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How To Start A Business in Mississippi [2023]

How To Start A Business in Mississippi [2023]

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How To Start A Business in Mississippi [2023]

How To Start A Business in Mississippi

In the heart of the American South, Mississippi emerges as a prime location for entrepreneurs and business owners seeking a welcoming environment to launch and grow their ventures. With an economy that has demonstrated consistent growth, the Magnolia State boasts business-friendly policies and regulations, as well as attractive tax incentives that have laid the foundation for a thriving entrepreneurial ecosystem.

Mississippi Small Business Stats

Steps to Start a Business in Mississippi

Starting a business can be an exciting and rewarding experience, but full of pitfalls if the steps aren’t completed correctly. By following our step-by-step guide, you will gain the confidence, knowledge, and tools necessary to transform your business dream into a thriving reality.

Step 1: Choose a Business Idea

The first step in starting a business in Mississippi is to find a good business idea. The key to a good idea is to carefully evaluate the feasibility by looking at various factors such as market demand, competition, geographical location, workforce availability, and potential customers.
When assessing these factors, entrepreneurs should also consider their own skills, resources and goals. Conducting market research is essential to identify high-potential business opportunities that are a good match for the entrepreneur.

To refine your business idea, conduct comprehensive market research, evaluate your value proposition, and test your product or service. Be prepared to adjust or pivot your idea based on the feedback you receive and the market conditions you encounter.

Our business library offers a wealth of resources to help you research your business idea further, including industry overview, costs to start, and more.

Step 2: Write a Business Plan

Once a solid business idea is in place, it’s time to start working on the business plan. A well-crafted business plan serves as the foundation for your company, ensuring that you have considered and prepared for the various legal, financial, and operational aspects you will face before starting your business.

Many people only consider writing a business plan because the bank asks for one to get funding. While that’s a valid reason, writing a business plan gets the ideas out of the entrepreneur’s head and helps create a roadmap for where they want the business to go. Like most builders wouldn’t build a house without blueprints, an entrepreneur shouldn’t build a business without a business plan.

Related: How to write a business plan

Step 3: Select a Business Entity

The next step in starting a business in Mississippi is selecting a business entity. A business entity (also called a business structure) is an essential concept that every new business owner should understand. There are four common types of business entities in Mississippi: Sole Proprietorship, General Partnership, Corporation, and Limited Liability Company (LLC).

The Sole Proprietorship is the simplest form of business entity. It is owned by a single individual who has complete control over the operations and finances of the business. The owner is personally liable for all debts incurred by the business and pays taxes on profits through their personal income tax return. This type of entity is best suited for small businesses with minimal risk and limited capital requirements.

A General Partnership consists of two or more people who share ownership and management responsibilities in a business venture. All partners are jointly liable for all debts incurred by the partnership and pay taxes on profits through their personal income tax returns. This type of entity is best suited for businesses with multiple owners who can share risks as well as rewards.

The Corporation is a separate legal entity from its owners (called shareholders) which gives them limited liability protection from debts or legal action against the corporation. This type of entity is typically best suited for larger businesses that require significant capital investments or have higher levels of risk associated with them.

Related: What is a corporation?

A Limited Liability Company (LLC) combines features from both the sole proprietorship & partnership and corporations as this structure provides limited liability protection to its owners (called members) while allowing them tax flexibility. This type of entity is typically best suited for small businesses that need flexibility in how they manage their operations and finances but still want some level of protection from creditors or lawsuits against them.

Related: How to form an LLC in Mississippi

Forming a corporation or LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.


Some popular formation services include:


IncFile - Great service and free registered agent the first year.

Northwest - Privacy-Focused: Free registered agent and private business address for 1 year!

ZenBusiness - Easy to use and free registered agent for 1 year!

Step 4: Register the Business

The next step involves registering the business. Licensing requirements can vary depending on the type of business, location, and industry. As a starting point, here are some of the most common federal, state, and local registrations for Mississippi businesses:

Business Licenses: The state of Mississippi doesn’t have a general business license; however, many cities require a business license to operate.

Federal Employer Identification Number (EIN): Businesses organized as a partnership, corporation, multi-member LLC, or any business with employees will need to obtain an EIN from the Internal Revenue Service (IRS). This number serves as a unique identifier for tax purposes, and you can register for an EIN at no cost.

Sales Tax Permit: Businesses selling products and certain services will need to register for a Sales Tax Permit with the Mississippi Department of Revenue.

Professional Licensing: Some services, such as contractors, foresters, and tattoo artists, require licensing in Mississippi.  While this isn’t a license on the business, licensing is required in order to operate.

Health Permits: Food service businesses, like restaurants and food trucks, require a health permit. Apply through the Mississippi State Department of Health

Related: What business licenses and permits are needed in Mississippi?

