How to Start an LLC in Mississippi
Mississippi hasn’t always been known for a huge swatch of businesses, but that is changing – in recent years, the state has become a destination for growing tech brands and other businesses. Between the many colleges, tax incentives, and rising population, it’s no wonder that entrepreneurs are taking this step. One way to take advantage of Mississippi’s vibrant economy is to form an LLC. The process is straightforward, with this step-by-step guide you’ll see how easy it is to become LLC owner in The Magnolia State.
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Forming an LLC is done by filing for a Certificate of Formation. Before you file these startup documents, there are preliminary steps you need to take. Understanding as much as you can about state laws and required forms will help you launch your Mississippi LLC.
Name your LLC
Have a name in mind? Check on name availability by searching the state’s business directory.
While naming your business is a creative endeavor, it’s also an important one to help with Mississippi’s registration process. The state is responsible for ensuring these names are unique, so you cannot choose a name that any other Mississippi business has used.
To make this easier, there is a business entity name search available through the State of Mississippi. Your first step should be to search your proposed name here and be sure it can be used.
Distinguishable names are not the only requirements Mississippi has for business names. For an LLC, the phrase “limited liability company” or an abbreviation of the phrase must be present.
There are also rules to help ensure your name isn’t misleading – for example, it cannot include words that would be confused with a government agency or words that require a professional license to use.
Once you’ve chosen a name that meets these requirements, you will be able to file your LLC using the name. However, there are some additional considerations that may be helpful:
- Think about spelling and how easy it would be for someone to find your business on their own.
- You will want a domain name and social media handles that match your business, so see if these are available.
- While you cannot have the same name as other Mississippi businesses, the same rule does not exist across states. You can do an internet search for other identical business names to avoid confusion.
- Trademarks are issued at the national level. If you want to trademark your business name, you will need to check the US Trademark and Patent Office’s directory.
- Until you have filed for your LLC, the name will not be yours. You can reserve a name for 6 months to give yourself more time if needed.
Most people will operate their LLC under the same name they use for registration. However, you can use a fictitious business name, or a dba (doing business as) if you’d prefer to use another name for daily operations.
You can reserve a business name in Mississippi for 180 days.
Select a registered agent
The Mississippi government will require a designated point of contact for your LLC. This person is called a registered agent.
A registered agent may receive tax documents and legal information, as well as service of process in the event of a lawsuit being filed. In order to ensure these are all received, every LLC owner in Mississippi must name a registered agent when he or she files for a Certificate of Formation.
Who can be a Mississippi registered agent
Registered agents can be either an individual or a commercial entity that specifically performs this service. In either case, they need to have a physical address (not a P.O. box) in the state of Mississippi, and an individual must be over 18.
While anyone can act as a registered agent, they are expected to be available during all normal business hours, so some people prefer a registered agent service that ensures this coverage.
Your registered agent will need to explicitly consent to their appointment at the time they are listed, so you cannot surprise someone with the job. Decide ahead of time who will act in this role, or what service you would like to use so that you are prepared for the question.
File Certificate of Formation
The reason you need to know information like the name of your business and the registered agent is that you will be asked for these items on the Certificate of Formation. This document is what officially creates your LLC once it is filed and accepted by the Secretary of State. You can fill out and submit this form online.
In addition to your LLC’s name and registered agent information, you will need to disclose the nature of your business in the Certificate of Formation.
You will use a NAICS code to indicate the former – the North American Industry Classification System is a national system for defining the nature of a business. The United States Census Bureau provides a list of these 6-digit codes so that you can provide the appropriate information.
You can fill out and submit your LLC formation documents here.
The cost to submit a Certificate of Formation is $50. This is nonrefundable.
Mississippi processing time
Once you have submitted your Certificate of Formation online, there is an expected processing time of 2 business days. After that time, you will receive either a confirmation of your LLC’s formation or rejection and information on why this happened.
Create an LLC operating agreement
An approved Certificate of Formation is all you need to say you have an LLC in the state of Mississippi.
However, another document that isn’t mandatory can be critical for your business: an operating agreement. This legal document outlines the ownership and operating procedures of an LLC, from daily operations to financial obligations. If any major changes occur or there is disagreement about how to proceed, the operating agreement can be referenced.
Most businesses can draft their own operating agreement using an online template. Very large or complex organizations may prefer to work with an attorney, but operating agreements often contain similar sections. You can expect to find the following in an LLC operating agreement:
- Formation date and founding members
- Ownership structure
- Management structure
- Voting allocation
- Capital contributions
- Plans for raising funds
- Profit and loss distribution
- Changes to membership
- Dissolution plans
This document must be signed by all members and can then be kept on file for reference.
Now that you have a Mississippi LLC, the real work of being a business owner begins. Before you can jump into daily operations, there are other administrative tasks to be aware of to avoid any penalties or issues with your business.
Get your EIN
After someone in the United States is born, one of the first things that happens is they are issued a Social Security Number. Your SSN is a unique identifier that allows the government to track you throughout your lifetime, for things like taxes and credit reports. An EIN, or Employer Identification Number, serves the same purpose for your business.
Any business can obtain an EIN for free through the IRS. A handful of businesses – those with no employees and no excise tax obligations – are not required to have an EIN, but most will be. The EIN can have many uses, but the primary reason it exists is to act as a tax identifier for all employer taxes paid to the IRS.
Banks often require an EIN before you can open a bank account in your business’s name. It’s also common for vendors or clients to require your EIN, so it is helpful to have one even if your LLC is not explicitly required.
In addition to the EIN issued at a federal level, Mississippi has a state tax ID number that serves a similar purpose. This number is used when filing taxes, hiring employees, submitting annual reports, and similar activities. Any business with employees or that will be selling taxable goods needs to have this number.
