How to Start a Business in Mississippi
How do you start a business in Mississippi? Just sell something. Do that and you're automatically a sole proprietor in the Magnolia State, where corporate tax rates and labor costs are far below the national average. But if you want to make money, minimize your personal risk, and stay aboveboard legally, you've got some work ahead of you. This guide will take you through all the steps needed to launch your Mississippi business.
Ready to Start a Business in Mississippi?Let's Get You Started
Pick a Business Structure
Name Your Business
File Formation Paperwork
Draft Internal Records
Get Mississippi Business Licenses
Organize Your Money
Get Business Insurance
Understand Your Tax Burden
Build Your Business Website
File Mississippi Annual Report
Apply for Trademarks
1. Pick a Business Structure
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 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.
Can an LLC be just one person?
Yes! A one-person LLC is called a single-member LLC. Single-member LLCs are one of the most common kinds of businesses in the country. For the most part, single-member LLCs are just like multi-member LLCs, but there are some slight differences in how they file taxes and protect personal assets.
Read all about Single-Member LLCs.
What about a Mississippi nonprofit?
If you want to start a Mississippi nonprofit, you’ll need to submit your Articles of Nonprofit Incorporation to the Secretary of State. The main difference in forming a nonprofit versus a for-profit corporation is that your business must exist for the sole purpose of benefiting the public or serving a group of people.
Want to learn more? Check out our Nonprofit Guide.
2. Name Your Business
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.
Can I reserve a business name in Mississippi?
Absolutely. You can reserve a business name in Mississippi for 180 days by filling out a Mississippi Business Name Reservation Application. You’ll have to log into the Mississippi Business Services online portal to fill out the application, but you can submit either online or via the mail. Don’t forget to submit the $25 filing fee alongside your application to reserve your business name.
Since your business name must be unique in Mississippi, reserving your business name is a good way to claim the name you want prior to forming your business.
What is a DBA?
A Doing Business As (DBA) name is any name your business uses that is not the business’ legal name.
A DBA is most commonly called a fictitious name in Mississippi. Registering a DBA allows your company to conduct business under a name other than the business’ legal name. So if you want to expand, rebrand, or add new product lines, DBAs allow you to do that without opening a whole new company.
To register a DBA, you need to fill out the Fictitious Business Name Registration Application ($25) on the Mississippi Secretary of State’s online business portal. You must renew your DBA every five years.
What about trademarked names?
It’s a good idea to check with the US Patent and Trademark Office (USPTO) to make sure your business name hasn’t been trademarked by someone else. If it has, and you use it anyway, there’s a chance that the business could come after you for infringement.
3. File Formation Paperwork
Filing your formation paperwork might seem like the scary part of starting your business in Mississippi, but we’re here to help. The first step is figuring out if you even need to file with the Secretary of State to start doing business.
Sole proprietorships and general partnerships, for example, are not considered separate legal entities from their owners—meaning that no paperwork needs to be filed. However, you might still need a business license.
If you do have a separate legal entity, such as an LLC or corporation. You’ve got some paperwork to fill out. To start a Mississippi LLC or corporation, you’ll need to file formation documents with the Mississippi Secretary of State’s office.
- To form a Mississippi LLC, file Mississippi Certificate of Organization.
- To start a Mississippi corporation, file Mississippi Articles of Incorporation.
Even if you want to submit these via the mail, you’ll need to make an account on the Mississippi Secretary of State’s Business Division online portal to access the official documents. Keep in mind you will need your Mississippi registered agent’s information to submit your formation documents. Your registered agent’s information will go on the public record.
How can I keep my information off the public record?
You can keep your information off the public record by sharing it on business forms as infrequently as possible. When you’re a Northwest client, you can use our name and address on business forms wherever possible to ensure the maximum amount of privacy.
What is a registered agent?
A registered agent is the person or business that receives legal mail on your business’ behalf. The registered agent’s information must be public, and the registered agent must be physically in Mississippi during regular business hours.
If you are sent a service of process, your registered agent gets the notice—and this legally counts as handing you the notice, even if your registered agent doesn’t ever tell you. Hiring a professional registered agent gives you peace of mind that you won’t miss an important legal notice. Lucky for you, Northwest offers Mississippi registered agent services.
4. Draft Internal Records
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.
Mississippi 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?Learn about Mississippi nonprofit bylaws.
5. Get Mississippi Business Licenses
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.
How do I get a Mississippi business license?
To get any Mississippi business license, just fill out the appropriate forms and submit it to the proper governmental office. For the only state-wide license, the Sales and Use Tax Permit, make an account on Mississippi TAP and fill out the request for your seller’s permit online.
How do I get a professional license in Mississippi?
To get a Mississippi professional license, you’ll need to apply with your profession’s board. Once you’ve completed whatever training and education is required by your profession’s board, you just need to fill out the application and wait for the bureaucratic wheels to turn. Specifically, check with your board and find out their requirements.
How do I get a local business license?
