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Sole Proprietorship

Missouri law allows individuals to operate as a Sole Proprietorship. Income and expenses are reported on the proprietor's federal individual income tax return and in return the income will flow through on the Missouri Individual Income Tax Return.

A sole proprietorship has a single owner who has complete control over a business. The single owner will claim all the profits, make all business decision, and take full responsibility for the debts and obligations of the business. A sole proprietorship is not recognized as an entity separate from its owner or proprietor and is not taxed separately. The income the owner receives from the business is taxed at the owner's personal income tax rate. Sole proprietorship business owners will file a Federal Schedule C, Profit or Loss From Business, Federal Form 1040, and a Missouri Individual Income Tax Form 1040. The starting income on the Missouri tax return is the federal adjusted gross income from Federal Form 1040, Line 15.

Partnerships, Limited Liability Partnerships, Limited Liability Companies Taxed as a Partnership

Partnership/Limited Liability Partnership income is divided among partners in accordance with investment or partnership agreement and reported on the partners’ individual returns.

Limited Liability Company (LLC) taxed as a partnership income is passed directly through to the members according to the amount of stock held. Generally no income tax is paid by the LLC.

For a limited liability company that is taxed as a partnership, each of the members share total responsibility and liability for the debts and obligations of the partnership. Each member is an agent of the partnership and can bind the partnership to many obligations, including liabilities. Each member's liability includes total personal liability for the wrongful acts or omissions of the other partner(s).

A limited liability company taxed as a partnership will file a Federal Form 1065 and a Missouri Partnership Return MO-1065. Each member will receive a Federal K-1 and will report their income on their Federal Form 1040 and on a Missouri Individual Income Tax Form 1040.