Start a Business in Mississippi

Starting 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:

Step 1: Create a business plan for your Mississippi company

Business plans are a lot more important than some new entrepreneurs may think.

First of all, 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.

Business Plan Tips

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

Step 2: Choose a business structure

Every business has to choose a business structure. The business structures you have to choose from include: corporation, partnership, limited liability company (LLC), or sole proprietorship.

Your business structure 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 Proprietorship

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.

Mississippi Limited Liability Company (LLC)

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.

Step 3: Determine startup costs for your Mississippi business

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.

Fixed, Variable, and One-Time Expenses

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)

Funding Options

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.

Look at Mississippi’s official website for incentives and grant opportunities or use the SBA to find financing options that work for your business.

Step 4: Name your Mississippi business

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.

Business Naming Considerations

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 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 offering a loan to prevent fraud.

Step 5: Register your business in Mississippi

Before you start serving customers, you’ll need to register your business and open the required accounts (like a business bank account or business credit 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 small 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.

Benefits of opening a business in Mississippi

Cost of Living

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.

Business Owner Incentives

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
• Mississippi Professional Limited Liability Company
• Mississippi Corporation
• Mississippi Nonprofit Corporation

Examples of good businesses to start in Mississippi

Agriculture

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.

Tourism

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 in Mississippi.

Bottom Line

Mississippi can be an excellent place to start a new business, particularly if your small business 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.

Ready to make your business idea a reality? Reach out to us today. From formation to compliance, our worry-free services can help you start, run, and grow your business.

More on Starting a Business in Mississippi

• The Best Businesses to Start in Mississippi