If you’re launching a new Mississippi limited liability company (LLC), there’s plenty to be excited about. From revenue streams to marketing strategy, new entrepreneurs have countless options and opportunities to consider.
Unfortunately, launching an LLC also involves far less exciting legwork: You’ll need to meet Mississippi’s legal requirements for forming a new company. Before you can start making money, you’ll need to file the right paperwork and make some official decisions about your business’s details.
Fortunately, there’s no reason to stress over these bureaucratic hurdles. Forming an LLC in Mississippi can be fairly straightforward, as long as you follow certain steps in completing the process.
Additionally, creating a new company should be relatively affordable. While you will need to pay some fees to get your business on the books, they’ll probably seem small compared to your other startup costs.
All that being said, it will certainly help to get some expert guidance to navigate Mississippi’s processes as efficiently as possible. That’s where this guide can come in handy, explaining each step in clear and simple terms.
Below, we’ll show you how to make your business official, taking you through every part of the state’s process. We’ll also answer some common questions, addressing possible complications in advance. As we cover these important topics, we’ll explain how the right business formation service can handle all the hassles of business formation, allowing you to focus on getting your company going.
For new Mississippi entrepreneurs in any industry, the guidance on this page will prove extremely helpful. If you’re ready to cut through red tape and launch your business the right way, keep reading.
In Mississippi, the office of the Secretary of State oversees the formation of all new business entities. To officially launch your LLC and begin legally doing business, you’ll need to file a Certificate of Formation with that agency.
But before you can submit the required paperwork, you’ll need to make some choices about the information you include. At a bare minimum, you’ll need to select an official name and identify a registered agent. It’s also wise to create an Operating Agreement to govern your new business.
Additionally, you’ll probably need to obtain an Employer Identification Number (EIN) from the federal government. Depending on the nature of your business, you may need to register with other Mississippi state agencies.
At the outset, this mix of different requirements can seem somewhat overwhelming. But with the proper approach, the process can be quite smooth. To help you out, we’ve broken down the requirements into this step-by-step guide, which we’ll explain in detail below.
Step 1: Name Your Mississippi LLC
No company can prosper without a proper name, and perhaps you’ve chosen one already. But to select an official name for your LLC, you’ll need to meet certain criteria:
- Your name must be distinct from that of any other Mississippi business. So that the state can clearly distinguish between companies, your business’s name must differ from the name of all other business entities (including those that no longer exist). To check if your preferred name is available, use the handy business search tool on the Secretary of State website.
- Your name must include one of the following: “limited liability company,” “LLC,” or “L.L.C.” Whichever variation you choose, put it at the end of your business name, rather than in the beginning or middle of it.
Once you settle on a name, it might make sense to reserve it. While this precaution is not technically necessary, you don’t want anyone else to grab your chosen name while you complete the other aspects of forming your LLC.
To reserve your name, you’ll need to complete an Application for Name Reservation through the state’s online business filing portal. To access this portal, you’ll need to create an account. The cost of submitting this form is $25.
It’s also worth mentioning that your LLC’s official name does not need to be the name you use when doing business with the public. Instead, you can use a “fictitious” or “DBA” (“Doing Business As”) name to brand your business as you see fit.
If you choose to use a DBA name, it would be smart to register it with the Secretary of State. While not required by law, registering your DBA name can prevent other businesses from using it (accidentally or intentionally). Registering also costs $25 and can be completed through the same online business filing portal.
You’ll also want to cross-check your DBA with the United States Patent and Trademark Office to see whether your business name or logo is trademarked at the federal level. Trademarks can also be state-specific, so check with this Mississippi Secretary of State page for more info.
Step 2: Appoint a Registered Agent in Mississippi
Like other states, Mississippi requires the founders of new LLCs to designate a “registered agent” when filing a Certificate of Formation. Registered agents serve one primary purpose: to receive legal documents if your business is served with a lawsuit or subpoena.
