How to Start a Business in Missouri: Accounting & Tax Checklist

An operational accounting and tax checklist for a new Missouri company

“Starting a business is as much an opportunity as it is an obligation. For Missouri entrepreneurs, solid accounting and tax preparation from the get-go avoids bumps in the road, minimizing penalties and positioning the business for future growth. This checklist features a roundup of the most important accounting and tax steps to follow when you start business missouri accounting in order to stay compliant.

Choose the right business structure

Choose whether you want to be a sole proprietorship, partnership, limited liability company (LLC) or corporation. Each adds a layer of complexity to the way you track income, pay taxes and report to the state. The decision will impact filing requirements, personal liability exposure and the way that profits are taxed — so make sure to align the structure with your long-term goals and risk appetite.

Complete state and local registration

Register your business with the state filing office and receive any required local permits and licenses. In order to form a new business in Missouri, you will generally need to file formation documents and register an LLC or corporation as well as registering for a trade name if you will use a name other than your business name. Check local or county permits relating to health, safety, or professional conduct when required.

Get a federal EIN from the U.S. government

An EIN is important for tax filing, hiring employees, opening a business bank account and keeping business finances separate from personal ones. Get a missouri ein early on; you will need one when filing payroll tax forms, lenders' applications and other documents.

Open a business bank account Setting up a dedicated business bank account is essential for accounting purposes and helps to keep your personal finances separate from your business finances.

Duplex bank accounts make bookkeeping easier and provide extra liability protection. Put all income and expenses through the business bank account – Only use this for your business. This division means tax filing is more straightforward and it’s easier to generate financial statements and reconcile monthly activity.

Establish an accounting system and chart of accounts.

Select an accounting method (cash or accrual) and generate a chart of accounts, which is specific to your type of business. Your chart of accounts will include revenue streams, cost of goods sold, operating expenses, payroll liabilities and tax-related accounts. It makes month end reporting and tax preparation much easier when you have a uniform chart of accounts from the beginning.

Implement bookkeeping routines

Good bookkeeping can also help during tax time. Keep track of income and expenses on a weekly basis, reconcile bank accounts monthly, keep receipts/ invoices. “Track sales tax collected separately and book payroll tax liabilities as they are incurred.” And maybe standardize the categories of expenses and do regular review to catch discrepancies early on.

Understand sales tax obligations

If you sell taxable products or services, collect sale tax through the state and any local area recorded for sales collection. Decide if your product/service is taxable Create liability and hold all collected Sales Tax till you remit it. Be aware of your filing due date and frequency according to estimated collections.

Get ready for payroll and employment taxes

If you’re going to have employees, apply for employer withholding tax accounts at the state and federal level. Establish procedures for payroll withholding of income tax, Social Security and Medicare contributions, and unemployment insurance (if applicable). Monitor due dates for payroll tax deposits so you dodge penalties.

Estimate income tax payments ahead of time

Quarterly estimated taxes force many small-business owners and sole proprietors to automate these payments. Calculate taxable income, analyze estimated deductions and pay the IRS and state tax agency on time to avoid paying penalties for underpayment.

Keep an eye on when to process 1099s, and contractor payments

When you hire independent contractors, get a completed payee information form and document payments throughout the year. If your payments exceed certain reporting thresholds, you must prepare and submit year-end informational returns. Getting the classification between employees and independent contractors right is very important for tax.

Organized records and the importance of a retention schedule

Keep your tax returns, bank statements, pay stubs and receipts for three to seven years depending on the type of record. Keep normal digital and physical filing neat and organized so retrieval is easy in audits or financing reviews.

Understand depreciation and the rules for tracking assets

For large purchases such as equipment or vehicles, record purchase date, cost and expected useful life. Use the correct depreciation methods and maintain schedules to reflect any deductions taken on your tax returns. You want your fixed asset records to be accurate and these also facilitate dealing with insurance and resale values.

Take note of local tax and licensing nuances

Independent cities may issue their own business licenses or personal property taxes. Check applicable city or county filing requirements and keep a calendar for renewals and renewal of occupational licenses.

Create a tax calendar and compliance checklist

Make a calendar of all federal, state and local filing deadlines: income tax payments, payroll deposits, sales tax remittances and business registration renewals. Automate reminders and check the calendar quarterly to reflect any changes in your business rhythm.

Seek professional advice when needed

Consultation with a tax advisor or accountant can resolve other concerns about entity election, tax elections, payroll setup and available credits/deductions. Premature guidance can save future tax and help you align your accounting process to the advance of regulators.

Closing: Start clean, stay organized

When you begin business missouri accounting the right way, (start your business by registering it the right way, get a missouri ein and start with good bookkeeping/tax habits) you set yourself up correctly for stability and success. Continual financial process checks, well-thought-out tax planning and good recordkeeping provide the triple check to save you time and dollars as well as maintain compliance within your business. Employ this checklist as a roadmap for the first year, and refer back to it on an annual basis to help guide you as your business develops.