There’s incredible potential for businesses in Mississippi and the state wants entrepreneurs to take advantage of it. That’s why it provides several in-state loans and incentives to small, minority- and women-owned businesses. These programs offer training, access to opportunities, technical assistance, and grants to business owners.
You get a solid base to transform your vision for a business in the state into reality. You just need to learn how to start an LLC in Mississippi first.
What Is a Mississippi LLC?
A Mississippi LLC is a legal structure used to operate a business or hold assets in the state. LLCs provide liability protection, which means that your personal assets remain shielded from the liabilities and contracts of the business. Should the business run out of money, your personal assets won’t be at risk.
An LLC in the state can have single or multiple members. The entity is considered pass-through, in that all income flows to the owners who must report it on their tax returns.
What to Consider Before Forming an LLC in Mississippi?
A business plan is the foundation upon which your entire business is going to be built. It provides you with a clear path to growth and profitability. Conduct in-depth market and customer research and add that to the plan. It will help you visualize the opportunities that exist in the market and give you a better idea of how to position your products and services in order to gain an edge over the competitors.
All the research that you conduct at this stage will also make it apparent what type of business entity you could choose to incorporate. Most small business owners will go with an LLC since they’re easy to set up and operate, there are minimal paperwork requirements, and keeping on top of ongoing compliance matters is simple.
8 Steps to Start an LLC in Mississippi
Mississippi makes it quite easy to incorporate an LLC in the state. The process may seem a bit complex if you haven’t got any experience with these matters. However, you can go through it very easily by following the simple steps highlighted here.
Step 1: Decide on a Business Name
The business or LLC name that you choose must be unique. It can’t be the same as another business. You can check the state’s business name database and even search online to make sure that the name is available and is not trademarked.
Keep in mind that you’ll need to put limited liability company or the LLC abbreviation at the end of the name. If you’d rather not have the full name displayed on your marketing materials or communications, you can use a DBA instead. It allows you to use a name that’s different from the registered name.
Step 2: Choose a Registered Agent
You must have a registered agent for your Mississippi LLC. If you’re a resident of the state you can be your own registered agent. The state requires registered agents to have a physical address in Mississippi and be available during regular business hours to accept legal documents.
If you’re based elsewhere, just use a Mississippi registered agent service. Among the reasons why you need a registered agent is the fact that someone must be able to receive service of process in case your business gets sued. Having a registered agent in the state ensures that you meet this crucial requirement.
Step 3: Prepare and File LLC Articles of Organization
At this stage, you need to put together all the important information about the LLC into a document that’s called the Articles of Organization. This document will include the name of the business, details about its members and managers, address, business purpose, and more.
This document has to be then submitted to the Secretary of State. Once the application has been processed and approved, your LLC will be officially registered and you can move on to the other steps that include getting licenses and opening a business bank account
Step 4: Draft an LLC Operating Agreement
The operating agreement for your LLC lists all the rights and responsibilities of the members. It details all the operating procedures, providing complete clarity on how the internal affairs will be run. Think of it as a contract between the members to run the company.
The details that you should mention in the operating agreement include the decision-making and dispute-resolution processes, management structure, distribution of profit and losses, etc. A solid operating agreement will allow everyone to do their jobs more efficiently.
What’s Next After Filing an LLC in Mississippi?
Since you’ve made it this far, you’re on the right track. Your LLC is now active but it’s not quite ready to launch your business just yet. There are still a couple of more steps that you must take to ensure that your LLC remains active and compliant. This involves obtaining an EIN from the IRS and getting your banking matters sorted.
The following steps highlight what you need to do from here to complete the entire LLC formation process and get started on taking your business to new heights.
Step 5: Apply for EIN
Businesses are required to obtain an Employer Identification Number or EIN from the IRS. It’s a nine-digit number unique to every business so if you have multiple LLCs, you’ll need separate EINs for them all. The IRS uses these numbers to identify businesses for taxation.
It’s a very simple process to obtain an EIN. File the Form SS-4 with the IRS either online or via mail. The IRS will work on the application and once approved, send you a confirmation letter with the EIN on it.
If there ever comes a time when you lose the EIN, you can recover it very easily either by getting in touch with the IRS or finding the confirmation letter that was sent to you.
Step 6: Open a Business Bank Account
Your LLC needs a separate bank account. It would be a mistake if you use a personal account for business matters. Separate your personal and business expenses so that it becomes simpler to track all business transactions and maintain accurate financial records.
To open a business bank account, gather all the business formation documents and your ID before heading to your preferred bank. Be sure to ask them questions about their banking products so that they can guide you effectively about the solutions best suited to the needs of your business.