A registered agent can be an individual or another business entity and must have a physical address in the state of Mississippi (a P.O. box will not suffice). Because legal documents are often served in person, the Secretary of State must know where to find your registered agent during regular business hours.
Many business owners assume they should serve as their own registered agent and use their home or business address for this purpose. But this choice could have unfortunate repercussions: If you’re sued, you don’t want to be served in front of clients or your family. Moreover, if you move your home or business, you’ll need to update your registered address with the state.
In many cases, a better solution is hiring an outside registered agent, a company that provides this service to businesses. With the right registered against service, some benefits include:
- You’ll never have to worry about missing important paperwork.
- You’ll never have to worry about being embarrassed in front of customers if you receive a service of process from any legal proceedings.
- You can work whenever it is most convenient for you, as you’ll always have someone available during traditional business hours.
- It’s easy to operate as a foreign LLC in other states where you plan to do business with a registered office in the state.
Step 3: File Mississippi Certificate of Formation
After choosing an official name and a registered agent, you’ll be ready to file your Certificate of Formation with the Mississippi Secretary of State using their online business filing portal. Once again, you’ll need to create an account before you can access the portal. The fee for filing a Certificate of Formation online is $50. For those with old-school inclinations, you can also mail in your completed form for the same price. In addition to your business’s name and the name and address of your registered agent, the Certificate of Formation form asks for some other pieces of information. Have each of the following items ready to complete the form:
- An email address (this can be a business email or an owner’s personal address)
- The North American Industry Classification System (NAICS) code for your type of business.
- Your LLC’s “future effective date.” This only applies if you want your Certificate of Formation to take effect at some later date. If, like most entrepreneurs, you want your business founded immediately, leave this section blank.
Step 4: Create an Operating Agreement
While some states require LLCs to have Operating Agreements as part of their paperwork, Mississippi has no such requirement. That being said, forming an Operating Agreement is still a smart call for your new company — even if you’re the sole owner.
LLC Operating Agreements establish specific terms and rules for your business’s activities and ownership. These agreements designate various stakeholders’ rights and responsibilities, from the allocation of profits to voting powers.
Even for individual LLC owners, an Operating Agreement can be crucial. Many financial institutions or potential investors will want an Operating Agreement before dealing with your business. Moreover, an Operating Agreement can help protect you from legal liability or debt if your business struggles. If you have one in place, courts are more likely to assess your business as separate from your personal assets.
Step 5: Apply for an EIN
Once you file your Certificate of Formation with the state of Mississippi, you’ll probably need to let the federal government know about your new business. Most businesses are required to obtain a federal Employer Identification Number (EIN) from the IRS, although there are certain exceptions.
If any of the following apply to you, go ahead and get an EIN:
- Your LLC will employ anyone other than yourself
- Your LLC has more than one member (owner)
- You have a Keogh plan (a form of retirement savings for self-employed individuals)
- Any of the other criteria listed here apply to you
Even if you don’t meet these criteria, an EIN might be helpful to your business. Without one, you may struggle to secure business bank accounts from financial institutions. You might also need to use your personal Social Security number more often, possibly exposing you to identity theft.
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.
Once you form your LLC and receive your EIN, you should also investigate whether you need to register with the state of Mississippi in other ways. If you employ workers, for example, you’ll probably need to register for Unemployment Insurance Tax through the Mississippi Department of Employment Security and also register for Employee Withholding Tax through the Mississippi Department of Revenue. If you plan to sell goods, you’ll need to register with the Department of Revenue to collect sales tax.
How much does it cost to start an LLC in Mississippi?
Relative to other states, Mississippi charges new business owners remarkably little to form LLCs. As noted above, the cost of filing a Certificate of Formation is $50, and the optional name reservation form costs another $25.
If you choose to register a DBA name, you’re looking at another $25, amounting to a total of $100. While that sum is nothing to sneeze at, it’s far more affordable than some other states, which can charge new businesses hundreds.
