Set up as an entity separate from its shareholders (owners), a corporation provides many benefits, such as allowing you to issue shares to raise the capital necessary to get your enterprise going, and protecting your personal assets if the business is sued or goes into debt.
But starting a corporation in Mississippi can also be a complex undertaking, involving filing the Articles of Incorporation, appointing directors, writing bylaws, drafting a shareholder agreement, applying for appropriate business permits and licenses, working out tax requirements, and much more.
So, whether you want to launch into Mississippi’s welcoming business climate as a C corporation (treated and taxed as a separate entity), an S corporation (earnings are split among shareholders and taxed at that level only), or a tax-exempt nonprofit corporation, here are the steps you must take to open your doors for business.
And if you want a trusted partner to help you successfully launch a Mississippi corporation, ZenBusiness has easy-to-use tools, expert support, useful resources, and attractive pricing plans to get you going.
How do I form a corporation in Mississippi?
Steps to form your Mississippi Corporation
- Name Your Corporation
- Appoint Directors
- Choose an Mississippi Registered Agent
- File the Mississippi Articles of Incorporation
- Create Corporate Bylaws
- Draft a Shareholder Agreement
- Issue Shares of Stock
- Apply for Necessary Business Permits or Licenses
- File for an EIN and Review Tax Requirements
- Submit your Corporation’s first report
To start a Mississippi corporation, you must file the Articles of Incorporation with the Secretary of State. To simplify the process of forming a corporation in the state of Mississippi, we’ve put together 10 easy steps to form your business:
Step 1: Name Your Mississippi Corporation
What’s in a name? Quite a lot when you are naming your Mississippi corporation. Not only must you brainstorm and come up with one that is aligned with the purpose of your business and evokes a positive response in your target market, but you also have to navigate several legal considerations.
The name should not sound too much like one already in use. It should also contain a designator word indicating what type of company you are, and it needs to avoid using certain prohibited words.
To see if your desired corporation name is available, you can start by searching the business name database on the Mississippi Secretary of State’s website. It then costs $25 to reserve your name if you choose, and you can do so online.
According to the Mississippi statute covering corporation naming guidelines:
- The company name must contain the word “Corporation,” “Incorporated,” “Company,” or “Limited,” or the abbreviation “Corp.,” “Inc.,” “Co.,” or “Ltd.,” or words or abbreviations in a different language with the same meaning.
- You cannot imply that the corporation is organized for any unlawful purpose or one not outlined in its Articles of Incorporation.
- The name must be distinguishable from any existing businesses in the state.
Mississippi, like most other states, prohibits businesses from using names that:
- Imply they are a government entity
- Mislead people about what they do
- Include a word that implies professional licensing when that’s inaccurate
- Using a name that is deceptively similar to another corporation name on record
Many corporations with professional designations — such as accountants, lawyers, and engineers — will need to pay money and fill out paperwork for licenses.
Another thing you’ll want to think about with your Mississippi corporation is whether or not you want to operate under a “fictitious name.” Commonly referred to as a “doing business as” or DBA in other states, a fictitious name is another name to operate your Mississippi corporation under.
Although not legally required, you can register your fictitious name with the Mississippi Secretary of State along with a $25 filing fee. Note that registering a fictitious name does not grant the registrant the exclusive rights to the use of the registered name. However, registering your DBA may dissuade someone else from using that name, even if they can legally do so.
You’ll also want to cross-check any names you choose with the United States Patent and Trademark Office (USPTO) to see whether your desired business name is federally trademarked. Checking for trademarks now can prevent legal problems later. You can also do it at the state level here.
Step 2: Appoint Directors
To get your corporation off the ground, you need to appoint a board of directors to oversee the business operations at an organizational meeting before you file your Articles of Incorporation. You must appoint at least one director who, as well as performing other duties, will oversee your Mississippi corporation until the first shareholder meeting is held. Among their responsibilities, the directors of a corporation look after the adoption, amendment, and repeal of bylaws and supervise, elect, and remove officers.
An incorporator is an entity or person who signs and files the incorporation articles. The board of directors oversees the business, and the shareholders finance it by buying shares in the corporations. While these are distinct roles, incorporators may also be directors and shareholders. While company shareholders can be directors, the directors don’t have to be shareholders.
Step 3: Choose an Mississippi Registered Agent
When you file your Articles of Incorporation, you will be asked to supply the name of your Mississippi registered agent. A registered agent is a person, or an entity, who accepts tax and legal documents on behalf of your corporation. They can be a resident of Mississippi, a corporation, or an LLC so long as they have a physical address in Mississippi. You must get the agent’s consent before designating them as your company’s registered agent. Commercial registered agents are also an option, though they have additional obligations in Mississippi.
In Mississippi, you can, if you wish, decide to be your own registered agent, or select someone from your company, a friend, or even a family member, as long as the person is 18 years or older, has a physical address in the state, and is available during normal business hours.
