Mississippi isn’t the richest state. Its modest $104.2 billion GSP isn’t near the highest, and it actually ranks among the poorest states in the country. Still, the state offers a unique opportunity in some of its fastest-growing industries, which include finance and insurance, manufacturing, and transportation and warehousing.
If you’re wondering how to start a business in Mississippi, this guide can help.
Benefits of Opening a Business in Mississippi
In Mississippi, the cost of living is a major benefit to small business owners. Out of the entire U.S., it’s the cheapest state to live in with a cost of living that’s about 19% lower than the national average. What does that mean? Cheaper labor, if your business plans to hire employees, and cheaper real estate. It’s also a great location for business owners looking for a place to build their lives. There are no state taxes on most retirement income, so when it’s time to hang up the towel, it doesn’t cost an arm and a leg.
Beyond that, Mississippi offers a number of incentives to business owners. This includes grants for at-risk businesses whose industries have been relocating abroad, those that benefit the public or state infrastructure, and rural businesses. They also help foster the growth of minority and women-owned companies, which are certified through the state, with a wide variety of financing and educational programs.
Start an Entity in Mississippi
- Mississippi Limited Liability Company (LLC)
- Mississippi Professional Limited Liability Company
- Mississippi Corporation
- Mississippi Nonprofit Corporation
How to Start a Business in Mississippi
When you’re starting a new business in Mississippi, it’s a safe bet that you’ll be dealing with the Mississippi Secretary of State and Mississippi Department of Revenue (DOR). The former has a number of businesses services to help you along your way, including business reports and online document filing. Beyond that, this checklist can guide you:
How to Start a Business in Mississippi Checklist
- Create a business plan
- Choose a business structure
- Determine your Mississippi business costs
- Create a name for your Mississippi business
- Register your business and open financial accounts
- Market your Mississippi business
1: Create a business plan
Business plans are a lot more important than some new entrepreneurs may think. Not only do they help you secure funding (either by attracting investors or helping you qualify for a business loan), they also help you understand whether or not your business is worth launching in the first place. The truth is that most businesses fail because there is no market need, but a business plan outlines your product, your market, and the process that happens between the pair. When you’re crafting a business plan, you may want to:
- Clarify your business idea: What do you aim to do? Are you solving a problem that actually needs solving?
- Look at the financials: How much will your business cost to run, and when do you expect to turn a profit. Do you need outside funding?
- Choose a location: Not all locations are ideal for business, and Mississippi has a wide range of areas from bustling cities to rural communities.
- Run a competitive analysis: Who are your competitors? How are you better, and where can you improve?
- Run a market analysis to determine how best to serve your ideal consumer
- Search for tax breaks and local grants
2: Choose a business structure
Every business has to choose a business structure, whether it’s a corporation, partnership, limited liability company (LLC), or sole proprietorship. This determines your taxes and may require registration with the Secretary of State. Two of the most popular small business entities are LLCs and sole proprietorships. This is because they’re relatively easy and inexpensive to form.
Sole proprietors have the least amount of paperwork and thus the quickest formation process. Establishing an LLC consists of filling out a Certificate of Formation (a.k.a. Articles of Organization in some states) with a listed registered agent. An operating agreement isn’t a requirement, though it’s strongly encouraged to head off issues that may emerge down the road.
Even with the ease of formation, the main draw of an LLC is the fact that business owners can enjoy limited liability protection on their personal assets, a luxury not given to sole proprietors. Both have a favorable tax position, avoiding an additional corporate tax bypassing business revenue through to the owner’s personal tax return.
3: Determine your business costs
It’s important to fully understand how much it will cost to open your business. This will help you evaluate your need for funding and set competitive prices. Remember: always add a six-month cushion just in case of an emergency. Businesses are rocky in the beginning, especially before you’ve landed regular customers. To figure out costs, add up:
- Fixed expenses (like insurance premiums, rent, and employee salaries)
- Variable expenses (like inventory costs)
- One-time costs (like supplies, office furniture, and other equipment)
Once you know the costs, you can look at funding options. Smaller, one-time business expenses are easily handled through a low or no-APR business credit card, but you must always be wary of interest. For everything else, business owners typically opt for a business loan. This can be done through the Small Business Administration (SBA) or a local bank that provides business services. Additionally, you may qualify for a grant or another type of government resource.
