Missouri is a wonderful place to do business since it has some of the lowest business costs in the country, including labor costs. Missouri’s energy prices are also cheap, lower in fact than in 31 other states, resulting in considerable savings in operating expenditures for businesses based in the state.
To entice new entrepreneurs despite stagnating growth, the state government has introduced incentives such as sales tax exemption for manufacturers and flexible profit distribution for limited liability company (LLC) owners. Missouri has a lot of untapped potential in terms of economic growth. Because of lower living and business costs, it’s a good spot to start a new firm.
Here are a few small business statistics from Missouri that shed a light on the state’s entrepreneurial landscape.
Quick Missouri Small Business Statistics for Entrepreneurs
- Small businesses in Missouri represent 99.4% of all private enterprises in the state.
- Small business employees account for 45.8% of all payrolled employees in Missouri.
- Veterans account for 5.4% of employees and 8.3% of small business owners.
- Racial minorities own 10.5% of small businesses in Missouri.
- In 2019, small businesses in the state exported goods worth $3.4 billion.
- The per capita disposable income in Missouri is $47,746.
- 43% of small businesses are owned by women.
- Between March 2019 and March 2020, 24,736 Missouri enterprises opened and 20,513 closed, for a net gain of 4,223.
- Missouri small business employment increased by 6.1% between 1994 and 2018, reaching 1.2 million employees in 2018.
- Only 9.4% of workers in Missouri belong to a workers union.
Missouri Small Business Statistics
1. What is considered a small business in Missouri?
According to the Small Business Administration, the definition of a small business depends on the number of employed workers (from 1 to 1,500 employees) and annual revenue ($16.5 million or less).
There are 542,519 small businesses in Missouri that represent 99.4% of all private enterprises in the state. Missouri accounted for 91,326 of all new business applications submitted nationwide from January 2021 to January 2022, ranking 21st among states. Adjusting for population, Missouri had 1,488 applications per 100,000 residents, which was lower than the national average, and ranked 25th among states.
Applying for a business license can be a complicated and daunting process especially for first-time business owners. That’s why it’s important to hire an LLC formation service to take care of all the red tape during the registration process. Read my review of the best LLC Services in Missouri and find out which company is best for your business.
2. How many people are employed by small businesses in Missouri?
In total, 1.2 million small business employees in Missouri account for 45.8% of all employees in the state. Missouri’s minimum wage rate is $11.15 per hour.
Missouri voters went to the polls in 2018 to approve Proposition B, the $12 minimum wage initiative. The law went into effect on January 1, 2019, and increased the minimum wage from $7.85 to $8.60 per hour, increasing by $0.85 every year until it reaches $12 in 2023.
However, certain workers are exempt from this minimum wage:
- Tipped employees must be paid half the minimum wage, that is $5.58.
- Farm workers are exempt from the Missouri minimum wage.
- Any company with gross yearly sales or profits of less than $500,000 is permitted to pay employees less than the federal minimum wage.
3. Missouri small business statistics by industry
The construction industry is the largest in Missouri in terms of small business investment. There are approximately 65,233 small businesses within this industry. A total of 51,960 firms in this sector have no employees, 12,085 have 1–19 employees, and 1,188 have 20–499 employees.
The utilities industry is the smallest in the state with only 269 small businesses operating in it.
4. Missouri small business ownership by ethnicity
Missouri has a population of 6,168,187 people with an annual population growth rate of 0.3% for the next five years, ranking 29th out of 50 states. The prominent ethnic groups in the state include White/Caucasian (82.9%), Black/African American (11.8%), Hispanic/Latino (4.4%), Asian (2.2%), American Indian and Alaska Natives (0.6%), and Native Hawaiian and Other Pacific Islander (0.2%).
The information below shows how small business ownership is distributed among these groups:
- White/Caucasian — 456,268
- Black/African America — 36,606
- Asian — 15,196
- Hispanic/Latino — 11,161
- American Indian and Alaska Native — 1,048
- Native Hawaiian and Other Pacific Islander — 250
5. Missouri small business ownership by gender
Women own 186,311 small businesses in Missouri. Approximately 166,000 of these firms have no employees, and 20,311 have employees on payroll. Men own 290,319 small businesses, and 231,000 of these are nonemployer businesses while another 59,319 have employees.
There are also 32,737 small businesses that are owned by both men and women.
6. Business taxes in Missouri
Most small businesses in Missouri are LLCs, which, to the taxman, are regarded as pass-through tax entities where the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members. Some states charge LLCs a separate tax or fee for the privilege of conducting business in their jurisdiction. Missouri, on the other hand, is not one of those states.
However, in some situations, the owners of an LLC can opt to have their firm taxed as a corporation. When an LLC elects to be taxed as a corporation rather than as a pass-through entity, the firm must submit a separate tax return. Missouri, like practically every other state, levies a corporate income tax of 6.25% on Missouri taxable income.
According to the Tax Foundation’s State Business Tax Climate Index Ranking, Missouri ranks at 14th out of all 50 states.
Filing your income taxes on time is crucial if you want your business to maintain its good standing with the state government. Failure to file your tax returns may attract some serious legal penalties for you and your business. However, you can enlist a registered agent in Missouri to help with your tax filing process. Read my full review of the best registered agents in Missouri and find out which agent is best for your business.
7. How COVID-19 affected small businesses in Missouri
Missouri has the 22nd greatest economic exposure to COVID-19 out of all 50 states based on the percentage of employees working in industries with a high or medium-high degree of exposure to COVID-19.
Nearly half of all Missouri employees, or 1,609,293 people, work in industries with a high or medium-high degree of economic exposure to COVID-19. Only 4% of Missouri employees, or 129,334 people, work in industries with a low or medium-low degree of economic exposure to COVID-19.
8. Small business financing in Missouri
The Community Reinvestment Act (CRA), passed in 1977, compels the Federal Reserve and other federal banking authorities to encourage financial institutions to assist in meeting the credit requirements of the communities in which they operate, especially low- and moderate-income neighborhoods.
Large banks are required by the CRA to disclose new small business loans. In 2019, reporting banks gave out $1.7 billion in loans to Missouri firms with less than $1 million in sales. Total reported new lending to firms with loans of $100,000 or less was $1.4 billion, while total reported new lending to businesses with loans of $1 million or less was $4.8 billion.
9. Missouri small business export statistics
In 2019, a total of 2,051 identified businesses exported items worth $11.3 billion from Mississippi. Of those exporters, 1,542 (or 75.2%) were small enterprises that shipped items valued at $1.7 billion, accounting for 15.5% of all recorded business exports.
The Final Word
The Show-Me State has one of the friendliest tax structures in the country, with the eighth-lowest corporate income tax and one of the lowest tax loads per worker. When you consider the low cost of living, it’s simple to see why people desire to live and work in Missouri. Residents enjoy a four-season climate, magnificent state parks, sparkling lakes, and a plethora of sports and entertainment options. These alone should be enough to entice both foreigners and residents to establish a business in the state.
Sources
- US Small Business Administration
- Foreign USA
- Missouri Department of Economic Development
- US Census Bureau – Missouri Demographics
- Patch
- US News – Missouri Economy
- Area Development
- Tax Foundation
- Nolo
- Ibis World