record of sources of income and back up sales records.
    • Balance bank account monthly. Do it when the statements come from the bank.
    • Inventory all items regularly. Count all items in inventory and include the purchase cost of each item. Absolutely take inventory once a year. A good business practice is to take inventory twice a year and better practice is quarterly inventory.
  • Show/Hide

    Professional services

    It is always advisable to enlist the services of an accountant and a lawyer when considering a new business operation. Their advice and guidance can help you choose the form of business organization best suited for your particular situation, thus increasing the chances of business success.


    Your lawyer should be experienced in business matters. Ask your banker to recommend a law firm or individual lawyer. Ask other successful business owners whom they use. Be sure to discuss fees in the initial interview, and ask if he/she represents businesses similar to yours. A reputable lawyer will welcome an open discussion on both subjects. Do not feel obligated to hire the first lawyer with whom you discuss your business plan. Find one with whom you are comfortable and you feel you can trust.

    Another way to find a competent attorney is through the Missouri Lawyer Referral Service operated by the Missouri Bar Association. Their attorneys will confer with you for up to 30 minutes for a fee of $25.


    Although an accountant is not mandatory for starting a new business, it is highly recommended that one be consulted. Again, seek recommendations from your lawyer, banker and other business associates. Don't feel obligated to hire the first accountant that you interview.

  • Show/Hide

    Checklist for starting a new business

    As you proceed through the process of starting your business, use the following checklist as a guide to make sure that you have covered all the requirements for starting your business.

    Please explore our site for information, forms, publications and links to training. For personal assistance, locate a Small Business Development Center office near you.

    Find a location

    In addition, the staff at Missouri SourceLink can research and assist with specific questions about business licenses, registrations and other issues.

    • Show/Hide

      Critical steps in the planning process

      • Register the name of your business with the Secretary of State by filing the necessary forms and paperwork. The way to register a name is different for each type of legal structure.
      • Choices of legal structures are sole proprietorship, partnership, limited partnership, Limited Liability Company (LLC) or corporation. A discussion of the issues involved in the legal formation of your company can be found at Legal formation. Each legal structure has unique registration requirements, outlined below.
      • To check on the availability of a business name, search the Secretary of State's registered business entity online database at
      • Obtain local business licenses through the city or county government (generally this is the city clerk or county clerk).
      • A sales tax number or use tax is needed if you will be selling at retail or wholesale. Collection of sales tax is required by any business making retail sales and retailers should complete Missouri DOR form 2643. Search the forms on the Missouri Department of Revenue website ( to get a sales tax number or sales tax exemption.
      • Those businesses buying wholesale or operating solely as a wholesaler should complete a Missouri DOR form 149 Sales/Use Tax Exemption Certificate (search at and provide it to their supplier.
      • Federal Identification Number (EIN). Generally required only when you have business partners, hire employees, form a corporation or LLC; however, your bank may require an EIN to open a business account. Go to the IRS website at to get form SS-4.
    • Show/Hide

      Hiring employees

      Before you hire that employee

      • Obtain a Federal Employer Identification number (IRS form SS-4) Get form (PDF)
      • Obtain a Missouri Employer withholding number by filing Missouri Department of Revenue form 2643, Missouri Tax Registration Application. State tax is then withheld from the employee's payroll and remitted to the Missouri Department of Revenue. More info
      • File form 2699 with the Missouri Department of Labor & Industrial Relations to register and contribute to the Missouri unemployment compensation fund. You will need to make appropriate arrangements to pay workers compensation insurance. 2699 form
        Learn more

      Once you have hired the employee

      • Each employee must complete IRS form W-4 and Missouri form W-4. A copy of the federal W-4 or the Missouri form must be forwarded to the Missouri Department of Revenue within 20 days of the new hire. IRS W-4 form
        MO W-4 form
      • The employee must complete an I-9. The employer keeps this form on hand in a separate file. Visit the U.S. Citizen and Immigration Services website at to learn more. Learn more about I-9
      • With the first payroll you will:
        • Withhold state income tax and federal income tax at a percentage determined by salary and exemption information stated on the form W-4.
        • Withhold 6.2 percent of the employee's salary for Social Security taxes.
        • Pay 6.2 percent of the amount of the employee's salary for Social Security taxes.
        • Withhold 1.45 percent of the employee's salary for Medicare taxes.
        • Pay 1.45 percent of the employee's salary for Medicare taxes.
        • Make monthly payment of these taxes to an approved banking institution on the 15th of the month.
        • File reports with the government on a quarterly and annual basis and issue W-2 reports to employees at the end of the year.
        • For more information, visit the IRS website at Download IRS Publication 15, Employers' Tax Guide for a good resource.
          Employers' Tax Guide
        • Review OSHA guidelines and check workplace safety procedures with all employees.

        Additional suggestions

        • Evaluate the feasibility of your business idea. Refer to Evaluating Your Business Idea to evaluate your idea and estimate your startup costs before you spend a lot of time and money.
        • Prepare a written business plan. For information on writing a business plan, refer to Business Plan
        • Check on local zoning ordinances, regulations, building permits and fire codes through the city or county government.
        • Determine whether your business requires a state or federal license or permit to operate. Also check on state or federal regulations that may affect your business. Information on selected types of businesses is available online.
        • Select a banking institution and open a business account.
        • Contact an insurance agent and consult with him or her regarding fire, accident, liability, theft and other types of commercial insurance.
        • Contact an accountant. Determine if you are required to make quarterly estimated income tax payments to the IRS and self-employment tax payments. Information on taxes for small business or self-employed individuals can be found at
          • File annual tax information for state and federal government.
          • Keep a good set of records for all business activities.