If you’re looking to start a business in Mississippi, you may have already discovered that there are a number of entity types to choose from. But which one is best for you?
One type of entity you might consider forming is called the professional corporation (PC). PCs are business organizations that are owned and operated specifically by licensed professionals.
Want to know more about how to form a professional corporation in Mississippi? ZenBusiness can help. Read our guide below.
Determine whether a Mississippi professional corporation structure is the right fit for you
If you’re just getting started on the business formation process, you might be wondering, What is a professional corporation in Mississippi?
The Mississippi Professional Corporation Act (MPCA) permits the formation of a professional corporation by one or more professionals whose purpose is to render certain professional services. Specifically, Mississippi law defines a professional service as one that may be “lawfully rendered only by a person licensed or otherwise authorized by a licensing authority in this state to render the service.”
Examples of individuals who may perform professional services include:
- Certified public accountants (CPAs)
This isn’t an exhaustive list, and there are other professionals who may be able to form a Mississippi professional corporation as well.
How will ownership be divided?
In a Mississippi professional corporation, owners are referred to as “shareholders.” The PC may issue shares only to those who are authorized by law to render the professional services the PC was created to provide.
Ownership in the PC will be divided according to each shareholder’s respective percentage ownership of the overall number of issued shares.
How will the professional corporation be managed?
The day-to-day affairs of a Mississippi professional corporation will be governed and managed by the board of directors for the PC.
These directors will help guide the PC’s strategic and decision-making processes. However, the management powers of the board are not limitless. In most cases, the professional corporation’s bylaws will more clearly define, limit, and regulate the management powers of the board of directors.
Should you form a professional corporation or a professional limited liability company (PLLC)?
Mississippi also allows businesses the option of forming what is called a professional limited liability company (PLLC). But how does a PLLC differ from a Mississippi professional corporation?
As discussed above, the shareholders are the owners of a Mississippi professional corporation. A PC is managed by a board of directors.
The owners of a PLLC, on the other hand, are referred to as “members.” A PLLC can be managed either by the members (member-managed) or by hired managers (manager-managed). Other differences between a Mississippi PC and PLLC relate to taxability and liability protection for owners.
Choose a name for your Mississippi professional corporation
If you have determined that a professional corporation is the right entity type for your Mississippi business, the next step will be to choose a name.
Comply with Naming Restrictions
Pursuant to the Mississippi Professional Corporation Act, there are certain words or abbreviations that you must include in your Mississippi professional corporation name. Specifically, your business name must include one of the following:
- Professional corporation
- Professional association
Additionally, your PC name may not contain any language stating or implying that the business is incorporated for any purpose other than that authorized in the Articles of Incorporation.
Check whether your preferred name is available
If you already have a potential name in mind for your Mississippi professional corporation, you will definitely want to check to see if it’s available before moving forward. Sometimes business owners make the mistake of moving forward with their preferred name without first running a search. Unfortunately, however, if another business entity has already taken the same or similar name, this can result in wasted time and fees.
Thus, always check to verify whether your preferred business name is available before taking any additional steps. You can save a lot of time by searching the Mississippi Secretary of State Business Search database.
Reserve a name and domain
If your preferred business name is still available, you’re ready to move forward. If you like, ZenBusiness can help you reserve your business name and register a domain so that no one else takes them while you finish the PC formation process.
Select a Mississippi registered agent
You must also designate a registered agent for your Mississippi PC. A registered agent is a person or entity that your Mississippi PC designates to accept service of process of legal documents and certain official state correspondence on your behalf. Having a registered agent is crucial to ensuring that your business receives important legal documents and stays compliant with all requirements moving forward.
Wondering whom to appoint as a registered agent for your Mississippi professional corporation? ZenBusiness can help. With our registered agent services, we can connect you with a trustworthy and reliable registered agent to help you comply with state requirements.
Complete your Mississippi Articles of Incorporation
Next, file Articles of Incorporation for your Mississippi professional corporation. The Articles of Incorporation is one of the most important documents for any corporation.
The Articles of Incorporation for your PC must set forth:
- A corporate name
- The number of shares the corporation is authorized to issue
- The street address of the corporation’s initial registered office and the name of its initial registered agent at that office
- The name and address of each incorporator
There is additional information that may be included in the Articles of Incorporation, but at the very least, you must include the information above.
Establish a corporate record in Mississippi
A Mississippi PC must also keep corporate records in connection with the business and its activities. For example, your Mississippi professional corporation must maintain records of:
- Minutes of all meetings of its shareholders and board of directors
- All actions taken by shareholders or the board of directors without a meeting
- Accounting records
- List and addresses of its shareholders, directors, and officers
- Resolutions adopted by the board
- Bylaws and amendments
- Written communications to shareholders
- Its most recent annual report
Additionally, such records must be maintained and available for inspection by shareholders at the corporation’s principal office location during regular business hours.
