How to Start a Business in Mississippi

Choosing the right entity type for your business depends on a few things, like your business’ overall goals, who will manage it, and how you want to pay taxes. For example, a business owned and operated by just one person who hasn’t registered with the state is a sole proprietorship. When two or more people own and operate a business without filing paperwork with the Mississippi Secretary of State, it is a general partnership. However, neither sole proprietors nor general partnerships have liability protection—which means that the business’ debts are your debts, and if your business is sued, you risk losing your personal assets.

Liability protection is only available for businesses that are legally separate entities from their owners—meaning that formation documents were submitted and approved by the state. To start a business with liability protection, you will need to form a separate entity like an LLC or a corporation. Let’s go over a few of the most common entity types with liability protection.

Mississippi Limited Liability Company (LLC)

Mississippi limited liability companies (LLCs) offer business owners the liability protection of an incorporated business, pass-through taxation by default and the flexibility to run their business how they want, making them a popular choice for small businesses.

To start a Mississippi LLC, you’ll need to file your Certificate of Formation with the Secretary of State.

Mississippi corporation

Mississippi corporations also have liability protection, so the owners (called shareholders) are not personally liable for the business’ debts. Unlike LLCs, however, corporations have a board of directors and can sell shares. This makes corporations more appealing to investors and donors than LLCs. So while corporations are less flexible, many businesses choose to incorporate because they can grow bigger faster.

To start a Mississippi corporation, submit your Articles of Incorporation with the Secretary of State.

Naming your business in Mississippi involves a few simple steps: choosing a name that is not already in use, ensuring that your chosen name matches the Mississippi business name guidelines, and including the name on your formation documents.

Sole proprietorships must use the owner’s legal first and last name as their business name unless they get a DBA.

For an LLC or a corporation, you business name must:

• Include an entity identifier, such as “LLC” for limited liability companies or “Inc.” for corporations.
• Not use words that mislead customers on the purpose of your business, such as “charity” and “bank” if you are not a charity or bank.
• Be unique in the state of Mississippi.

Find out if your desired name is available in Mississippi by looking it up on the Mississippi Secretary of State Business Search.

So far in this guide, we’ve dealt with public forms that you’ve had to file with the Mississippi Secretary of State. Now, it’s time to organize your internal records. These are the documents your business will keep on record within your company.

Though these documents are internal, you’ll likely need to show them to third parties like the bank or—if you start a nonprofit—the IRS.

Here are the major internal documents you need to organize for LLCs and corporations:

Mississippi LLC Operating Agreement

This is your LLC’s rule book. It defines how your LLC will do things like make decisions, distribute money, manage operations, and appoint officers. Your operating agreement plans for every big picture scenario your LLC is likely (or unlikely) to face, including dissolution.

Drafting an operating agreement is hard, and the internet is full of shabby templates that have been copy and pasted from who knows where. So we had our attorneys draft a Mississippi LLC Operating Agreement template that you can use as a solid foundation.

Mississipi Corporate Bylaws

Bylaws are the rules your corporation will adopt and follow internally. Bylaws detail how your corporation will appoint directors and officers, hold shareholder and board meetings, and handle emergencies, among other things. Unlike operating agreements, corporate bylaws are required by law in Mississippi (see Miss. Code Ann. § 79-4-2.06).

As with operating agreements, you can find plenty of bylaws templates online. But bylaws are pretty serious, so you don’t want to just use the first template you come across. Our attorneys drafted a Mississippi Corporate Bylaws template you can use to get started.

Starting a nonprofit? We also have Mississippi nonprofit bylaws.

Every business in Mississippi will need some sort of business license. What kind of license—and how many licenses you need—depends on a few factors: where exactly your business is located, what exactly your business does, and what your professional qualifications are. Let’s go over a few of the most common types of licenses needed for Mississippi businesses.