However, acting as your own registered agent can have its drawbacks, including:
- You could be served with a lawsuit notice at your place of business in front of customers and employees.
- If you travel a lot or spend a lot of time outside the office, you wouldn’t fulfill the registered agent requirement of keeping normal business hours.
- Your name and address will be part of your corporation’s public records filed with the state, which could be a problem if you want to keep this information private because, for example, you run a home-based business.
When choosing a registered agent, many businesses prefer to go with a commercial registered agent service with a proven track record of reliability. Their service ensures that you receive important legal and compliance notifications in a timely manner (so no summary judgments because you missed service). Having a professional registered agent means you don’t have to worry about filing an update with Mississippi every time your office location or contact information changes.
Step 4: File the Mississippi Articles of Incorporation
After you have chosen a registered agent and have at least one director for your corporation, it’s time to make your corporation official by filing the Articles of Incorporation online with the Mississippi Secretary of State. (These are called the Articles of Incorporation in Mississippi but may be known as a “Certificate of Incorporation,” a “Corporate Charter,” or the “Articles of Association” in other places.)
The Articles of Incorporation are a set of formal documents filed with the Mississippi government to document your corporation’s creation legally. They contain important information, such as:
- Corporate name, address, and NAICS code
- Corporate registered agent name and address
- Number and type of authorized shares the corporation is allowed to issue
- Any information about the designation of particular classes of shares
- Incorporators’ names and addresses
- An email address where notices and reminders may be sent
The articles must be submitted by at least one of the incorporators, along with a $50 filing fee.
When you file your Articles of Incorporation, you can authorize as many shares as you like but must have one at a minimum. If you want to designate different kinds of shares (with specific voting rights or restrictions), you’ll need to say what these are.
For example, you might want to have common stock and preferred stock. Common stock is the one most often issued by corporations. It usually has voting rights, with the number of votes corresponding to the number of shares owned. Preferred stock typically doesn’t include voting rights but it usually has fixed, guaranteed dividends and, in the event of bankruptcy, priority payouts.
Step 5: Create Corporate Bylaws
Before opening the doors of your Mississippi corporation, you need to set up your corporate bylaws, establishing your company’s operating rules, the responsibilities of its directors, the rights and powers of its shareholders, and other matters related to the business.
Under the Mississippi legal code, the incorporators or board of directors are required to adopt initial bylaws. The bylaws of a corporation can contain “any provision for managing the business and regulating the affairs of the corporation that is not inconsistent with law or the Articles of Incorporation.”
The bylaws are not filed with the Mississippi Secretary of State, but they must be agreed on by the directors and kept on file at the corporate office. The state requires that corporations keep several important documents at its office:
- Bylaws and any amendments
- Articles of Incorporation and amendments
- Director or shareholder meeting minutes
- Any resolutions creating one or more classes or series of shares
- All written communication to shareholders
- Current names and addresses of officers and directors
- The most recent annual report
It’s a good idea to set up a corporate records book, where you can gather all of your corporation’s important papers, including bylaws, minutes from meetings, and stock certificates.
Step 6: Draft a Shareholder Agreement
A shareholder agreement is an official arrangement among the corporation’s stockholders, laying out the shareholders’ rights and obligations.
A shareholder agreement is different from the company’s bylaws. While the latter is required in Mississippi, a shareholder agreement is optional. A shareholder agreement often includes:
- The names of all shareholders and their contact information
- Information about shareholder voting rights
- Shareholder responsibilities, including rules about how officers are appointed
- Guidance on how changes can be made to the original shareholder agreement
- How stock can be sold or transferred
- Each shareholder’s financial obligation and time commitment
- A clear description of how dividends are distributed
- A plan for the distribution of assets if the business closes
The shareholder agreement is devised to ensure that each shareholder is treated fairly and to protect their rights. Again, you might want assistance in creating this important document, but templates can be used if you wish.
Step 7: Issue Shares of Stock
When you file your Articles of Incorporation in Mississippi, you need to include:
- The number of shares issued
- A description of the type of shares issued
- The preferences, limitations, and relative rights of each class, if more than one type is issued
Corporations are required to have at least one shareholder and issue a minimum of one stock share. A corporation cannot issue more shares than are authorized in the Articles of Incorporation.
Stock can be issued publicly or privately. A public corporation makes a portion of its stock shares available for the public to buy. For the most part, privately issued stock is issued to the founders, managers, employees, or a private group of investors.
Mississippi corporations that issue public stock need to file quarterly statements with the U.S. Securities and Exchange Commission (SEC) and track how many shares are issued and to whom. Get information about requirements at the state level from the Mississippi Securities Division.
Step 8: Apply for Necessary Business Permits or Licenses
To operate your company in Mississippi, you must comply with federal, state, and local government regulations. The business licenses and permits you need to operate cannot be researched easily in one place, though you can hire a professional service to research them for you.
