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Tax Advantages for Missouri Business Owners
Owning a Missouri business is an exciting way to invest your time and money, and it can pay off several ways. You get to enjoy the freedom of being your own boss. Plus, your earnings are directly linked to your own efforts, so you aren't earning money for another company. Another valuable thing to consider when starting a company or buying a business is what tax advantages you might get.
Limited Liability Companies and Limited Partnerships
Tax advantages for business owners in Missouri begin with the type of business entity selected. There are two business types specially created to allow business owners to avoid the double-taxation that corporations face. According to the Missouri Secretary of State, those business entity types are limited liability companies and limited partnerships.
- Limited liability companies are fairly new to Missouri, and have only been an option in the state since 1993. This type of entity limits the liability of the business owners while avoiding the double-taxation effect.
- Limited partnerships, like limited liability companies, avoid the double taxation associated with corporations. With this business structure, taxation works the same way it works with a traditional partnership.
Tax Advantages for Missouri Business Owners
Missouri has one of the most business-friendly tax structures in the country, according to the Missouri Business Development Program. Several methods are used by the state government to offer business owners a tax structure that reduces the tax burden.
- Lower corporate tax rates than other states: A lower corporate income tax rate is set at a percentage of the organization's net taxable income. Part of the federal income tax paid in also gets to be deducted before corporations calculate taxable income for the state.
- Income tax formula choices: Unlike what occurs in other states, only income earned within the state of Missouri is considered taxable. Then, to make it even more inviting to run a business in the state, owners get to choose between two ways to calculate income and can choose the less costly one.
- Exemptions for inventories: While most states require companies to pay tax on the value of inventory, raw materials, goods that are in the process of manufacturing and finished goods are all exempt when calculating Missouri state taxes.
- Chapter 353 enterprise zones: This tax break is focused on repairs to real property as part of an urban redevelopment plan. Up to 100 percent of the improvements can be exempt for up to 25 years under this plan.
Tax Advantages for Businesses Anywhere in the US
Some tax benefits that Missouri businesses enjoy extend all across the country. These are focused on federal tax policies. Some are linked to providing equal opportunity for people with disabilities, while others are associated with the costs of doing business.
- The Disabled Access Credit is for small businesses when funds are spent on providing access for disabled workers.
- The Barrier Removal Tax Deduction is for businesses of any size that remove barriers to mobility for disabled employees.
- The Work Opportunity Tax Credit cuts the tax burden for companies that hire veterans and disabled workers from between $1,200 up to $9,600 as of April 2018.
Some of the other things that provide tax advantages at the federal tax level due to being deductible include:
- Mileage and auto expense deductions
- Education expenses and training books
- Advertising and marketing
- Travel expenses
- Interest on business purchases
- Business insurance premiums
- Fees for professional services
Begin thinking about ways to leverage business tax advantages when in the planning stage of setting up shop in Missouri. Enjoy the tax advantages the state offers to make budgeting easier on business owners. Finally, be sure to take advantage of federal tax deductions that save you money and free up more cash in your business accounts.
Be sure to browse through our available St. Louis businesses for sale at www.linkbusiness.com and contact the LINK St. Louis office by phone at (314) 487-0005 or email at email@example.com to get started on the path to owning your own business.