Pay Your Mississippi Small Business Taxes

If you run a Mississippi small business, you already know that paying taxes is an important part of keeping your business legally compliant. But Mississippi state taxes aren’t exactly easy to understand, even for experienced entrepreneurs. That’s why we’ve put together a short guide to the types of state business taxes your company might face, when and how to pay them, and which of our products and services can help make the process of doing your taxes less painful when the time comes. 

When it comes to keeping track of your finances, our ZenBusiness Money App can help. The app allows you to easily send custom invoices, accept credit card and bank transfer payments, and manage your clients from an easy-to-use dashboard.

If you need complete compliance help, our Worry-Free Compliance service can help you stay on top of your Mississippi obligations like annual reports and other required filings, warn you about upcoming deadlines, and keep all your business’s documents in one place. 

Step 1: Establish your Mississippi business’s corporate income tax obligations

Business taxes in Mississippi can be confusing because they change depending on your type of business or level of income. In most states, corporations are taxed at the state’s corporate income tax rate. Some states also charge corporations a “franchise tax,” which is a tax levied for the privilege of doing business in that state. Mississippi has both a corporate income tax and a franchise tax. 

However, if you operate your business as a limited liability company (LLC), partnership, S-corporation, or sole proprietorship, these are all considered pass-through entities. Mississippi small business taxes on pass-through entities are usually the same as the state’s personal income tax rate.

Corporations

As mentioned, Mississippi charges corporations an income tax as a percentage of business income. This is a graduated tax, and it’s levied as follows:

• 0% tax on the first $3,000 of taxable corporate income
• 3% tax on the next $2,000 of taxable corporate income
• 4% tax on the next $5,000 of taxable corporate income
• 5% tax on all taxable corporate income over $10,000

In addition, Mississippi has a franchise tax. Corporations pay this tax simply for the privilege of doing business in Mississippi. Franchise tax can be a little confusing. It is calculated at $2.25 per $1,000 (or fraction thereof) in excess of $100,000 of money spent doing business in Mississippi. Meaning, you aren’t assessed franchise tax on the first $100,000 your business spends. However, if your property values are assessed at more than the money your company spends in Mississippi, your franchise tax is based on that. The minimum franchise tax a corporation can pay is $25.00.

Pass-through entities

Mississippi small business taxes for pass-through entities like LLCs and partnerships are simply your personal income tax rate. If you have questions about what tax rate you should be paying, contact the Mississippi Department of Revenue. The Mississippi Department of Revenue is a great place to start when clarifying questions on what tax documents you need to file for yourself and your business.

Resources

Both the Mississippi Department of Revenue and the U.S. Small Business Administration can help you with information about your Mississippi small business taxes. Both offer many resources for small business owners. Your personal taxes and business taxes may be due at different times during the year, so be sure to ask for help if you need it in organizing or filing your documents. If you’re operating a pass-through entity, you may even have to file or pay quarterly estimates. 

The Mississippi Department of Revenue makes it clear that even if you don’t make any money or your company is inactive, you may still have to file a Mississippi small business tax return. Typically called a “zero return,” this type of document usually just shows the Department of Revenue that your company exists but didn’t make money in Mississippi during that year. Contact the Mississippi Department of Revenue if you have questions about your tax return obligations.

Step 2: Determine your Mississippi business’s employment taxes

If your Mississippi small business has employees, you’re responsible for withholding taxes from your employees’ paychecks. These are typically called “withholding taxes” or “employment taxes.” The Mississippi Department of Revenue has a system where employers can file online to enable themselves to withhold taxes from their employees paychecks. Since different withholding rates apply to different employees, check with the Mississippi Department of Revenue before submitting your required withholding tax payments and returns.

Step 3: Establish your Mississippi business’s additional state tax obligations

In some states, there are tax obligations for business owners in addition to things like income tax and employment tax. This can include sales tax, unemployment tax, and other taxes levied on top of other Mississippi small business taxes. Thankfully, Mississippi is a business-friendly state and there are no surprises here. The only two additional taxes to consider (on top of income tax and franchise tax) are sales tax and unemployment tax.

Sales tax

Mississippi currently charges a 7% sales and use tax. Business owners need to pass this through to the state. Local jurisdictions in Mississippi can charge additional sales tax too, so business taxes in Mississippi may be considerably higher than they seem at first blush if you don’t understand how local sales tax works. Check with your local tax commissioner and the Mississippi Department of Revenue to confirm the most current rates and filing dates for returns.

Unemployment taxes

The Mississippi Department of Employment Security administers the unemployment tax program in Mississippi. Business tax rates in Mississippi for unemployment insurance can vary depending on how many years you have been in business. These Mississippi small business taxes can also vary depending on other factors like the size of your workforce. If you have questions about your rates or filing requirements, contact the Mississippi Department of Employment Security.

Not sure how to stay compliant? Learn more about legal compliance for small business owners.

Step 4: Prepare to file and pay your Mississippi small business taxes

You can file your Mississippi small business taxes online with the Mississippi Department of Revenue. You can file and pay online through the department’s automated TAP system. Registration is required.

However, before you finalize your Mississippi small business tax return, you’ll want to ensure you have complete records about your business on hand. Helpful records to have handy before filing your tax return include:

• Your social security number and home address
• Business address and public information (like articles of association or organization and bylaws)
• Your business’s employer identification number (EIN) and state tax ID number 
• Any invoices and sales records from the last year
• Your business’s expense records as well as your personal expense records if your business is a pass-through entity
• Any relevant receipts

Our ZenBusiness Money App can also help you out at tax time. Our app can help you send payments, manage invoices, and quickly find receipts. Keeping everything in one place can be your secret weapon when you go to file your Mississippi small business taxes!

Do I need an accountant?

Most small businesses choose to hire professional accounting help. Your focus is on your company, not on tax preparation. Leave that to the pros. There can be serious consequences for those who don’t file their Mississippi small business taxes properly. Hiring an account or tax preparer can take the accounting hassle off your plate. 

If you’re looking for information about federal taxes, head over to our page on federal taxes for small businesses to learn more.

How we can help

When it comes to keeping track of your finances, our ZenBusiness Money App can help. The app allows you to easily send custom invoices, accept credit card and bank transfer payments, and manage your clients from an easy-to-use dashboard.

If your business is still in the formation phase, our Mississippi LLC Formation Services or Corporation Formation Services can help you get started.

Mississippi Small Business Tax FAQs

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.