Once your questions about opening a business bank account have been adequately answered and you like what they’re offering, go ahead and start the process. Most banks can sort you out with the account immediately.
Step 7: Obtain Licenses or Permits
Based on the type of business you’re looking to operate, Mississippi may require you to get a license or a permit. You can search online for any requirements, local and state, that may pertain to your business. The filings can typically be made online and it won’t take too long to obtain them if everything is in order. There may be fees associated with the licenses that you seek, including renewal fees.
Step: 8: Get Business Insurance
There is one LLC insurance requirement that businesses in Mississippi have to meet. They must have workers’ compensation insurance if they have five or more employees. Business owners can either purchase coverage or seek approval from the state to self-insure.
It’s generally advised to maintain comprehensive insurance coverage for the business.
Consider general liability insurance to ensure that the business is protected against most types of risk. Automotive insurance may also be required if you have operations with an element of commercial driving involved.
3 Types of LLCs to Consider in Mississippi
You can choose from different types of LLCs depending on the type of business that you’re in. There are several options available for incorporation in Mississippi. It’s vital you choose the right type of limited liability company structure so that your business can operate effectively.
1. Single-member LLC
A single-member LLC functions quite like a sole proprietorship in which the income passes through to the owner who has to report them on their personal income tax returns. However, the limited liability company offers asset protection, shielding the owner’s personal assets from the liabilities of the business.
Small business owners generally opt to incorporate LLCs since they’re easy to set up and the filing fee tends to be minimal as well. It provides a solid platform for their business while ensuring that their assets are protected.
2. Multi-member LLC
The main difference between multi-member and single-member LLCs is that the former has two or more members. It provides an effective way for multiple people to come together and form a business entity.
All members have the same level of protection against the liabilities of the business. Members are free to decide the equity percentage and the distribution of profit and loss among them. They’re similarly easy to set up with minimal paperwork required to complete the process.
Mississippi is one of the states that allows practicing professionals to form a Professional Limited Liability Company or PLLC. This includes professionals who require a Mississippi state license to practice, such as lawyers, doctors, architects, etc.
PLLCs work in the same way as conventional LLCs. The primary benefit is that they provide owners with personal liability protection that may be a result of professional malpractice. Professionals can run their practice as a separate legal entity while limiting their personal liability.
How the Mississippi LLC Formation Experts Can Help You
You’ll need to incorporate an LLC to tap into Mississippi’s incredible potential. Even if you don’t want to go through the entire process yourself, you can rely on trusted service providers to help you.
With doola’s LLC formation services, you can be sure that experts who are well-versed in all of the technicalities are helping you establish your business in Mississippi. This takes the stress out of the process for you, helping you focus on what matters more.
Why should I file an LLC in Mississippi?
Incorporate an LLC in Mississippi because it offers generous incentives and grants for small businesses. The process is simple enough and the filing fee is reasonable, so you can establish your business in a cost-effective manner.
How long does it take to get an LLC in Mississippi?
You can get your LLC in Mississippi within a few days. It doesn’t take very long to go through the entire process. Once you have submitted all the relevant documents to the Secretary of State, they’re usually very quick at processing the application.
How much does an LLC cost in Mississippi?
When you submit all the relevant documents and file the application to incorporate an LLC in Mississippi, you’ll need to pay a $50 fee. Make the application and pay the fee online through the Mississippi Business Services portal.
How is an LLC taxed in Mississippi?
Both state and federal taxes may be applicable to an LLC in Mississippi. LLCs are considered pass-through entities so members are required to report that income on their personal income tax returns. Members may also need to pay self-employment taxes and payroll taxes if they have employees.
Can I change the name of my LLC in Mississippi after it’s formed?
Changing the name of your Mississippi LLC is a simple process. It requires you to file an amendment with the Secretary of State and pay a fee of $50. Once the application is approved, you can legally change the LLC’s name.
Can an LLC in Mississippi be taxed as an S-Corporation?
LLCs can elect to be taxed as an S-Corporation in the state by filing Form 2553 with the Internal Revenue Service. This can provide tax benefits but only a tax professional can guide you on whether it would be beneficial for your business to elect to be taxed as such.
Do I need to have a physical office for my LLC in Mississippi?
Even if you don’t have a physical office in Mississippi for your LLC, you’ll need a registered agent in the state who has a physical address there. This is a requirement for all LLCs, as the registered agent is required to be present during business hours to receive legal documents.
Can I dissolve or close my LLC in Mississippi if I no longer need it?
A Mississippi LLC can be dissolved fairly easily. Start by filing the Articles of Dissolution with the state and pay the $50 fee. It takes a few days for the application to be processed and the LLC then stands dissolved.