There are several questions that a small business owner asks, either of themselves or of others. Our goal is to provide the answers to these questions here, so you don’t have to search for them. If you do not see your question listed below, feel free to contact one of our experts for advice.


+ How Do I Finance a Small Business?

Business funding comes either through equity or borrowing. Equity is capital provided through proprietors or investment and does not require repayment. Borrowing is indebtedness and those sums will need to be paid back from business revenues.

A majority of small businesses never make it, so lenders are cautious, often requiring credit applications and a detailed business plan before agreeing to the loan. It is usually easier to borrow funds to purchase hard assets like business equipment or real estate since these things hold their value.

The commercial lending arm of a local bank should be your first resource. Local banks are prepared to work with small businesses and can offer you specialized services. Small businesses are vital to Missouri’s economy and there are financing programs provided through the state designed to aid the small business owner. More information on state resources to small businesses can be found in this pdf.

Organizations which exist to assist small businesses in Missouri:

  1. SMB and Technology Development Centers help with problem-solving, training and offer consultant services.
  2. Service Corps of Retired Executives (SCORE) connects small business owners with experienced professionals to offer help in writing business plans, record-keeping and financials.
  3. Small Disadvantaged Business Purchasing Programs refers to agencies within the state which offer help to small business facing unique challenges. In Missouri, Small Disadvantaged Business (SDB) and Minority Business Enterprise (MBE) or Women Business Enterprise (WBE) are the most often sought.

+ Can You Help Me Improve My Website/SEO?

CONTENT IS KING… refer to this article…

+ How Do I Write a Business Plan?

A business plan looks ahead three to five years and lays out a roadmap for achieving revenue projections and annual business benchmarks. Well-written business plans take an objective view of business performance and keep key decisions ground in current realities.

The small business administration (SBA) offers a Business Plan Tool that is easy to use and 100 percent secure. The business plan can be modified as needed over time and is stored as a secure PDF file for up to six months. Small business partners like your lender, SCORE counselor or SBA mentor will use your business plan to inform each successive step in establishing your business.

+ How Do I Find More Customers?

Expanding your customer base is critical. There are a number of strategies for recruiting new customers.

  1. Offer special discounts to first-time customers. Use the opportunity to gather customer information.
  2. Giveaway promotions. Hand out free samples of product and a flyer either outside your business or in high traffic areas where your potential customers will be. Make certain that those giving out samples wear shirts with your business name.
  3. Host an Open House. Plan an event which invites new customers to come inside your business and try products or services at no charge.
  4. Use your existing client base to help build your new customer list. Reward your existing customers who bring in or refer a friend.
  5. Gift certificates bring in more business and new customers. It is said that 80 percent of gift certificates will result in sales above the face value and 40 percent will produce sales that double the face value. Many gift certificates will be given to new clients.
  6. Social media presence
  7. Sponsor an event and give out samples too

Always ask new customers how they heard about your business to keep your efforts well-spent.

+ When and How Do I Go About Getting Workman’s Compensation?

With very few exceptions, any business that employs five persons or more is required to carry workman’s compensation insurance. Construction companies with just one employee will need to carry the insurance. Agriculture businesses and businesses engaged in domestic labor are among the rare exceptions to this requirement. Both salaried and non-salaried workers are covered by workman’s compensation.

The worker’s compensation program is administered by the state, though businesses may apply for permission to self-insure if they so choose. Workman’s compensation provides 105 percent of the state weekly wage to those injured on the job or those who fall victim to work-related illnesses. Insurance premiums are based on the risks associated with your business. Keep in mind that the term injury encompasses a broad range of physical problems from cuts and contusions to heart attacks, even injuries which occur due to another employee’s misbehavior.

Workman’s compensation is an important business consideration, but exists to protect both the worker and the employer in case of illness or injury at work. Failure to carry worker’s compensation can result in a $25,000 fine or a year’s imprisonment. More information is available through the Missouri Division of Worker’s Compensation.

