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Mississippi offers the lowest cost of living in the United States according to the World Population Review. But, unmatched affordability is just one of the ways Mississippi creates a business-friendly environment for both entrepreneurs and employees. With low 4% to 5% corporate and individual income tax rates, business funding programs, and booming agricultural, manufacturing, and aerospace industries, Mississippi has become a popular choice for small businesses.
Entrepreneurs who choose to form their business entity as a limited liability company (LLC) also benefit from asset protection, tax flexibility, and more control over how they run their business. You can form an LLC in the Magnolia state relatively quickly by filing a Certificate of Formation with the Mississippi Secretary of State (SoS). But there are a few things you need to gather before you can file.
Here's everything you need to know to set up your new Mississippi venture, including state requirements and critical next steps.
Why form an LLC in Mississippi?
Mississippi is well known for affordability and business-formation fees are no exception. It costs just $50 to form an LLC with the Mississippi Secretary of State (SoS), which is of the lowest formation costs in the nation. Not to mention there's no fee to file annual reports, which will help your business save a lot in long-term compliance spending.
In terms of taxes, LLCs benefit from the ability to choose between paying as a C corporation or as a pass-through entity, like an S corporation. This perk is about to get even better, as Mississippi is set to eliminate individual income tax. Rates should drop to 3% by 2030, decreasing annually until it hits 0%. These are just a few of the policies that allow Mississippi LLCs to invest more back into their business.
How to form a Mississippi LLC
As mentioned, you officially form your LLC in Mississippi when you file a certificate of formation with the SoS. This form is also known as articles of organization in other states. But, before you can file, your business needs an available name and a Mississippi registered agent.
If you use LegalZoom's business formation service, we can guide you through the process and handle the paperwork for you. Either way, the steps are the same.
Step 1: Choose your business name
The first thing you need to do is choose a business name, which must comply with Mississippi's naming requirements. Here are some of the most important requirements to keep in mind:
- Your business name must include business entity identifiers, such as “limited liability company” or abbreviations like “LLC” or “L.L.C.”
- An LLCs name can't contain words that falsely imply affiliation with a government agency, regulated industry, or another business structure, such as “attorney,” “bank,” "trust," "insurance," or “credit union,” "corporation," or "partnership."
Your name must be noticeably different from other existing businesses registered with the SoS. Conduct a Mississippi business name search through the Secretary of State's website to determine your desired business name is available, or use LegalZoom’s free business name check tool below.
Free Mississippi Business Name Check
Use our free name check tool to search the Mississippo Secretary of State database and see if your business name is available.
By clicking "Check Availability," I agree to LegalZoom's Terms of Use. This search is a preliminary check of state databases and does not include variations or trademarks. Results do not guarantee name availability or compliance with legal requirements.
Once you've found a name that meets these requirements, there are a few other considerations to keep in mind:
- Even if you don't think you'll need a webpage, it's smart to reserve the option of having one in the future by buying your domain name now.
- If you aren't ready to register your LLC, you can hold the name for up to 180 days by submitting a $25 application for name reservation with the SoS.
Register with the Mississippi Secretary of State filing system to access business document forms and apply for your name reservation.
Step 2: Appoint a registered agent
Under Mississippi law, all LLCs need to maintain a registered agent. A registered agent is an individual or entity that you appoint to receive official legal documents and notices on behalf of your business.
If you're wondering if you can be your own registered agent, the answer is yes. However, it's typically not recommended. Not only is the registered office address available to the public, but also missing out on important legal or official notices has the potential to affect an LLCs legal status.
Therefore, it's critical to have an agent who can manage your business’ legal documents in a reliable, timely, and secure manner. LegalZoom offers comprehensive Jackson-based registered agent services for $249/year.
Step 3: File a certificate of formation
The certificate of formation, also known as the articles of organization, is the document that officially forms your LLC in Mississippi. It informs the Secretary of State about your business' basic ownership, structure, and contact information. Here's what you'll need to provide:
- LLC name and email address
- LLC's effective date (leave this blank if you want your LLC to become effective upon filing)
- Registered agent’s name and office address (a P.O. box doesn't work)
- NAICS code (the North American Industry Classification (NAICS) code identifies your LLC's specific business activities)
- The signature of a member, manager, or organizer of the LLC
You can submit the certificate of formation online through the SoS' online filing portal. Mississippi no longer accepts mail applications. Once you file and pay the $50 filing fee, the Secretary of State will review your paperwork. This typically only takes a day. Once approved, your LLC will officially become a legal business entity!
