How to Start a Sole Proprietorship in Mississippi

Last updated: March 13th, 2024
We might receive compensation from the companies whose products we review. We are independently owned and the opinions here are our own.
  • Same day filing service
  • Affordable pricing
  • Strict ethical code
  • Set up LLC without hassle
  • Take you through all steps
  • Start your LLC worry-free
  • Simple setup
  • Wide range of services
  • Technical support

Starting a sole proprietorship in the state of Mississippi is a relatively straightforward process. While there are no formal steps required to establish a sole proprietorship, there are certain actions you should take to ensure that your business is operating legally and in compliance with state and local regulations. This comprehensive guide will outline the steps to get your sole proprietorship up and running in Mississippi.

Jump to

What is a sole proprietorship?

A sole proprietorship is the simplest type of business entity. It is owned and operated by a single individual responsible for the business’s finances and debts. They are easy to set up and, for this reason, are popular amongst solo entrepreneurs and small business owners. Unlike other business structures like limited liability companies (LLCs) or corporations, there is no legal separation between the business and the owner.

While a sole proprietorship offers simplicity and flexibility but has some drawbacks. The main disadvantage is the lack of asset protection. As a sole proprietor, your personal assets, like your car, home, and savings, are at risk if you run up any business debts.

A step-by-step guide to starting your Mississippi sole proprietorship


Choose a business name

The sole proprietorship should match the owner’s legal name. In Mississippi, to use a different name, one has to register a “Doing Business As” (DBA) or a fictitious business name.

Here are the steps to filing your DBA:

  1. Choose a business name: Go for something memorable and illustrative as you brainstorm names. Choosing a name that conveys your business’s distinctiveness can build a well-known brand.
  2. Check availability: After brainstorming some possible names, confirming they’re available is vital.

Here are tools to assist:

  1. Check online availability: With the increasing prevalence of the digital world, businesses must manage their online visibility. Search for domain names that tie in with your business label. Owning a domain consistent with your business name can help create a consistent brand.
  2. Register the business name: Once you’ve confirmed the availability of your chosen name, you can register it as a trade name. File your new name with the Mississippi Secretary of State with a filing fee. You can only file your fictitious business name online.

Registering a fictitious name in Mississippi is completely voluntary but comes with some benefits:

  • Registering a business name informs others that the name is taken, potentially deterring similar names. However, registration does not grant exclusive use rights.
  • If a trademark dispute arises, a registered business name can support claims of prior use compared to another business.
  • Banks may require fictitious name registration to get a business loan or open an account to prevent fraud under Mississippi’s new Act.

Obtain an (Employer Identification Number) EIN

Sole proprietors without employees don’t need to register for a federal tax ID number. They can use their Social Security Number (SSN) for tax purposes.

However, we recommend obtaining an EIN from the Internal Revenue Service (IRS) for several reasons:

  • Opens up business banking opportunities: An EIN is often required to open a business bank account. This can help separate personal and business finances.
  • Helps establish business credit: With an EIN, you can apply for business credit cards and loans separate from your personal credit. This can help you build credit for your business, which may be useful for future financial opportunities.
  • Eases hiring process: If you plan on hiring employees in the future, you must have an EIN. It’s required to report taxes and other documents to the IRS and set up payroll because it helps distinguish employees from employers.
  • Enhances business privacy: An EIN can also replace your social security number in business paperwork, protecting you from identity theft and adding an extra layer of privacy.
  • Prepares for business growth: Even though a sole proprietorship does not legally require an EIN, having one can simplify the transition if you decide to incorporate or restructure your business.

You can apply for your EIN here.


Register for taxes

As a sole proprietor in Mississippi, you report your business income and expenses on your personal tax return, Form 1040. When you file your personal income tax Form 1040, attach Schedule C to report details on your sole proprietorship’s income, profits, and losses for the year.

As a self-employed sole proprietor, you owe self-employment tax contributions for Social Security and Medicare, which you can calculate and report using Schedule SE.

Access the most current versions of Form 1040Schedule C, and Schedule SE on the IRS website.

Additional state and local taxes

  • Mississippi has a sales tax. You must register for a Sales Tax Permit and collect and remit tax on taxable sales.
  • To register for additional state business taxes, visit the Mississippi Department of Revenue website and register through their Taxpayer Access Point (TAP) system. This will allow you to report and pay taxes in one fell swoop.
  • Businesses selling beer, wine, liquor, tobacco, oil, or other specialized products may need to register for specialized tax permits.

Obtain Mississippi business licenses, permits, and zoning clearances

There is no general state business license requirement in Mississippi. 

However, it is more than likely that your business will need additional licenses.

Additional steps

Completing your EIN application, federal tax registration, and securing necessary licensing checks the core boxes for establishing your sole proprietorship. With the legal basics covered, it’s wise to take extra steps to set up your new business for ongoing success.


Open business bank accounts

Keeping your business and personal finances separated is key for accurate recordkeeping and protecting your assets. Think about opening:

  • Business bank account: A dedicated business account to manage income, expenses, and transactions maintains clear separation from your funds. This also lends credibility when working with vendors or applying for financing.
  • Business credit card: Opening a card in your business’s name further segments spending and builds credit history specific to your company’s financial profile.

Get general liability insurance

Sole proprietors carry unlimited liability for business obligations, so insurance is critical. Policies can shield against unexpected claims or events. Consider:

  • General business liability insurance: Covers claims of property damage, bodily harm, or personal injury resulting from your operations.
  • Professional liability insurance: For service providers, it protects against alleged negligence, errors, or omissions in delivering your services.

Maintain detailed records

Careful recordkeeping helps maximize tax deductions and organize your sole proprietorship’s finances. Be sure to track:

  • Income
  • Expenses
  • Assets/liabilities
  • Inventory
  • Receipts

Using bookkeeping software, spreadsheets, or an organized system makes staying on top of documentation easier for tax filing and general financial health.

Sole proprietorship vs. LLC

For some businesses, forming an LLC may better serve long-term goals than a sole proprietorship. LLCs offer advantages like:

  • Liability protection: Your personal and business assets are legally distinct with an LLC structure. Your business is a legal entity that files taxes separately from the business owner.
  • Credibility: The formal LLC designation can boost your professional image with customers.
  • Growth potential: LLCs are well-suited if you aim to expand your current operations eventually.
  • Tax flexibility: LLCs permit you to select how your business income is taxed.

However, LLCs also come with tradeoffs to weigh:

  • Complexity: LLCs require drafting an operating agreement and annual reporting obligations. Sole proprietorships involve less paperwork.
  • Cost: Forming and maintaining an LLC has higher upfront fees and ongoing costs.


  • Consult a tax advisor to determine the ideal structure for your goals.
  • Compare liability protection needs against the desire for simplicity.


What are the main benefits of registering my business name? 

It provides public notice of use, can support dispute claims, and may be required for licenses or loans.

Does my business name need to be unique statewide or just locally? 

Registration is filed at the county level, so uniqueness is only required in that county.

How are a sole proprietorship’s finances handled? 

Use dedicated business accounts and credit cards, and maintain detailed records for taxes.

What are the differences between a sole proprietorship and an LLC?

Sole proprietorships have unlimited liability but are simpler and cheaper; LLCs provide liability protection but have more legal complexity.

Can I register multiple business names for the same business?

You can register as many names or “DBAs” for a single sole proprietorship.

Is a sole proprietorship simpler for taxes compared to an LLC? 

Yes, taxes for a sole proprietorship pass through to the owner’s tax return, avoiding business tax returns.

Find out how to start a sole proprietorship

Click on your state below to get started.

Back to top