How To Get An Llc In Mississippi
The Limited Liability Company (LLC) is a popular entity structure for businesses starting in Mississippi. The LLC provides personal liability protection and has the potential to save money on taxes. With our guide, you can learn how to form an LLC in Mississippi without an attorney.
Unlike a sole proprietorship or partnership where the small business owner can be held personally liable for lawsuits against the business, the LLC is a separate legal structure, protecting the business owner's personal assets.
Related: How Does an LLC Protect You ?
Besides the liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration, and management flexibility.
Cost to Form an LLC / Processing Time
To form a Limited Liability Company in Mississippi, file the Certificate of Formation with the Mississippi Secretary of State. The filing fee is $50.
Processing time for the LLC typically takes between 3-5 business days when filing by mail and online filings are available immediately.
If you have questions, contact the Mississippi Secretary of State.
601-359-1633
800-256-3494
Steps to Form a Mississippi LLC
Step 1: Register with the Mississippi Secretary of State
- Begin by registering for an account at the Mississippi Secretary of State website.
- After registering, log in and select "Form a Mississippi Corporation, Non-Profit, LLC, Partnership or Cooperative."
Step 2: Business Information
Business Type– In this drop-down menu, select "Limited Liability Company" to form an LLC.
Business Name – Enter the name you want for the LLC. The LLC's name also has to differ from other entity names registered with the Secretary of State. Check on available Mississippi LLC names before filing to be sure the one you want is available.
Additionally, the name of the LLC must include one of the following phrases or abbreviations at the end of the business name:
- Limited Liability Company
- Professional Limited Liability Company
- LLC
- L.L.C.
- PLLC
- P.L.L.C.
A comma may be used after the business name and before the designator. "Cowboy Cleaners LLC" and "Cowboy Cleaners, LLC" are both acceptable.
Before finalizing on a name, you may also want to see if a domain name is also available to have a matching website address.
A Professional Limited Liability Company is an LLC that provides services that require licensing in Mississippi. To see more about professional licensing, see our guide on Mississippi licenses and permits.
Enter the name you want to use and the desired designator at the end of the name. If the name you want isn't registered, a message will show up saying it is available.
If there is a name you want but are not ready to register the LLC, you can file the Reservation of a Business Entity Name with the Mississippi Secretary of State. The name reservation will hold a name for up to 180 days, at the cost of $25.
Business Email – Enter any email for the Secretary of State to communicate with you regarding any questions during the LLC formation.
Step 3: Future Effective Date
If you want the LLC to start on today's date, leave the field blank. If you want to delay the LLC start to a date in the future, enter a date less than 90 days in the future to start.
Some will delay the LLC start date if they aren't ready to go but want the filing out of the way or if they are close to the end of a calendar year and want to delay until the following year so they won't have to file business taxes.
Step 4: Nature of Business
This section is asking for information regarding the activities of the business. To do that, there is a number called NAICS (North American Industry Classification System). This code is a six-digit number that classifies and categorizes the different business industries. This information is used in reporting statistical data for each of the industries in the U.S. Remember this number as you will need it when filing annual tax returns. Find your NAICS number by clicking on the "Search for NAICS Codes" and enter the keyword(s) that most closely resemble what your business will do. Enter the code(s) in the boxes.
If the activities of your business aren't specifically listed, choose one that is close. The filing allows for up to three codes to be entered. The first one is typically the code for the main business activity.
Step 5: Registered Agent
To have a Mississippi Limited Liability Company, a Registered Agent must be identified for service of process. The Registered Agent can either be a resident of Mississippi (Select "Individual" from the drop-down box) or a Resident Agent service (Select "Organization" from the drop-down box) who is registered with the Secretary of State. The agent must have a physical street address in the state (PO Boxes are not allowed) and act as a central point of contact to receive legal papers, tax notices, summons, subpoenas, etc. on behalf of the LLC.
You are not required to pay for a registered agent. Any individual meeting the requirements can be the agent; however, the agent's name and address become public record, and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when doing business from home or still employed. Hiring a Registered Agent Service like Northwest Registered Agent to be the Registered Agent will reduce unwanted phone calls and mailings.
Step 6: Signature
At least one signature from someone authorized to sign on behalf of the LLC is needed. This can be a member, manager, or non-members like an attorney or accountant, that the members give signing authority to. Enter the person's title, name, and address.
Under title, there are three options – Manager, Member, and Organizer. The definitions of these are:
A Manager is someone the Members hired to run the LLC, similar to a CEO of a corporation.
A Member is an owner of the LLC.
An Organizer is someone who is assisting with the formation of the LLC. This is often a Registered Agent, Attorney, or Accountant.
Enter all of the people / organizations signing on behalf of the LLC and click "Next" to proceed.
Step 7: Review
Review that all of the information is correct. If there are no corrections, click "Next."
Step 8: Acknowledgement
You are asked to acknowledge that "By clicking below, I acknowledge that all steps will be taken to register this company with the Mississippi Department of Revenue pursuant to their rules and guidelines." If you agree, click, "I Acknowledge."
Step 9: Upload Attachments
If there are additional rules for the LLC to file, they can be added here. Most filers will click "Next" and skip this step.
Step 10: Pay and File
Pay and file the Certificate of Formation.
You don't have to form your LLC by yourself or pay an attorney!