Of course, that dollar figure doesn’t cover the true cost of starting an LLC: When you consider the time, effort, and stress of dealing with bureaucratic processes, you realize that cutting through red tape can be a serious drain on your focus.
What are the benefits of an LLC in Mississippi?
For several reasons, LLCs are an attractive business structure, both in Mississippi and around the country. Generally, LLCs are more flexible entities than corporations, with a wider array of options for management and ownership. Yet, they also protect the individuals who own them and provide clear benefits in terms of taxation.
While there are many kinds of LLCs and some regional differences in regulation, LLCs tend to offer these advantages:
- They protect your personal assets from debts and legal liabilities resulting from the business.
- Ownership and management agreements can be shaped flexibly to suit the individual needs of stakeholders and the business.
- LLCs have fewer reporting requirements than corporations.
- LLCs prevent “double taxation”: Owners pay personal taxes on income earned from the business, but the LLC itself does not have to pay taxes on its profits.
How is a Mississippi LLC taxed?
For any business, taxation must be evaluated at both the state and federal levels. In Mississippi, LLC owners should be aware of how the IRS and State Department of Revenue will assess their business’s tax burden.
As we mentioned earlier, LLCs are designed to prevent double taxation: Owners typically pay personal income tax on earnings, but LLCs do not pay business tax as corporations do. At the federal level, the IRS assesses tax obligations for each of an LLC’s owners according to their share in the profits of the business. If an LLC has only one member, that member simply reports any LLC profits on Schedule C with their 1040 tax return. But if an LLC has multiple members, the LLC itself must file Form 1065 to inform the government of its earnings, even if they’re not taxed at the LLC level. The individual members then report their share of the LLC profits and losses via Schedule K-1 of Form 1065.
The exception to this rule is when an LLC elects to file as a corporation. This approach might be attractive for LLCs with impressive profits, but most new LLCs won’t benefit from this move.
At the state level, Mississippi takes a similar approach to tax LLC profits: Unless they elect to file as corporations, LLCs “pass-through” tax liability to their owners, who pay personal income tax on their earnings.
However, that doesn’t mean you’ll pay no business taxes. If you employ workers, for example, you’ll be responsible for paying unemployment tax and withholding tax. For more information on the taxes that might apply to your new LLC, review them on the Mississippi Department of Revenue website.
Mississippi LLC FAQs
What is the processing time to form my Mississippi LLC?
If you file online with the Mississippi Secretary of State, your Certificate of Formation will be approved immediately. (In the unlikely event that issues arise with the information you provided, representatives can contact you later to rectify them.) However, if you choose to file by mail, the Secretary of State’s office suggests that processing typically takes three to five business days.
Do I need to file my Operating Agreement with the state of Mississippi?
An Operating Agreement is not required to form an LLC in the state of Mississippi. Creating an Operating Agreement is still a very valuable precaution for your business, however.
What tax structure should I choose for my Mississippi LLC?
As noted earlier, most LLCs are taxed in the default manner, meaning tax liabilities are passed to individual owners. This allows owners to avoid “double taxation,” paying only personal income tax and no corporate tax. rnrnIf your LLC is highly profitable, it could be worthwhile to explore your other option: having your LLC taxed as a corporation. It would be wise to consult an accounting professional before taking this approach if only to confirm that it is truly advantageous for your LLC. For a brief overview of various tax structures and their respective advantages, take a look at this slideshow on the subject.
Does Mississippi allow a Series LLC?
Although Mississippi has previously considered altering its laws to permit Series LLC business structures, it does not currently allow them to be formed.
Which licenses and insurance are required for an LLC in Mississippi?
To operate your Mississippi LLC, you must comply with federal, state, and local government regulations. Business licenses and permits vary depending on your industry and where you do business. Be sure to check out the Mississippi Small Business Development Center website to find out more about what you’ll need.rnrnIn any case, we recommend hiring a professional service like ZenBusiness, which will provide you with a comprehensive package of all the licenses, permits, and insurance required for your Mississippi LLC.