If you do this on your own, you can start by visiting the U.S. Small Business Administration (SBA) website for federal licenses and permits information. On the state level, check out the Mississippi Secretary of State’s website or the Mississippi Small Business Development Center. For local licenses and permits, contact your local Mississippi county clerk.
Step 9: File for an EIN and Review Tax Requirements
Your corporation is required to obtain an Employer Identification Number (EIN) from the IRS. Fortunately, getting an EIN is pretty simple: Just use the IRS website, fill in the requisite information, and get yours immediately. There’s not even a fee to complete the process.
As far as state tax requirements, Mississippi has both corporate income tax and a corporate franchise tax. The franchise tax applies to both C and S corporations. The franchise tax is $2.25 per $1,000 of capital employed or assessed property value in the state (whichever is greater). $25 is the minimum corporate franchise tax.
Step 10: Submit Your Corporation’s First Report
All Mississippi corporations are required to file an annual report anytime on or after Jan. 1 of the calendar year, with a deadline of April 15. Corporations that fail to file a corporate annual report can be administratively dissolved and lose their ability to conduct business. Annual reports must be filed online through the Mississippi Secretary of State portal.
How much does it cost to start a corporation in Mississippi?
In Mississippi, you’ll pay $50 at a minimum to form your corporation. Some optional filing costs charged by the Secretary of State include:
- Reservation of name: $25
- Fictitious business name registration: $25
This doesn’t include the annual report. There are also ongoing fees for business licenses and permits.
Keeping track of all the costs and staying compliant with related regulations can be a lot for any company to deal with. That’s why it is good to turn to a trusted partner like ZenBusiness to help get your corporation started and running in Mississippi and receive assistance with many of the required steps for a low yearly fee.
What are the benefits of a corporation in Mississippi?
When you start a corporation in Mississippi, you can realize a number of benefits, including:
- Your assets are protected if you are sued for debt or other financial obligations.
- You receive legal recognition as a separate entity within and outside the U.S.
- There’s greater protection of personal assets than a sole proprietorship or general partnership if someone files a lawsuit against the business.
- You can issue stock to raise capital for the business.
As a Mississippi corporation, your business entity may benefit from several tax incentives and exemption programs, including state income tax credits and various tax exemptions.
Against these benefits, there can be some disadvantages to starting a corporation, so it’s worth making sure this is the right type of business for your needs. The disadvantages are the tax structure (profits are taxed at both the corporation and personal income tax levels), and there’s much more red tape and paperwork involved with corporations than other structures, such as limited liability companies (LLCs).
How is an Mississippi corporation taxed?
How your Mississippi corporation is taxed depends on whether it is a nonprofit, C corporation, or an S corporation.
A C corporation is taxed as a separate entity from its shareholders. In addition, shareholders report and pay taxes on their share of profits received from the corporation. This is, in effect, double taxation. While this may give some new business owners pause, the tax structure has some advantages, including flexibility regarding what may be deducted.
An S corporation is taxed like a partnership with a “pass-through” tax structure. The corporation itself doesn’t pay income tax on profits; the profits aren’t taxed until they’re distributed to the shareholders.
Nonprofit corporations can apply with the IRS to be exempt from federal taxes. It may also be possible to be exempt from Mississippi taxes if they meet the state’s requirements. But anyone working for a nonprofit corporation must still pay income tax on their salary.
In Mississippi, corporate income is subject to federal taxation and a state income tax. As mentioned in Step 9, Mississippi also has a corporate franchise tax, levied on both C and S corporations. The Mississippi Department of Revenue has additional information about taxes your corporation may be responsible for, depending on your business type.
Mississippi Corporation FAQs
- Does running a corporation in Mississippi involve more paperwork than running other types of businesses?
The greater complexity of corporate structures means they often involve more paperwork than a simpler business model, such as an LLC. This can involve licensing requirements, corporate bylaws, and keeping records of meetings.
- What is the difference between an LLC and a corporation in Mississippi?
A limited liability company is a business structure that is a pass-through entity for tax purposes. Like a corporation, it serves to keep the owners’ assets separate from business assets. But LLCs do not have a board of directors, and they don’t issue shares.
- How do I change my corporation’s name in Mississippi?
To do this, you can file a Mississippi corporation amendment online with the Secretary of State. You can complete the process and pay online, or you can print the document and submit it by mail to the Office of the Mississippi Secretary of State.
- How many people are needed to form a corporation in Mississippi?
Forming a corporation in Mississippi requires one or more incorporators to sign the Articles of Incorporation.
- Can I form my Mississippi corporation online?
To form a corporation in Mississippi, you must file the Articles of Incorporation with the Secretary of State. You do this online or by mail for $50.
- How do I dissolve my Mississippi corporation?
If your corporation authorizes dissolution, you can dissolve it by filing the Articles of Dissolution online with the Mississippi Secretary of State.
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