After your LLC is approved: Next steps
Formation is just the beginning. There are still several important steps that you need to take to ensure your LLC is compliant and set up for long-term success.
Create an operating agreement
While Mississippi state law doesn't require an LLC operating agreement, it’s wise to have a comprehensive one in place for several reasons. Your operating agreement will provide an outline of ownership structure, roles, and operational procedures. This can lend credibility with investors and creditors and provide a single document to keep many of the records that Mississippi law does require LLCs to maintain.
Additionally, a Mississippi LLC operating agreement presents a transparent plan for how your LLC will conduct business. It can help to protect your limited liability status by proving your LLC is truly a separate entity, prevent internal disputes by outlining clear roles and responsibilities, and provide clarity should legal disputes arise. Without an agreement in place, courts can make judgements based on state law, which may not be in the best interest of LLC owners.
Here are some key provisions to include in your operating agreement:
- LLC's name and principal address
- Names and addresses of LLC members and managers
- Duration of the LLC
- Registered agent’s name and address
- Purpose of the business
- Members' rights, responsibilities, and voting powers
- Profits and loss distributions
- Member contributions
- Incoming and outgoing member procedures
- Management structure (Is your LLC managed by its members or managers?)
- Indemnification and liability clauses
- Meeting rules
- Dissolution scenarios and procedures
You don’t need a multi-member LLC to take advantage of the structure, freedom, and protection that an operating agreement provides. Single-member LLCs can also benefit from establishing an internal-operating guideline that distinguishes the entity from its owner. Plus, this internal document doesn't have to be filed with the Mississippi Secretary of State.
If you're not sure how to get started, you can build from an LLC operating agreement template or work with a professional to ensure the document is airtight and customized to your specific business needs. LegalZoom can help you create an operating agreement that’s comprehensive and helps protect your limited liability status.
Building a business is enough work as it is. We'll help you start your LLC with confidence.
Obtain a federal tax ID and open a business bank account
The IRS assigns a nine-digit employer identification number (EIN) to identify businesses for tax purposes. You can obtain your EIN through the IRS in four ways: by mail, online, fax, or by phone. Although applying for an EIN is completely free, you can also pass the task along to an EIN filing service to save time.
If you apply online, you'll receive your EIN immediately. However, if you decide to apply by fax, it'll take four days to process, and if you apply by mail, it may take up to four weeks.
The IRS doesn't require LLCs to have an EIN unless they plan to hire employees. But, having one often makes it easier to do some of the following things:
- File and manage federal and state taxes
- Open a business bank account
- Apply for business licenses (if necessary)
- Shield your SSN during business transactions
Next, you should consider opening a business bank account. A separate bank account for your LLC creates a clear divide between your personal and business finances, which is vital to help protect your limited liability status and shield your personal assets from business debts. A business bank account also makes it easier to track your expenses and income for tax and accounting purposes.
Note: Banks generally require an EIN to open an account, and many also will want to see your certificate of formation and an operating agreement.
Obtain business insurance
If you plan to regularly employ at least five workers, you'll need to provide workers' compensation insurance by law. You can purchase a policy from a private insurance carrier.
That said, general or professional liability insurance may be a wise move for LLC owners that want to protect their business financially from lawsuits. Industries like manufacturing, construction, or food and beverage in particular may want to consider insurance. A business attorney can offer more specific advice based on your business needs.
Register for Mississippi sales tax
Limited liability companies file pass-through taxation by default. This means that the entity itself doesn't pay federal income taxes directly. Rather, it reports business income and expenses through to the members' personal tax returns. This subjects LLC owners to self-employment tax: generally 15.3% (12.4% for social security and 2.9% for Medicare). However, LLCs can elect to file corporate taxes instead by submitting Form 8832 to the IRS.
Once you've formed your business, register with the Mississippi Department of Revenue for a Mississippi Tax Identification Number, which is required to conduct business in the state. Sign up through the Department of Revenue's Tax Payer Access Point (TAP). LLCs are also pass-through entities by default in Mississippi and file a specific pass-through entity income tax return. Other common taxes for small businesses include the following:
- Sales and use tax. For companies that sell, rent, or use tangible personal property or certain services. Mississippi's sales tax rate varies, but is generally 7%.
- Withholdings tax. For employers who need to withhold state income taxes from employee wages.
- Industry-based taxes. For businesses that provide products or services that Mississippi imposes taxes on, such as petroleum, gaming, timber, and more.
File annual reports
LLCs must file an annual report online with the Mississippi Secretary of State between Jan 1 and April 15 every year. It’s totally free to file. All you have to do is update the Mississippi Secretary of State on your business' basic ownership and contact information. For example, is your registered agent and registered office still the same? Has your primary business address changed?
