How To Get An LLC in Mississippi [2023 Guide]
Starting a business can be a complex process, but it’s important to do your research before you dive in. In this guide, One important step is deciding on a business structure and in Mississippi the Limited Liability Company (LLC) is a popular choice.
I’ll walk you through the process of starting an LLC in Mississippi, from choosing a name to filing your paperwork. So whether you’re just getting started or you’re ready to take the next step, I’ve got you covered. Let’s get started!
What is an LLC?
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.
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 entity that protects the business owner’s personal assets. So, if the LLC is sued, the owner’s personal assets are usually protected.
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.
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What are the steps to form a Mississippi LLC?
Let’s break down the steps to complete the Mississippi LLC formation process.
Step 1: Choose an LLC Name
The first step in forming a Mississippi Limited Liability Company is to make sure the name you want is available.
It’s critical to do a name search before registering an LLC name, as the name of each LLC must be distinguishable from other entity names registered in the state. The Mississippi Secretary of State makes it easy to search and verify if your LLC name is available. Here is more information on how to do a Mississippi LLC name search.
In addition to the name being unique, the entity designator (identifier used at the end of the business name) must be either:
– Limited Liability Company
A comma may be used after the business name and before the designator. “Cowboy Cleaners LLC” and “Cowboy Cleaners, LLC” are both acceptable.
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.
Before finalizing a name, you may also want to see if a domain name is also available to have a matching website address.
Step 2: Appoint a Mississippi Registered Agent
Every LLC in Mississippi is required to have a Registered Agent. A Registered Agent will act as a central point of contact to receive legal documents, tax notices, summons, subpoenas, etc., on behalf of the LLC.
The basic requirements to be a Registered Agent in Mississippi include:
– The agent must be a Mississippi resident at least 18 years of age or a commercial Registered Agent service with a registered office in the state.
– The agent must have a physical address in the state (PO Boxes aren’t allowed).
– The agent must generally be available during normal business hours at the address provided to receive service of process.
Learn more about the requirements for a Registered Agent in Mississippi.
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 commercial Registered Agent service like Northwest Registered Agent will help keep the owner’s names from being publicly listed.
Step 3: File the Mississippi LLC Certificate of Organization
The paperwork to officially create an LLC in Mississippi is called the Certificate of Organization. To submit the paperwork file online through the Mississippi Secretary of State website.
When filling out the Certificate of Organization, there are a few sections and terms that can be confusing. Let’s go over a few of these sections to help get your LLC started right.
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 to get 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.
Nature of Business – This section asks for information regarding the activities of the business. To answer, you need to enter 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 entering 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.
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, whom the members give signing authority. 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.
If you have questions, contact the Mississippi Secretary of State.
What To Do After Starting A Mississippi 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.
Obtain an EIN
If the LLC will hire employees or is owned by more than one member, an EIN is required.
The EIN or Employer Identification Number (also referred to as 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, build business credit, 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.
If an Employer Identification Number isn’t required, the LLC can use either the owner’s social security number or register for an EIN.
Related: How to Apply for an EIN
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.
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 in Mississippi.
- 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.
File Mississippi LLC Annual Reports
LLCs are required to file an annual report with the Mississippi Secretary of State. The report can be filed between January 1st and April 15.
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Mississippi LLC FAQs
How much does a LLC cost in Mississippi?
The state filing fee to start an LLC in Mississippi is $50.
How long does it take to start an LLC in Mississippi?
It normally takes one to two days for the LLC paperwork to be processed in Mississippi.
What is the total expected cost of operating an LLC in Mississippi?
Each year, an annual report must be filed, though the cost to renew is $0.
Do you need a business license if you have an LLC in Mississippi?
It’s sometimes thought that the LLC and business license are the same in Mississippi, but they aren’t. An LLC is referred to as a business entity, which is how the business is organized to conduct business. A business license is approval from a government entity to operate legally.
Most businesses in Mississippi will need to register with a variety of government agencies. Mississippi business license requirements are based on what the business does or where it is located in the state, not on the type of entity.
What is a Foreign Limited Liability Company?
A Mississippi foreign LLC is an LLC that was formed in another state but wants to physically operate in Mississippi. Physically operating means having a presence, such as having an office or hiring an employee.
What is a Professional Limited Liability Company?
Businesses that require occupational licensing in Mississippi, such as accountants, architects, veterinarians, etc., will want to file for a Professional Limited Liability Company (PLLC) instead of an LLC. Filing for a PLLC is very similar to that of an LLC.