+ How Do I handle Business Taxes (sales tax, unemployment tax etc.)

The best advice for questions on taxes will be from either your accountant or legal representation. Business income is taxed in accordance with the way your business was set up. In the case of sole proprietorships, LLCs and partnerships, the business owner will pay taxes directly through self-employment and personal income tax. By contrast, the corporation will be taxed as a business entity along with any payments given to shareholders and business officers. All taxes, self-employed or corporate, are paid in quarterly estimates which are reconciled at the close of the tax year.

Federal taxes include:

  • FICA – The Federal Insurance Contributions Act which funds Medicare
  • Self-Employment Tax – Many clergy are exempt, but otherwise full or part-time workers who earn above $400 are eligble.
  • Corporate Estimating Tax – Corporations need to file (MO-1120 ES) Declaration of Estimated Tax with the state and (1040-ES) Federal Estimated Tax with the IRS.
  • Excise Tax – Certain businesses and business activities are taxed by the federal government via excise taxes. IRS Public 510 on Excise Taxes provides a complete list of presently taxed activities.

State taxes include:

  • Corporate Income Tax – Corporate taxes are generally lower in Missouri than elsewhere in nation.  Corporate income tax is set at a percentage of net taxable income received through business in the state.  In Missouri, corporations may deduct a portion of their federal income tax prior to calculating taxable earned income.
  • Missouri Taxable Income – Only income that is earned here in Missouri is taxed by the state.  We are the only state to permit businesses to choose whether they want to be taxed on sales alone or on a calculation of payroll, property and sales.
  • Sole Proprietorship/ Partnership/S Corporation – The net income from business is taxable to either the sole proprietorship or the partners/shareholders of the Partnership/S Corporation.  Personal income taxes depend upon total personal income.
  • Property Tax – Assessment of property value and taxation differs from state and state and even within states.  Industrial real estate is assessed at 32 percent, homes at 19 percent and agricultural real estate at 12 percent in Missouri.
  • Inventories Exempt – The inventories of manufacturers, retailers, distributors and wholesalers are exempted from Missouri property taxes.
  • Real Property Abatement – Missouri encourages urban development through ad valorem tax incentives which exempt up to 100 percent of property improvements from taxes for us to 25 years.  Enterprise zones may also offer comparable abatement.
  • Withholding Tax – Every Missouri employer must obtain a Missouri Employer Tax Identification Number by filling out Missouri Tax Registration Application Form 2643.  State tax is then withheld from employee paychecks and paid to the Missouri Department of Revenue.

Unemployment Insurance and Taxes

Unemployment insurance and taxes are handled through the Missouri Department of Employment Security. The Internal Revenue Service deals with federal unemployment taxation. Employers may learn whether they are liable for federal taxes by contacting the IRS.

Liable employers must file a contribution and wage report each quarter. These forms are mailed to the employer quarterly from the Division of Employment Security. Complete instructions come with the form. The employer’s contribution may not be deducted from the worker’s pay.

Late quarterly payments are subject to interest charges determined by the IRS. Continued failure to file or pay taxes could result in an assessment being filed. This would jeopardize the employer’s personal property. A penalty of 10 percent of each unpaid contribution or $100 per unpaid quarter can be assigned with a maximum penalty of 20 percent or $200 per unpaid quarter.

Audits – All Missouri employers are subject to periodic auditing by the Division of Employment Security in order to ensure proper wage and worker reporting.
Franchise Tax – This is based on a percentage of total property assets in Missouri versus total company benefits
Personal Income Tax

+ How Can I Increase My Profit Margin?