You can get your EIN by visiting the Internal Revenue Service (IRS) website.
Get Mississippi business licenses
Not every LLC in Mississippi will need a license, but many will. Some of these licenses are issued at the state level related to the industry or services the business provides – for example, the Department of Health regulates licensure for restaurants. It is more common for localities to issue general business licenses, but you will need to check with the city or county where your LLC does business to see what requirements may exist.
The one state-level requirement for nearly every business is the sales and use tax number. This is similar to a seller’s permit and allows businesses to collect sales and use tax, as well as register them to pay these taxes to the state regularly. You can register for a sales and use tax number online for no fee.
Open business bank accounts
There are a variety of reasons why an LLC can be the best business structure for you, but one of the most common is personal asset protection. In the event that an LLC is sued or otherwise financially obligated, the owners and members do not have to use their personal assets to meet this obligation. However, this can be overruled if it is shown that the owner is mingling their personal finances with their business finances.
To avoid any appearance of this mingling, open a checking account for your business. All income and expenses can go through this account so that it is clear the business operates independently. When it comes time to file taxes or do your accounting, this will also make your task much simpler.
You can also choose to open a savings account for your business, or credit cards and credit lines.
Review LLC tax rules in Mississippi
The majority of LLCs are set up as pass-through entities, so for tax purposes, all profits of the business are imposed on the LLC members and filed on their personal tax returns. This avoids any corporate tax rates and can make the filing of federal taxes and state taxes simpler and more advantageous.
In this case, there is no special LLC tax that a Mississippi company must pay. Mississippi does not charge sole proprietorships, LLCs, or corporations a franchise tax.
File an annual report
All LLCs will need to file an annual report through the Secretary of State. This report requires some basic information, like the LLC’s name and address and registered agent information. It can be filed any time after the start of the year but must be done before April 15th.
There is no fee for filing the annual report in Mississippi.
Failure to file an annual report on time means your LLC will no longer be in good standing with the state.
An annual report is sometimes called a Statement of Information in other states.
Get insurance for your LLC
The only insurance required by Mississippi is workers’ compensation insurance. Any business with five or more employees, not counting owners, will need to have this coverage in place. However, most LLCs choose to have other insurance in place as a way of reducing risk and protecting their assets.
There are three common forms of insurance that an LLC may have:
- General liability insurance is the most common. It helps to protect a business from claims that a business caused bodily injury, property damage, or personal injury. Although an LLC does provide personal liability protection (meaning your personal assets like a home and car are kept separate from the business), additional liability insurance is important to consider.
- Commercial property insurance protects any owned or rented property, like buildings or equipment, used to run your business.
- Professional liability insurance covers those in certain professions, like medical providers or accountants. The coverage protects against claims that there was malpractice or some kind of business error.
How much does it cost to start an LLC in Mississippi?
The exact costs for new LLCs in Mississippi can vary based on the location within the state, the type of business, and what services you choose. However, there are some common fees to expect.
- Name reservation (optional): $25
- Fictitious name (optional): $25
- Certificate of Formation: $50
- Register agent service (optional): $20 – $200
- Permits and licensing: Varies
- Annual report filing: $0
- Sales and use tax number: $0
You can start an LLC in Mississippi for as little as $50, with other fees varying widely.
Additional resources to help you set up a business in Mississippi
The Mississippi’s Secretary of State’s office is dedicated to helping new businesses in the state. They provide a variety of resources, including:
- Start Your Business in Mississippi: A guide.
- Y’all Business, which offers a repository of assistance programs for small businesses.
- A local breakdown of each locality in Mississippi to help find the right contacts and requirements.
What is Mississippi sales tax and use tax number?
Mississippi requires businesses to obtain a sales and use tax number if they are going to sell any taxable goods or services. This number allows them to collect and remit the tax. It also acts as a tax identifier at the state level for things like hiring employees and filing annual reports. It is free to obtain this number.
Can I form an LLC in Mississippi by mail?
Mississippi now only allows online submission of all forms, including the Certificate of Formation and others needed to form an LLC. All forms and links are on the Secretary of State website, and you can contact the Business Services Customer Service Line for assistance. Forms can also not be submitted in person.
Does Mississippi have Articles of Organization for LLCs?
The main form needed to form an LLC in Mississippi is a Certificate of Formation. This serves the same purpose as what other states call the Articles of Organization. Essentially, both are an application to form an LLC and a record of the LLC’s information. The Certificate of Formation formally registers your LLC.
Can my Mississippi LLC be rejected?
After submitting a Certificate of Formation, you will receive notice of acceptance or rejection. Rejections are usually because of an issue, like an omission or mistake. Your LLC can also be rejected for a name that does not meet the Mississippi criteria. The filing fee is nonrefundable, so be sure your information is correct before submitting.
Can I form a foreign LLC in Mississippi?
If you have an LLC registered in another state and would like to expand into Mississippi, you can register a foreign LLC. There is $250 to register your business in this way, and you will have to file an Application for Registration of Foreign Limited Liability Company with the Secretary of State’s office.
Are there recurring costs for a Mississippi LLC?
In Mississippi, there are no recurring costs for maintaining an LLC, including filing an annual report. Sales and use tax numbers also do not need to renew. However, some licenses or permits may need to be renewed through the state or local governments that issue them.
Does Mississippi require LLCs to have workers’ compensation?
Some LLCs in Mississippi will be required to have workers’ compensation in place. This is true for businesses that have five or more employees, not including the owners of the business or LLC members. Those with less than five employees can opt out of this coverage.
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