Mississippi State Business License

Mississippi requires that all businesses obtain a Sales and Use Tax Permit (also called a seller’s permit). This is obtained through the Mississippi Taxpayer Access Point (TAP) online portal, and allows the business to collect and remit the 7% statewide sales tax rate.

Professional Business Licenses

Professional business licenses are required for any businesses that the service providers need specialty training or education for, such as a doctor, veterinarian, tattoo artist, or dietitian. A good rule of thumb is if you need a license to conduct the work, you’ll need the license to have the business as well. You can check the Mississippi government’s professional licensing search to see if your profession requires a license. You can also check with the local government in your city or county to see if they require a particular professional license.

Local Business Licenses

Local business licenses are required on the city and/or county level. The specific licenses needed depend on where your business will be operated and what kind of product/service you sell. For example, in Jackson, all businesses need a general license, as well as business-specific licenses, such as food and safety licenses for restaurants and alcohol licenses for bars. Check with your local city’s business department to see what you need.

Learn more about How to Get a Business License.

The liability protection you get from forming an LLC or corporation is only as strong as the separation between you and your business. At a minimum, you’ll need to open a bank account for your business. And if you’re going to hire employees, you’ll need to tackle payroll, too.

Open a Business Bank Account

To keep your business spending separate from your personal spending, you’ll need to open a business bank account. If you don’t, a court could find that your business is not actually separate from you, the owner, under the Alter Ego Doctrine. Also known as piercing the corporate veil, this is the outcome when a judge finds that a company is not a separate entity but rather an alter ego of the owner. If this ever happens, you could lose your limited liability status.

Opening a business bank account as a sole proprietor is important, too. Though sole proprietors and general partnerships have no limited liability status to protect, both will benefit from organizing their business finances come tax season.

Set up Payroll

Setting up payroll in Mississippi means doing every business owner’s favorite thing—filling out more forms! While that might sound like a chore, don’t worry—we’ve compiled it all into an easy-to-follow list.

Mississippi payroll requires that you:

• get a FEIN
• register with the Mississippi Department of Revenue’s TAP online portal for a Withholding Account Number
• apply with the MDES Employer Registration Portal to receive an Employer Account Number
• prepare the forms your employees will fill out
• choose a payroll service or software
• decide on a payroll schedule

Pro-tip: Choose a payroll software that automatically deducts taxes and pays your employees to save yourself the hassle.

Forming an LLC or corporation protects your personal assets. But if anything disastrous befalls your business—like a lawsuit, burglary, flood, or fire—your business is on the hook to pay. Business insurance can help cover the costs.

While we recommend that all businesses carry insurance, each state has different legal requirements. Read more about what types of business insurance Mississippi law requires for business owners.

Workers’ Compensation Insurance

Workers’ compensation insurance covers unforeseen costs for employees due to workplace injury. This includes medical bills, lost wages, short-term disability, and more. Having workers’ comp is crucial for employers and employees, as private insurance might not cover work-related claims.

Workers’ compensation is required in Mississippi if the company has five or more employees. A few notable exceptions are:

• Domestic/household workers
• Farm laborers
• Charity/religious/cultural organization employees
• Federal workers
• Sole proprietors and independent contractors

While workers’ compensation is not required for the above workers, many business owners choose to take out coverage for their employees anyway. This prevents the business from accruing debt from liable accidents, as well as preventing the employees’ financial hardship of potentially being unemployed while they recover from injury.

Liability Insurance

This covers the costs of claims against your business for injuries or damages to the property of others, like clients or customers. This includes medical expenses, legal fees, settlements, and judgments. Whether or not you need it depends on whether your business is likely to be sued and how many assets your business needs to protect. If it’s just you and your computer in your basement, you might feel comfortable skipping liability insurance. Or maybe you won’t. Beyond general liability insurance, you can purchase or add on more specific types, like professional, cyber, commercial, home-based business, or product liability insurance.

If tax season ignites your fight-or-flight instinct, we understand. But don’t worry–business taxes stop being so scary once you understand your tax burden. Business taxes are broken into three distinct categories: federal, state, and local. Let’s go over them.