To get a Mississippi local business license, search your local government’s business division to see what licenses are required. For example, Southaven has three business licenses: commercial-based, home-based, and transient. Which license you need depends on your business’ purpose and structure.
6. Organize Your Money
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.
How do you set up a business bank account?
LLCs and corporations will need to provide the bank with their formation documents, operating agreement or corporate bylaws, EIN, and in some cases, a Corporate Resolution to Open a Bank Account or LLC Resolution to Open a Bank Account.
Do I need a business bank account to accept credit card payments?
Probably. Payment processors require you to provide them with a bank account. This is where they’ll deposit funds from transactions. Most of the time, this needs to be a business bank account.
Some payment processors may let you get away with listing a personal bank account, but it’s not a great idea. Mixing your business finances with your personal finances erodes the separation between you and your business, weakening your liability protection. It also turns tax season into a nightmare.
Learn more about Payment Processing.
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.
What forms do my employees need to fill out?
Your new employees will need to fill out a W-4 to determine how much you’ll withhold and an I-9 to verify that the employee is eligible to work in the US.
What’s the difference between an independent contractor and an employee?
It’s important to understand the difference between an independent contractor and an employee. That’s because for employees, you’ll need to withhold and pay income, social security, and Medicare taxes. Independent contractors pay these taxes on their own.
An independent contractor is self-employed—how they complete their work is not directly controlled by an employer. An independent contractor may perform the same kind of work for other businesses, and can do the work when and how they choose.
An employee, on the other hand, performs their work how and when their employer chooses.
If you’re unsure, you can file Form SS-8 with the IRS and let them decide.
Learn more about hiring independent contractors.
How do I get a Mississippi Employer Account Number?
To get an Employer Account Number for your Mississippi business, you will need to register your business with the Mississippi Department of Employment Security (MDES). Your Employer Account Number will allow you to report and pay unemployment taxes.
7. Get Business Insurance
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.
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.
Do business owners need workers’ compensation insurance in Mississippi?
No, business owners are not legally obligated to have workers’ comp coverage for themselves. (Specifically, sole proprietorships, partners that owns/manages the business, and corporate officers who own more than 15% of corporate stock are exempt.) However, many business owners choose to include themselves in their policy because independent health insurance might deny work-related claims.
Do I need business insurance for my home-based business?
Probably. That’s because you can’t count on your homeowners’ or renters’ insurance policy to cover damages related to your business. Most insurance companies offer a home-based business insurance plan.
8. Understand Your Tax Burden
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.
- 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.
Do I need an EIN if I’m self-employed?
If you’re operating a sole proprietorship or single-member LLC that doesn’t employ anyone else and you don’t need to file excise or pension plan returns, you don’t legally need an EIN.
However, you can still get one—and you probably should. Otherwise, you’ll have to use your own social security number to do business. Plus, you’ll likely need an EIN to open a business bank account.
How do I get an EIN?
To get an EIN, you can either apply online or file form SS-4 by mail with the IRS. Getting an EIN is free.
Check out our guide to applying for an EIN.
What is an S-Corp?
An S-Corporation is a federal tax election. Registered business entities like LLCs and corporations start out with a default tax status, but can file paperwork with the IRS to be taxed as an S-Corp. Like LLCs, S-Corps are taxed as pass-through entities. Like corporations, S-Corps can make distributions that aren’t subject to the 15.3% self-employment tax.
Learn more about the S-Corp tax election.
What is a C-Corp?
A C-corporation is the default federal tax election assigned to corporations. Most corporations are taxed as C-Corps, but LLCs can also apply for C-Corp tax designation by filing paperwork with the IRS. C-corps file federal corporate income taxes and state corporate income taxes (in Mississippi, the corporate tax rate ranges from 2 to 9.4%). C-corps can pay their shareholders in distributions, and the shareholders report those profits on their personal tax returns.
Learn more about the C-Corp tax election.
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.
9. Build Your Business Website
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 (“email@example.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.
10. File the Mississippi Annual Report
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.
What if I don’t file an annual report in Mississippi?
Failure to submit your annual report in Mississippi could result in the business being administratively dissolved.
11. Apply for Trademarks
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.
How do I register for a trademark in Mississippi?
You can register a trademark in Mississippi by submitting the Application to Register or Renew Trade and Service Marks. This can be submitted online in the MS Secretary of State’s Business Services portal or via mail. Either way, you will need to have an original signature—the application is designed to be filled out online and printed off for signature, according to the Mississippi Secretary of State website. It costs $50 for residents ($60 for non-residents) to register a trademark in Mississippi, and all Mississippi trademarks are good for five years.
Search for current Mississippi Trademarks already in use before submitting your application.
Can I register a trademark before I use it?
No. But you can file an application with the USPTO under Intent-to-Use status. This gets your application in line before you’ve actually used the mark, which could be helpful if you’re worried someone else might register your mark before you’ve had a chance to use it.
For your trademark to become official, you’ll eventually need to show proof that you’re using it. An Intent-to-Use application buys you some time to do that.
Learn more about filing an Intent-to-Use Trademark.