Fact checked for accuracy by Billie Anne Grigg, a bookkeeper and Mastery Level Certified Profit First Professional.
Do you have a good idea for a business and are you thinking of forming an LLC? There are so many sources of information online, and it can definitely get confusing. Where do you even begin looking for accurate information on forming your LLC? If you are looking at forming one in Mississippi, you’re in luck.
Here’s everything you need to know about how to form an LLC in Mississippi with a step-by-step guideline to focus more on your business instead of spending hours on research.
Step 1: Choose a Name for Your LLC
First things first, you have to decide on a suitable name for your LLC. The state of Mississippi requires all LLCs to include LLC, LLC, or Limited Liability Company in their name, so make sure your potential business names go well with these additional letters. There are a couple of other naming guidelines to follow.
- The LLC name cannot include any words that may be confused with a government agency, such as “FBI” or “Treasury.”
- If your LLC includes restricted words such as “bank” or “university,” you may be required to submit additional paperwork and have a licensed individual be a part of your LLC.
Then head over to the Mississippi Secretary of State’s website for a business entity search. Mississippi requires all business names to be unique and distinguishable from all other entities in the state. This also includes any business that no longer exists.
Once you’ve decided on a name, reserve your LLC name with the Secretary of State and pay the $25 processing fee. To do this, log in to the website and click “Reserve a Business Name.” This will reserve your name for 180 days until you officially form your LLC by filing the certificate of formation.
Step 2: Select a Registered Agent
When forming an LLC in Mississippi, you must appoint a registered agent. A registered agent is a designated individual or business entity that receives important legal documents on your behalf. Simply put, they act as the middleman between you and the State.
The registered agent must have a physical address in Mississippi or at least a business office in the state. Although you can certainly act as your own registered agent, many business owners choose to hire a registered agent service like ZenBusiness or IncFile.
Step 3: File the Certificate of Formation
After choosing a name and selecting a registered agent, you are now ready to file the Mississippi Certificate of Formation with the Secretary of State. Once again, use the online portal to file and certify your LLC. The filing fee is $50.
A Certificate of Formation will require the following information:
- LLC name
- LLC email address
- LLC future effective date (only applicable if you want your LLC to be effective on a specific later date; the future date can be up to 90 days after filing)
- NAICS (North American Industry Classification System) code for your LLC.
- Registered agent name
- Registered agent address
- LLC member, organizer, or manager’s signature
Step 4: Create an Operating Agreement
Although it is not legally required to create an operating agreement to form an LLC in Mississippi, drafting an operating agreement is still strongly recommended. Even if you’re the sole member of the LLC, it is good practice to have one and can reduce the risk of any future conflict.
An operating agreement should contain the following:
- The business structure
- The responsibilities and contributions of the LLC members
- Purpose of the business
- Management of the LLC.
Step 5: Obtain an EIN (Employer Identification Number)
Except for single-member LLCs, all LLCs are required to obtain an EIN from the IRS. The EIN is a social security number for your business and is needed to pay income tax, file tax returns, and even open business bank accounts. Getting an EIN is a straightforward process: just apply online. There is no filing fee.
Cost to Start an LLC in Mississippi
Starting an LLC in Mississippi is on the cheaper side compared to many other states. The total to file with the Secretary of State is just $50. And if you reserve your business name beforehand, there is an additional $25 fee for a total of $75.
Keep in mind that the cost to start an LLC in Mississippi will certainly rise if you consider lawyer fees, advertising, and other miscellaneous start-up costs.
What To Do After Forming Your LLC in Mississippi
Here are the next steps to get your business up and running after forming your LLC in Mississippi.
- Open a business bank account. Once you’ve obtained your EIN, you should be able to open up a business bank account. Even if you’re a single-member LLC, opening a separate business account is important to separate your personal and business expenses. If you don’t, this will complicate matters come tax season.
- Get a business credit card. Although not necessary, getting a business credit card can make it easier to keep track of business expenses. You can easily monitor what you are spending on and even earn rewards and boost your business credit rating in the meantime.
- Hire an accountant. As a small business, you might think you can handle taxes and finances on your own, but the reality is that all of these details can get very confusing. In particular, when it comes to taxes, you don’t want to risk becoming non-compliant, which can risk your entire business. To avoid this, hire a third-party accountant or put one on your payroll. As an added plus, you will no longer have to deal with the little details regarding payroll and tax, so you can focus on the bigger picture.
- Get business insurance. One of the most important reasons you should get business insurance for your LLC is to protect yourself and your personal assets in case your company is sued. Getting insurance will also protect your business assets and your employees.
- Create a website. In this day and age, it is important that you have a website for any business. Doing so will not only make you look professional but will also bring you more business through Google. By displaying your products and services as well as your testimonials, potential customers and clients will be more likely to contact you.
- Create an online presence. Once you’ve created your website, you should start to establish an online presence. To get traffic to your website, use social media platforms like Facebook, Instagram, or even TikTok to grow your business.
How to Keep Your LLC Compliant in Mississippi
Once your LLC is registered, there are other legal obligations that you’ll need to keep in mind during your company’s lifetime.
Mississippi requires all LLCs to file an annual report with the Secretary of State. These reports are due on April 15 every year and serve to keep all business information updated with the state. If you fail to file one, this may lead to the dissolution of your company.
You should also file for any other necessary licenses or permits for your LLC. Depending on the type of business, you may be required to obtain certain licenses and permits. For example, if you have employees or sell goods and collect sales tax, you may also be required to register with the Mississippi Department of Revenue. Check out the US Small Business Administration website or ask your local city clerk to better understand licensing requirements.
Tax Filing Requirements for LLCs in Mississippi
At the federal level, a single-member LLC should just report any profits on Schedule C with their 1040. As for a multiple-member LLC, the LLC must file Form 1065. The members should then report their share of the profits and losses through Schedule K-1 on Form 1065. The exception to this rule is if you choose to file your LLC as a corporation.
Mississippi does not have any corporate or franchise tax requirements for LLCs. The taxes owed are instead paid by the personal income tax paid for by the members of the LLC. However, if you choose to have your LLC taxed as a corporation, you must pay both corporate income tax and franchise tax.
The corporate tax rate ranges from 3 to 5%, and the franchise tax rate is 0.25% per $1,000 with a minimum tax fee of $25.
Your LLC may also need to pay other taxes, depending on your business type. Some common taxes are:
- Sales And Use Tax
- Employee Withholding Tax
- Unemployment Tax
You can find more information on different types of tax with the Department of Revenue.
Frequently Asked Questions
How long does it take to register an LLC in Mississippi?
Registering an LLC in Mississippi takes little to no time. It will be processed immediately if you file your Certificate of Formation online. You should get your paperwork returned to you in a matter of a couple of days. Most online files take just 1 to 2 business days to be approved.
What tax structure should I choose for an LLC in Mississippi?
Most LLCs are not taxed as a corporation. Instead, the tax requirements are passed onto the individual members of the LLC. The reason for this is to avoid double taxation. However, you can elect to be taxed as a C or S corporation. In certain situations, being taxed as a corporation can be advantageous. Check with your accountant to see if this is the best decision for your LLC.
Should you hire an LLC formation service in Mississippi?
Whether or not you should hire an LLC formation service in Mississippi is completely up to you. Forming an LLC in this state is quite easy and straightforward, so you may not feel the need to do so. However, if you just can’t spare the time or if you are looking to spend more time on developing and planning your business instead of filing forms, hiring a third-party service may be for you.
Filed under: Mississippi Business Guides