To understand how well your business if performing and in what areas you will want to calculate some financial ratios. Once you have your ratios, you can compare them with average industry ratios in your field. There are multiple ways to compute financial ratios but crucial comparisons would include:

  1. Liquidity – Your business’ ability to pay down its indebtedness on time. Current ratio tells you how able you are to cover current indebtedness with current assets by dividing total current assets by total current debts. Quick ratio – reveals your immediate business liquidity with no attention to inventory.  This tells you how much of your current debt could be covered without selling off inventory. Calculate quick ratio by dividing cash and accounts receivable by current debt.
  2. Safety – Your debt equity or debt to net worth ratio reveals the financial stability of your business.  This ratio is computed by dividing total debt by total net worth. Earnings Before Interest to Interest – This ratio tells you how capable you are to make interest payments.  A high ratio means you are able to meet present or higher interest payments.  To figure EBIT to Interest ratios divide earnings before interest and taxes by interest charges. Cash Flow to Current Maturity of Long-Term Debt – lets you see how well your regular cash flow can cover the next year of debt principal payments.  Calculate this ratio by adding net profits and non-cash expenses (eg. Depreciation) and dividing that total by your current portion of long-term debt.
  3. Profitability ratios – tells you if your business is sufficiently profitable. Gross Profit Margin is a big picture ratio of how much return you are generating.  Divide gross by total sales. Net Profit Margin – lets you see how much profit you earn in every sales dollar. Divide net profits by total sales to calculate.

Other key ratios include: Return on Assets, Return on Equity, Accounts Receivable Turnover, Accounts Receivable Collection Period, Accounts Payable Turnover, Days Payable, Inventory Turnover, Days Turnover, Sales to Net Worth, Sales to Total Assets, and Debt Coverage.

+ What order do I go about getting my business licenses, permits, federal identification number, etc.?

  1. Register the name of your business with the Missouri Secretary of State. This is a matter of filling out paperwork.
  2. Get a local business license through the office of the city or county clerk.
  3. Retail businesses will need a sales tax number. You can get this through the Missouri Department of Revenue.
  4. Certain businesses will need a federal identification number which can be obtained by completing an online application at the IRS website.
  5. Prepare a business plan
  6. Check out zoning, building permits, etc.
  7. Find out if your business needs federal or state permits or licenses
  8. Open a business account at the bank
  9. Obtain commercial insurance
  10. Talk with an accountant about quarterly taxes

If you plan to hire employees:

  • Get a Federal Employer Identification Number through the IRS
  • Get a Missouri Employer Withholding Number through the Missouri Department of Revenue
  • Contact the Misouri Division of Employment Security regarding your unemployment insurance liability
  • Prepare for workman’s compensation insurance payments

Once you have employees:

  • Have them fill out State and Federal W-4 forms

+ What do I need to do to be sure to do when purchasing an existing business?

  1. Keep in mind that owning a business is a financial risk
  2. Ask the right questions of the seller and verify answers
  3. Perform a financial review of accounts receivable
  4. Ensure that the seller’s financial statements are not merely compiled but have been verified by an accountant
  5. Look at the seller’s tax return to get reliable information about inventory
  6. Establish a non-compete agreement
  7. Decided who pays accounts payable
  8. Determine fair market value for business assets

+ How do I compare to my competition?

Mass merchandising has engulfed much of the retail market, but small businesses can still gain a firm stake if they understand how larger competitors operate and are willing to adjust their own business strategy.
What mass merchandisers do well:

  1. Maintain optimum inventory
  2. Cultivate an image of always offering the lowest price rather than offering sales events
  3. Make shopping easy by offering a wide variety of merchandise under a single roof
  4. Provide convenient shopping hours, greet customers

What mass merchandisers don’t do well:

  1. Offer well-informed service and technical advice
  2. Offer special services such as gift wrapping, special delivery, on-site repair
  3. Offer high-end products

Mass merchandisers like Walmart do create a pull factor for communities. They draw in shoppers from a wider surrounding area and expand the trade area. This means that small businesses who look for the holes left by the bigger stores can benefit. Dining establishments usually benefit from the presence of Walmart. Businesses which choose to sell upscale items, items not offered by Walmart, who sell in smaller quantities or who provide special services can all successfully co-exist with a mass merchandiser nearby.