While the process is free and easy, it’s very important that you keep up with your business' annual reports. LLCs that fail to file can lose their active status in the state, which could eventually lead to administrative dissolution.
Starting a business takes courage. LegalZoom makes sure the legal details don’t stand in your way, from the day you register until the day you retire.
How much does it cost to form an LLC in Mississippi?
It can cost as low as $50 to form your Mississippi LLC, which is the filing fee for a Certificate of Formation. However, the cost may increase depending on your specific operating expenses, required licenses and permits, or any additional services you use to help guide you through the process.
Here are some common possible fees to start an llc in Mississippi:
- Certificate of formation: $50
- Registered agent: $0–300 (annually)
- Operating agreement: $0 (DYI) to $500
- Name reservation: $25
Special considerations for Mississippi LLCs
- Mississippi businesses with employees must register with the Mississippi Department of Employment Security for unemployment insurance.
- Mississippi requires businesses to have workers’ compensation insurance if they have five or more employees.
- Mississippi maintains a Small Business Development Center to supply resources for small businesses.
How to start your Mississippi LLC with LegalZoom
If forming your Mississippi LLC seems like an overwhelming and lengthy task, let us handle the busywork. LegalZoom can make the LLC formation process quick and effortless. Just fill out a simple questionnaire, and LegalZoom’s LLC formation services will do the rest so you can focus on what’s next. In addition to formation and registered agent services, LegalZoom also offers compliance, accounting, and licensing services to support your business every step of the way.
Start an LLC in Any State
LegalZoom can help you file your state's formation paperwork for as little as $0 + state filing fees.
Mississippi LLC FAQs
Can I form a single-member LLC in Mississippi?
Yes, Mississippi allows single-member LLCs. These LLCs will file pass-through taxes as a sole proprietorship unless you elect to file as a corporation. The formation process is the same as a multi-member LLC and will still benefit from an operating agreement and separate bank account.
Can I be my own registered agent in Mississippi?
Yes, you can be your own registered agent in Mississippi as long as you have a physical address in the state and are available during business hours to receive mail. However, it’s important to note that the address you list becomes publicly available. In addition to the added privacy, working with a professional service allows you to spend more time on your business while knowing your agent is handling your important documents with care.
Do I need to publish a notice of LLC formation in Mississippi?
No, unlike some states, Mississippi doesn't require LLCs to publish a notice of their formation. This is one more reason why Mississippi is a cost-effective state for LLC formation.
Can I reserve my LLC name before filing?
Yes, you can reserve your desired business name (as long as it’s available) for 180 days. Just file an Application for Name Reservation online with the Secretary of State. The filing fee is $25. However, Mississippi doesn't require you to reserve your business name—it’s only recommended if you're not ready to file and want to secure the name.
How are Mississippi LLCs taxed?
Both the IRS and Mississippi Department of Revenue tax LLCs as pass-through entities by default. This means LLCs pass their gains and losses through to the business owners' individual tax reports. But, LLCs can elect to file as a corporation instead by filing Form 8832 to the IRS. Changing your federal tax filing status will automatically change your filing status in Mississippi as well.
Can an out-of-state business register as a foreign LLC in Mississippi?
Yes, to register as a foreign LLC in Mississippi, file an Application for Registration of Foreign Limited Liability Company through the Secretary of State's online filing portal. The fee to submit this form is $250. You will still need a Mississippi registered agent to qualify as a foreign LLC.
How long does it take to form an LLC in Mississippi?
It typically only takes a day to form your LLC in Mississippi once you've submitted your application online with the Secretary of State.
What records must a Mississippi LLC maintain?
Mississippi code requires LLCs to keep the following records at their principal place of business:
- A list of member and manager names and addresses
- A copy of the LLC's Certificate of Formation
- A copy of the LLC's operating agreement (if one exists)
- Financial records, including capital contributions and profit distributions
- Dissolution scenarios and procedures
How do I dissolve a Mississippi LLC?
First, follow the dissolution procedures laid out in your operating agreement. Then, file a Certificate of Dissolution online with the Secretary of State and pay the $50 filing fee. To dissolve a foreign LLC, file the Certificate of Cancellation of Foreign Limited Liability Company, which costs $25. Finally, notify any creditors, pay all outstanding debts and taxes, distribute the remaining assets to members, cancel business licenses and permits, and close all accounts connected to the LLC. You can also use a service like LegalZoom to help dissolve your business.
Kimberly Gladden-Eversley contributed to this article.
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