LLC vs S-Corp in Missouri

Missouri has a state personal income tax and a state corporate income tax, so the LLC vs S-corp math involves both federal and state-side effects. The Missouri Secretary of State handles entity formation under Missouri Revised Statutes Chapter 347 (LLCs) and Chapter 351 (for-profit corporations). The IRS handles tax classification via Form 8832 and Form 2553. A federal S corp election is recognized for Missouri income-tax purposes. Missouri LLC basics. - Articles of Organization filed with the Missouri Secretary of State under Missouri Revised Statutes Chapter 347 (Missouri Limited Liability Company Act). - Filing fee: $50 online or $105 by mail or in person. Source: Missouri Secretary of State Business Forms (https://www.sos.mo.gov/business/corporations/forms). - Missouri LLCs are not required to file an annual report with the Secretary of State (unlike some neighboring states). - Single-member LLCs default to disregarded entity for federal and Missouri tax. Multi-member LLCs default to partnership tax. Either can elect S corp treatment with Form 2553. Missouri S corp basics. - A federal S corp election is recognized by Missouri. The S corp files Missouri Form MO-1120S, and shareholders report their share of income on their Missouri individual returns. - Missouri personal income tax is progressive; the top rate has been stepped down under successive reforms and for tax year 2026 the top marginal rate is scheduled to be approximately 4.7%, with lower brackets at reduced rates. Confirm the current rates with the Missouri Department of Revenue, which publishes updates each tax year. Source: Missouri Department of Revenue (https://dor.mo.gov/). - Missouri corporate income tax rate is 4.0% for tax years beginning on or after January 1, 2020, applied to Missouri taxable income of C corporations; S corps generally pass income through to shareholders rather than paying the corporate tax, but some S corp-specific items are taxed at the entity level. - Payroll. An S corp must pay its owner-employee a reasonable W-2 salary. Missouri has unemployment insurance through the Division of Employment Security and withholding through the Department of Revenue. Why a Missouri trades shop might still elect S corp. The primary reason is federal self-employment tax savings. A disregarded-entity LLC owner pays self-employment tax on the full net profit. An S corp owner-employee pays payroll tax on wages only; the distribution portion avoids self-employment tax. Missouri's state-tax treatment of the S corp does not add meaningful penalty, so the S corp election is largely a federal decision. Rule of thumb. Start as a Missouri LLC. When annual profit after a reasonable owner wage is high enough that payroll-tax savings clear the payroll, retirement-plan, and accounting costs, elect S corp. A CPA with Missouri construction clients can run the breakeven for your numbers and confirm current rates and credits, which Missouri has adjusted on multiple occasions since 2018.