Federal Taxes

• LLCs. Single-member LLC? By default, you’re taxed similar to a sole proprietor. More than one LLC owner? You’re taxed as a general partnership. Either way, your default tax status is “pass-through,” which means you don’t pay corporate taxes. Instead, your LLC’s owners report profits and losses on their personal tax returns. An LLC can file paperwork with the IRS to be taxed as an S-Corp or C-Corp instead.
• Corporations. Corporations are taxed as C-Corps by default. This means that corporations pay the 21% federal corporate tax rate and, as of 2022, 0% corporate income tax in Mississippi.

To pay your federal taxes (and take a good deal of other steps required to start a business), you’ll need to get an Employer Identification Number (EIN). You can apply for one with the IRS or hire us to get one for you.

Mississippi State Business Taxes

Now things get a bit more complex—Mississippi has its own rules for business taxes, and things have been changing over the last few years.

Since 2018, the corporate income tax rate in Mississippi has been slowly phased out. In 2022, the rate reduced to 0%. This is great news—no corporate income tax is a huge benefit for Mississippi business owners who now have a lower tax burden.

The current franchise tax—with a minimum of $25—is also being phased out. It is being reduced by $0.25 per $1,000 of excess capital per year. In 2022, the corporate franchise tax sits at $1.50 per $1,000/excess capital.

If a business owner fails to file their taxes, there will be a fee of $25 for the first instance of noncompliance and $500 for each additional instance of noncompliance.

Mississippi Local Business Taxes

All that’s left is the Mississippi local business taxes—meaning your city and county’s tax rates. You can search this on your local government’s online site to see what your local taxes will be. For example, Jackson, Mississippi has an additional 1% sales tax rate on top of the statewide 7%, totaling 8% sales tax for Jackson residents.

If you want Mississippians to find your business, they have to be able to find you online. This means you’ll need a website, a business email account, and social media accounts. Don’t worry if you’re not especially tech-savvy—you don’t have to be a web developer or an influencer to establish a robust online presence. You’ll just need the following:

• Domain name. Your domain is the address where your website will live. You’ll want a domain name that is short, unique, local, and—most importantly—available. If your domain is trademarked, you could face legal trouble.
• Domain registrar. Once you’ve decided on a domain name, you’ll want to register it with a domain registrar. Some domains are more expensive than others. Some domain registrars also offer hosting and most will provide you with a business email that includes your domain name (“name@yourbusiness.com”).
• SSL certificate. An SSL certificate signals to your users that your website is secure. If your website will use forms—like a sign-up form or a “contact us” form—an SSL certificate is critical. But even if you don’t you use forms, you’ll still probably want one—it allows an encrypted connection, which means your users’ data is transported securely. There are several types of SSL certificates, and you can often get one through your domain registrar.
• Site design. The easiest option is to use a free website creation tool—there are a number of free options available. Most are easy even for a newcomer to use, with styles and built in templates. For a more custom design, you can hire a web designer to work on your website, but this will be much more expensive.

All LLCs and corporations in Mississippi must file an annual report. The annual report can be filed anytime after January 1st and before April 15th. This is an annual fee of $25 for LLCs and no fee for corporations. You can file your annual report by logging into your online account on the Mississippi Secretary of State’s online portal and filing electronically.

A trademark is a design, symbol, word, phrase—or any combination thereof—that represents a brand’s goods or services exclusively. Only some businesses register trademarks.

You can apply to register your trademark with the State of Mississippi or federally with the U.S. Patent and Trademark Office (USPTO). Registering your trademark in Mississippi is cheaper and easier than registering with the USPTO, but doing so only protects your trademark in Mississippi.

You can only register a trademark once you’ve started using it (so slap it on that website you just made), and not all applications are approved. Trademark law is complex, and the strength of a trademark application (and the trademark itself) depends on many factors.

Our attorneys can review your application, offer advice, and prepare and submit the application for you—Check out our Trademark Service.