Designate a Mississippi professional corporation board of directors
Your Mississippi PC must also designate a board of directors. This board of directors will play a large role in your new business with the ability to:
- Hold meetings
- Manage affairs of the business
- Appoint officers
- Provide oversight
The powers of the board of directors will depend on the authority enumerated in the Articles of Incorporation. Thus, it’s important to carefully draft the Articles of Incorporation and see that you understand their implications.
Create Mississippi corporate bylaws
Mississippi law also states that the original incorporators or the board of directors must adopt initial bylaws for the corporation. These bylaws will provide key details for the effective regulation and management of the affairs of the business.
Typical bylaw provisions include topics such as:
- Frequency of meetings of the board of directors
- Voting requirements and procedures
- Dispute resolution procedures
While these are typical provisions, the bylaws for your PC may contain virtually any provision for the management of the business, so long as it’s not inconsistent with the law of the Articles of Incorporation.
Hold your first board meeting
Now, you’re now ready to hold your first board meeting.
At this first meeting of the board of directors, there are a number of topics that may be addressed. These topics include:
- Review and ratification of the bylaws
- Appointment of officers
- Discussion of tax status for the corporation
- Issuance of stock shares and classes of stocks
- How management of day-to-day operations will be handled
These are only a few topics, and there may be others depending on the particulars of your business. Regardless of what is discussed, it’s important to keep accurate and detailed meeting minutes to help establish the corporate record.
Handle your Mississippi tax obligations
It’s also imperative that you know and understand your various tax obligations.
At the federal level, your Mississippi PC will be subject to taxation by the IRS. To properly comply with your federal tax requirements, you will need an employer identification number (EIN) from the IRS, which ZenBusiness can help you secure.
But don’t forget — your Mississippi PC will also be subject to tax obligations at both the state and local levels.
Obtain Mississippi business licenses and permits
As described above, Mississippi professional corporations may only be formed by professionals licensed to provide professional services.
If you’re a professional hoping to form a Mississippi PC, you need to obtain all necessary business licenses and/or permits before your business provides any services. This might include general state and local business licenses, as well as any regulatory or industry-specific licenses needed for your particular profession.
Of course, many licensing and permit requirements are industry-specific and may vary at the federal, state, and local levels. As such, it’s important to check various resources to see that you have met all requirements. ZenBusiness can help you determine what licensing your business needs with our business license report.
Acquire insurance for your Mississippi professional corporation
The next step is to obtain insurance coverage for your Mississippi PC. Mississippi requires businesses with five or more employees to obtain workers’ compensation insurance. It’s also a good idea to acquire general business insurance. And depending on your specific profession, you may require industry-specific insurance coverage, such as professional malpractice insurance.
While obtaining coverage comes with additional financial obligations, having insurance is imperative to protect your business from potential legal liability and financial losses when the unexpected occurs.
Open a business bank account
Finally, you will need to open a separate bank account specifically for your Mississippi professional corporation. Doing so helps to establish a legal distinction between the business entity and any individuals involved in the management or ownership of the PC.
Failing to create a separate bank account can lead to the commingling of personal and business funds, which can have negative legal ramifications in the future.
Want more information on how to form a Mississippi professional corporation?
Business incorporation can be time-consuming and complex. Running a business can also be complex, but it doesn’t have to be.
At ZenBusiness, we focus on making the complex simple. We pride ourselves on supporting new and growing businesses throughout the business lifecycle. Take a closer look at our services, and see what we can do to help you run and grow your business today.
Mississippi Professional Corporation FAQ
What are the filing fees for a Mississippi professional corporation?
Current filing fees for business formation are subject to change. Thus, check in regularly with the Mississippi Secretary of State for the most up-to-date filing fee information.
Do I need a lawyer to form a Mississippi professional corporation?
No, you don’t need a lawyer to help you form a Mississippi professional corporation. Nevertheless, forming a Mississippi PC can be a complex process, so an attorney may be able to provide guidance.
Does Mississippi have other professional entity types?
Yes, Mississippi permits the formation of professional limited liability companies (PLLCs) in addition to professional corporations. As with PCs, a PLLC may be formed only by professionals providing professional services.
Can professionals from different fields form a Mississippi professional corporation together?
No, a Mississippi PC may only render one type of professional service as defined in the Articles of Incorporation. Thus, professionals from different fields may not form a Mississippi professional corporation together.
Will I be taxed as an S corporation or a C corporation in Mississippi?
It depends. In most cases, the PC can elect whether to be taxed as a C corporation or an S corporation.