A limited liability company (“LLC”) is an entity that allows the owner (also called a “member”) to maintain control over the entity and in many cases to still have the benefits of “limited liability.”
Limited liability means that the owner/member is not personally responsible for the business’s debts or obligations, except in certain circumstances.
In Missouri, LLCs do not require the formalities of a corporation, making it the simplest form of limited liability ownership.
The actual formation of a LLC in Missouri is relative simple. The Missouri Secretary of State allows for online formation.
The more difficult part, however, is operating the LLC properly and complying with state law. For this reason, we do not advise that people setup an LLC themselves or through a discount service.
An LLC owner should:
- Get proper advice to ensure the LLC’s operations conform to Missouri law;
- Operate in a manner that does not risk their limited liability protection;
- Understand the areas of potential liability where an LLC does not protect an owner;
- Have a proper written operating agreement to protect the member(s) and to meet any applicable Missouri statutory requirements;
- Clearly lay out the relationships between the parties, if there is more than one member.
In a single-member LLC, Missouri law requires (RSMo. Sections 347.081.1 and 347.015(13)) a written operating agreement. It is not mandated for multi-member LLCs, but strongly advised. Perhaps one reason it is not mandated in multi-member situations is that the parties are more likely to put the agreement in writing for their own protection.
We have seen a number of situations where the lack of a written agreement has led to strife as well as lengthy and expensive litigation. We generally advice all of our clients to make sure they have a clear operating agreement in writing prior to commencing the operation of the business.