For any entrepreneur, the process of starting a Limited Liability Company (LLC) in Mississippi can be both exciting and daunting. Successfully navigating the legal formation of an LLC is critical, regardless of your experience level as a business owner. This guide will walk you through key steps like choosing a business name, weighing costs and benefits, and completing required paperwork.
As we explore how to start your own business, keep in mind the end goal is not merely paperwork, but rather creating stability and profitability for your venture.
How to start an LLC in Mississippi in 7 steps
01. Choose a business name
The first step to starting a business in Mississippi is to select a name for your LLC. This isn't just a creative process, it's a legal one too. For your business name to be valid, it can't be identical or too similar to any names documented by the Mississippi Secretary of State. You'll want to make sure your chosen name ends with "LLC," "L.L.C.," or "Limited Liability Company" to comply with state registration requirements.
Start with these guidelines to create a business name that's distinctive and legally compliant:
Use the Mississippi Secretary of State's online database to search for existing business names.
Avoid using restricted words that could confuse your LLC with a government agency (e.g., FBI, Treasury).
Use a domain search tool if you plan to prioritize creating a website for your LLC.
Tip: If you need more inspiration when it comes to choosing a business name for your business, consider using a business name generator.
02. Choose your registered agent
Every LLC in Mississippi must have a registered agent, an individual or company that agrees to accept legal papers on behalf of your LLC. Your registered agent must be available during regular business hours and have a physical address in Mississippi.
Need help setting up your LLC? Wix has partnered with LegalZoom, the No. 1 choice for online business formation to help you start, run and grow your business.
03. Obtain state business permits
Depending on the nature of your business, you may need specific permits or licenses to operate legally in Mississippi.
To obtain the necessary permits in order to register your business, follow these steps:
Identify permit requirements: Check with local and state agencies to determine what permits you need.
Complete necessary applications: Fill out all required paperwork accurately and submit them to the appropriate authorities.
Pay any fees: Be prepared to pay any associated fees for obtaining your permits.
Let’s say you want to start a babysitting business in the state. First, you’ll need a business license and possibly a home occupation permit if you plan to operate from your own home. In addition, you may need certification in CPR and first aid, as well as background checks for all of your employees. It's important to research and comply with all regulations and requirements in order to operate a legal business in Mississippi.
Learn more: How to get a business license
04. File a Certificate of Formation
The Certificate of Formation is a critical document that officially creates your LLC in Mississippi. This needs to be filed with the Mississippi Secretary of State online along with the required filing fee.
To start filing gather your business information. This will include details like your LLC's name, registered agent information and management structure. It's important to note that the State of Mississippi offers only online filing of the application to the Secretary of State office. Complete the submission process by submitting the required form and paying the $50 filing fee.
05. Draft your LLC operating agreement
Although not legally required in Mississippi, creating an operating agreement is highly recommended for any LLC. This internal document outlines ownership structures, member roles and operational procedures for your type of business.
Here’s why an operating agreement is important:
It sets clear expectations for members regarding operations and conflict resolution.
It helps maintain limited liability status by proving that your LLC is a separate business entity.
It reduces potential disputes among members by detailing policies and procedures for how the business should be run.
06. Apply for an EIN and pay relevant taxes
An Employer Identification Number (EIN) is essentially a social security number for your LLC. It’s mandatory for hiring employees, opening bank accounts and filing taxes.
To apply for one start with the IRS who provides free EIN registration through their website or via mail. Next, make sure you understand all of the state-specific taxes that apply to your LLC, such as franchise tax or sales tax. In Mississippi for an LLC owner this includes a 15.3% self-employed tax (12.4% social security, 2.9% Medicare). For more information, visit the Mississippi Department of Revenue website.
07. Organize annual reports
Starting an LLC means submitting annual reports to the Mississippi Secretary of State. These reports keep your business information up-to-date and are required even if there are no changes from the previous year. Failure to file can result in penalties or even dissolution of your LLC.
To be compliant with this it's important to mark your calendar for when the annual report is due, which is January 1 of each calendar year. Next, fill out the relevant online form used for filing an LLC's Annual Report in Mississippi.
How much does it cost to start an LLC in Mississippi
Starting an LLC in Mississippi is relatively cost-effective but it's important to be aware of all the potential fees involved in the process. Here's a breakdown of the costs you can expect:
Certificate of Formation filing fee: This is the fee required to file your Certificate of Formation with the Mississippi Secretary of State. This is a one-time cost that is mandatory for all new LLCs. For an LLC it costs $50.
Registered agent fee: If you decide to use a professional registered agent service, they'll charge an annual fee for their services. If you act as your own registered agent, this cost can be avoided.
Business permits and licenses: The cost for these will vary depending on the type and number of permits and licenses your specific LLC requires. Each industry and locality may have different requirements.
Operating agreement: While drafting an operating agreement doesn't have a direct state-imposed fee, you may incur costs if you hire an attorney or use a professional service to help create this document.
Employer Identification Number (EIN): Obtaining an EIN from the IRS is free of charge.