Forming an LLC is a little intimidating, especially when it's your first time. Professional entity formation services help guide you to make sure it's done right. Check out our reviews of popular LLC formation services to learn more.
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Free plan offers a lot of value (state filing fees still apply)
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Free registered agent in the first year
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Proactive customer service called to discuss next steps
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Free business name availability check
Tasks After Forming Your LLC
Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.
Prepare a Mississippi LLC Operating Agreement
The operating agreement is a document that governs the framework of an LLC. This document covers items like ownership rights, member responsibilities, how profits and losses are distributed, and more.
Most states do not require an LLC to have an operating agreement, but it is still worth considering. Without an operating agreement:
- The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
- Member's personal liability protection may be diminished.
- Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.
Related: Mississippi operating agreement template
Obtain an EIN
The EIN or Employer Identification Number (also called a Federal Employer Identification Number, FEIN, or Federal Tax ID Number) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes. The EIN will be needed to hire employees, open a bank account, register for business licenses and permits, file federal and state taxes, and more.
There is no cost for the EIN when registering through the IRS. The number is available immediately when applying through the IRS website; however, you can also register by phone, fax, or mailing IRS Form SS-4.
Related: How to Apply for an EIN
Elect the LLC's Form of Federal Income Taxation
One of the significant benefits of the Limited Liability Company is the tax flexibility it provides. When applying for the Employer Identification Number, you will choose how the entity will be taxed for federal income tax purposes. While there are some limitations, an LLC may be classified for federal income tax purposes as a:
- Sole proprietorship
- Partnership
- C-corporation
- S-corporation
While this may sound confusing, this refers to how the LLC is taxed, not the legal structure.
Related: How can an LLC be taxed ?
By default, the taxation of an LLC is called pass-through taxation, which means the profits or losses of the LLC flow through to the members.
Single-member LLCs will, by default, be taxed as a sole proprietorship. The members can also elect to change the taxation to a C-corporation or an S-corporation.
Multi-member LLCs will, by default, be taxed as a partnership. The members can also elect to change the taxation to a C-corporation or an S-corporation.
In general, the difference between being taxed as a corporation and being taxed as a sole proprietorship or partnership the profits and losses are passed to the member's federal income tax returns based on their percentage of ownership. As a result, the owner will pay self-employment taxes on all business profits. As an alternative, electing to be taxed as a corporation allows the members to take a reasonable salary and then pay payroll taxes. Any remaining profits are distributed and aren't subject to payroll taxes, resulting in potential tax savings.
Before electing how your LLC will be taxed, consider talking with an accountant to assess which one will be best for you. Some tax elections, such as the C corporation, may be detrimental for some people due to double taxation.
Open an LLC Bank Account
Opening a bank account for your LLC is important for liability protection as the account separates the business's funds from the member's personal funds.
Several documents will be needed to open a business bank account, such as:
- A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
- Copies of the original formation paperwork from the state showing the creation of the LLC.
- Driver's licenses of the members.
- Depending on the age of the LLC, a Mississippi Certificate of Good Standing may be needed to prove the LLC is active and in good standing with the state.
Related: How to Open a Business Bank Account for your LLC
Apply for Business Licenses and Permits
Depending on what your business does and where it is located, there will likely be various business licenses and permits needed before starting your business. Some common registrations include:
- Business License – Some cities require businesses to obtain licensing before they can start.
- Professional License – Certain services such as barbershops, accountants, salons, and others must be licensed.
- Sales Tax Permit – To sell products and certain services, registration with the Mississippi Department of Revenue will be necessary.
- Unemployment Insurance – Businesses with employees will need to register with the Mississippi Department of Employment Security.
Related: What Business Licenses are Needed in Mississippi?
Get Business Insurance
Even with the liability protection of the LLC, business insurance is important to protect the business. The most common types of insurance include:
General Liability Insurance – covers damages owed and medical expenses for accidents that happen at your place of business.
Business Property Insurance – replaces damaged, stolen, or lost business property. This includes your physical business location, equipment, supplies, and anything else you used to run your business.
Business Vehicle Insurance – covers company vehicles and may also include coverage for personal vehicles used for business-related activities. Many personal policies won't cover your vehicle if there is an accident while being used for business purposes.
Workers Compensation Insurance – mandatory in most states if you have employees, this insurance covers medical expenses that occur because of an accident or injury that happens to one of your employees while they're at work.
Related: 7 Types of Insurance Your Business May Need
File Annual Reports
LLCs are required to file an annual report with the Mississippi Secretary of State. Unlike most states, there are no state fees to renew the LLC. The report can be filed between January 1st and April 15.
Related: How to File a Mississippi LLC Annual Report
Common Questions When Starting An LLC
You can act as your own registered agent, provide you are a resident of the state and are generally available during normal business hours.
It's sometimes thought that the LLC and business license are the same, which they aren't. Business license requirements vary by location and the type of business being operated.
An out-of-state LLC wanting to do business in another state will have to register as a foreign LLC with the new state's Secretary of State.
Businesses that require state licensing and offer professional services such as accountants, attorneys, podiatrists, physical therapists, acupuncturists, etc. often must file as a Professional Limited Liability Company (sometimes referred to as a Professional LLC or PLLC) instead of an LLC. Filing for a PLLC is very similar to that of the LLC.
How To Get An Llc In Mississippi
Source: https://startingyourbusiness.com/how-to-form-a-mississippi-llc/
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