When you’re looking for funding, it’s best to do due diligence, because you’ll likely owe someone, somewhere down the line. You can look at Mississippi’s official website for incentives and grant opportunities or use the SBA to find financing options that work for your business.
4: Create a business name
Choosing the perfect business name can seem like an enormous task. The best names for a business fit the brand’s unique aesthetic and are easy enough to understand to establish a presence through word of mouth and online. This is especially important when you’re registering social media profiles and a web domain.
The tricky part is that your business’s name also has to be unique. You don’t want there to be any confusion, and you certainly don’t want to get sued by a business that already owns the trademark. You can run an online search and look through Mississippi’s business registrations to make sure your name hasn’t already been taken.
There is one caveat to crafting the perfect business name. If you’re using a fictitious name (also called a DBA or “doing business as” name), you may have to register with the Secretary of State. Though registration under the Fictitious Business Name Registration Act is voluntary, banks are likely to require it prior to obtaining a loan to prevent fraud.
5: Register your business and open financial accounts
Before you start serving customers, you’ll need to register your business and open the required accounts. Mississippi LLCs can register online and must pay a filing fee of $50. Other steps include:
- Opening a business bank account and getting a business credit card
- Obtaining a tax ID number so you can pay state and federal taxes. Some sole proprietors may wish to use their social security numbers, but you can register for a federal employer identification number (EIN) for free through IRS.gov.
- Purchasing the required business insurance. Most businesses need general liability insurance, but you may also need unemployment insurance or other types of specialized business insurance.
- Registering with the Mississippi Department of Revenue through Mississippi’s Taxpayer Access Point, especially if you need to collect sales tax.
- Obtaining the required permits and business licenses.
6: Market your Mississippi business
A great marketing plan can make revenue soar. It’s how you’ll attract new customers, who’ll hopefully turn into repeat customers. In 2020, the best marketing plans have a heavy focus on digital advertising. This means considering crafting a cross-platform strategy on social media platforms like Facebook, Instagram, YouTube, Twitter, and LinkedIn. HubSpot has a helpful marketing guide to get started.
If your business hinges on local patrons, you may also want to sign up for Yelp, Angie’s List, Google My Business, and other local business registrations. Never underestimate the power of what’s essentially a digital phone book.
Examples of Good Businesses to Start in Mississippi
Agriculture is the largest industry in the Magnolia State, bringing in a whopping $6.3 billion each year. Since most of the state is rural, it presents a great opportunity for farming businesses. There are actually 41,000 farms in the state employing 30% of Mississippi’s workforce. In comparison, that greatly exceeds the total number of newspaper publishers in the entire United States. Some industries really do have a better chance of success than others.
Additionally, Mississippi is a huge state for tourism, particularly in the realm of gambling, since casinos were legalized in certain areas in the 1990s. Prior to hurricane Katrina, Mississippi was the second biggest gambling state. Though it’s no Las Vegas, gambling culture is still alive and kicking here.
Mississippi can be an excellent place to start a new business, particularly if it’s a company that serves rural communities. Since we’re also living in economically uncertain times, Mississippi’s Department of Employment Security has a number of resources for businesses and workers affected by the COVID-19 pandemic. If your business model hinges on large gatherings of people (like live entertainment or restaurants without takeout options), you may want to wait until a vaccine is widely available or start on a smaller scale.
Mississippi Business FAQs
How much does it cost to start an LLC in Mississippi?
Filing a Certificate of Formation online costs $50 in the state of Mississippi. You can also file by mail for the same price.
What is a good city to start a business in Mississippi?
Some of the largest cities in Mississippi are Jackson, Gulfport, Southaven, and Biloxi, which means they also give you direct access to the largest pool of workers and consumers. If your business hinges on local commerce, it’s best to go where the people are. If not, Mississippi is a great, and inexpensive, place to launch your endeavor.
How much does the average business owner make in Mississippi?
Different types of businesses have a vast array of salaries. Though the Bureau of Labor Statistics doesn’t have a distinct category for business owners, it does report that the mean wage for someone in a management position is $81,510 per year in Mississippi, while chief executives make a mean of $112,310 per year.
Popular States to Start a Small Business
How to Start a Business in North Carolina
How to Start a Business in New York
How to Start a Business in New Mexico
How to Start a Business in Utah
How to Start a Business in Idaho
How to Start a Business in Indiana
How to Start a Business in Kansas
How to Start a Business in Washington
How to Start a Business in Kentucky
How to Start a Business in Maryland