Annual report fee: There is an annual fee for filing your LLC's report with the state. This recurring fee keeps your LLC in good standing with the state.
Legal or financial consulting fees: If you seek professional advice during the formation process, these services will add to your startup costs.
Domain registration and website creation: Creating a website is an important part of establishing your business. Costs here include domain registration and potentially hiring a web designer or using a website builder like Wix.
Business insurance: Depending on your industry, you might need various types of insurance to protect your LLC.
Learn more: Cost to start an LLC
Who can start an LLC in Mississippi?
To form an LLC in Mississippi, there are specific eligibility criteria that need to be met. It's crucial to understand who can start an LLC in the state before you begin the process.
You must be at least 18 years old to form an LLC in Mississippi.
There's no requirement for you to be a resident of Mississippi. Non-residents can start an LLC in the state as long as they appoint a registered agent with a physical address within Mississippi.
Both U.S. citizens and non-citizens are permitted to own an LLC in Mississippi. However, non-citizens may need to comply with additional federal regulations.
Almost any type of business can be structured as an LLC in Mississippi, except for businesses that require a different structure by law, such as banks and insurance companies.
Benefits of starting an LLC in Mississippi
Setting up an LLC in Mississippi brings a host of perks that new business owners appreciate. With legal protections and tax advantages, it's a top pick for many entrepreneurs.
Learn more: Benefits of starting an LLC
Limited liability protection
As the name suggests, owners (members) of an LLC have limited liability, meaning their personal assets are typically protected from business debts and lawsuits.
A limited liability company—or LLC—is a type of business entity that offers some of the benefits of a corporation with less formality. One key benefit of an LLC is that it can protect a small business owner’s personal assets—like homes, cars, and personal bank accounts—from lawsuits against the business. Additionally, LLCs offer the flexibility of filing taxes as a sole proprietorship, partnership, or corporation. Also, you won’t need to worry about some of the same formalities as corporations, such as keeping minutes at shareholder meetings. Shylene D’Addario VP, associate general counsel at LegalZoom.
Pass-through taxation
LLCs often benefit from pass-through taxation where the business itself is not taxed. Instead, profits and losses are passed through to the members' personal tax returns, potentially reducing the overall tax burden.
Flexibility in management
Unlike corporations, LLCs have fewer formalities and can be managed by the members or appointed managers, providing flexibility in how the business is run.
Ease of formation and maintenance
Compared to other business entities, forming and maintaining an LLC in Mississippi is relatively simple, with fewer formalities and paperwork.
Credibility with customers and partners
Having 'LLC' after your business name can enhance your credibility with potential customers, suppliers and financial institutions. You can then choose an .llc domain for your website to reinforce this credibility.
Potential drawbacks of starting an LLC in Mississippi
When thinking about starting an LLC in Mississippi, it's important to look at the pros and drawbacks. Knowing these will help you decide if an LLC is the right fit for your business. Here are some things to keep in mind when it comes to starting an LLC in Mississippi:
Some businesses may find that investors prefer corporations over LLCs due to the ability to issue stock an thus potential for scale.
Although less burdensome than other entities, LLCs still face annual reporting requirements and fees that must be maintained to keep the business in good standing.
Why start an LLC over another business entity in Mississippi?
Choosing the right business structure when starting an LLC in Mississippi is a crucial part of starting any business. But it's important to compare it with other types of business structures to understand why an LLC might be the best choice for your situation.
Here's how an LLC compares against other business entities:
Sole proprietorship: Unlike a sole proprietorship, an LLC provides personal asset protection, separating your personal liabilities from those of your business.
Partnership: An LLC offers more protection for each member compared to a partnership, where each partner can be personally liable for the debts of the business.
Corporation: While corporations also provide limited liability protection, they’re also subject to double taxation (taxes on both corporate profits and shareholder dividends). An LLC avoids this with pass-through taxation. Corporations are also required to have a formal structure with directors and officers, while an LLC can be managed by its members or managers, providing greater operational flexibility.
You've formed your LLC in Mississippi, now what?
After successfully forming your LLC in Mississippi, there are several important steps you should take to ensure the smooth operation and legal compliance of your new business:
Keep your personal and business finances separate by opening a bank account solely for your LLC. This helps maintain your liability protection and makes accounting easier.
Depending on your type of business, you may need various insurance policies such as general liability insurance, professional liability insurance or workers' compensation.
Register with the Mississippi Department of Revenue to handle sales tax, payroll tax or other state taxes that may apply to your business.
Update your operating agreement as needed to reflect changes in management or ownership structure.
Invest in marketing efforts to attract customers and grow your business.
Good financial management is essential for any business. Set up an accounting system that allows you to track expenses, profits and financial growth accurately.
Looking to start an LLC in a different state?
How to start an LLC in Mississippi FAQ
How long does it take to form an LLC in Mississippi?
The time it takes can vary. If you file online, the process can be completed in a matter of days. Mailed applications may take a few weeks.