Step 5: Open a Business Bank Account

Mixing personal and business finances can lead to various tax implications and financial challenges, so an important step in starting a business is to open separate personal and business bank accounts. A few reasons include:

Simplified Tax Management: Separating personal and business funds makes it easier to track expenses and income for tax purposes, ensuring accurate reporting and potentially saving money on taxes.

Accurate Financial Records: Maintaining separate accounts allows for a clear understanding of your business’s financial health, making it easier to monitor cash flow, profitability, and growth.

Limited Liability Protection: If you operate as an LLC or corporation, mixing personal and business finances can jeopardize your limited liability protection, potentially exposing your personal assets to business debts and lawsuits.

Step 6: Find Financing

From conventional bank loans and SBA loan guarantees to microloan programs and investors, there are many ways for small businesses to secure the funding they need.

Conventional Bank Loans are one of the most common financing options for small businesses. Banks typically require borrowers to have good credit scores and personal investments in order to qualify for a loan.
Advantages: Competitive interest rates, potential for long repayment terms, and an established relationship with a financial institution.
Disadvantages: Can be difficult to qualify, may require collateral, and typically require a strong credit score and financial history.
Eligibility: Varies by bank, but generally requires a solid business plan, good credit score, and personal investment in the business.
Application: Approach banks with a strong business plan, financial statements, credit reports, and any relevant collateral. Be prepared to discuss your business’s financial health, growth potential, and repayment capacity.

The Small Business Administration (SBA) offers loan guarantees that can help small businesses secure financing from conventional banks. These guarantees reduce the risk associated with lending money to small businesses by providing lenders with additional security if the borrower defaults on their loan payments.
Advantages: Lower interest rates, longer repayment terms, and lower down payment requirements than conventional loans.
Disadvantages: More stringent application process, may still require collateral, and limited to specific uses.
Eligibility: Must be a for-profit business operating in the U.S., demonstrate a need for financing, and meet SBA size standards.
Application: Find an SBA-approved lender, prepare a detailed business plan, gather financial statements and tax records, and complete the necessary SBA forms.

Microloan programs are another option available to small businesses in Mississippi looking for funding. These programs provide smaller amounts of capital than traditional bank loans or SBA loan guarantees but can still be beneficial for startups or businesses looking to expand their operations.
Advantages: Accessible to businesses with limited credit history or collateral, often provide business training and support, and may have more flexible repayment terms.
Disadvantages: Smaller loan amounts, potentially higher interest rates, and may require personal guarantees.
Eligibility: Varies by lender, but generally requires a viable business plan and demonstrated ability to repay the loan.
Application: Research microloan providers, such as the LiftFund, provide small business loans to underserved business owners.

Finally, investors can provide an alternative source of funding for small businesses in Mississippi looking for capital. Investors typically provide capital in exchange for equity or a share in the profits generated by the business they invest in.
Advantages: Access to large amounts of capital, the potential for valuable mentorship and industry connections, and no required monthly repayments.
Disadvantages: Dilution of ownership, potential loss of control, and investors may expect significant returns on their investment.
Eligibility: Businesses with high growth potential, a strong management team, and a compelling business model.
Application: Research potential investors, develop a compelling pitch, and present your business plan, financial projections, and growth strategy.

Related: Understanding the different types of business funding

Step 7: Hire Employees

Hiring an employee is an exciting milestone and one that should be taken seriously. Before you begin the process of recruiting and hiring, it is essential to understand the legal prerequisites and regulations for employers in Mississippi, such as registering with the Internal Revenue Service, Mississippi Department of Employment Security and the Department of Revenue.

Employers are responsible for reporting new hires, verifying employees are eligible to work in the U.S., income tax withholding, unemployment insurance, unemployment taxes, and payroll withholding taxes, including Social Security and Medicare.

An employer with five or more employees is required to obtain workers’ compensation insurance.

Related: Steps to hiring your first employee in Mississippi

Step 8: Obtain Business Insurance

As a small business owner, it is important to understand the importance of having insurance for your venture. Insurance can help protect your business from potential losses due to accidents, natural disasters, and lawsuits. Without insurance, you may be liable for any damages that occur in the course of running your business.

There are several types of insurance policies that small business owners should consider investing in:

General Liability Insurance: This type of insurance provides protection against liability claims such as bodily injury and property damage caused by your products or services. It also covers legal costs associated with defending against such claims.

Professional Liability Insurance: Also known as Errors & Omissions (E&O) insurance, this policy covers negligence or mistakes made by you or your employees while providing professional services. It can also provide coverage for libel and slander claims.

Commercial Property Insurance: This type of insurance covers physical property owned by the business, such as buildings, equipment, furniture, inventory, etc., from damage caused by fire, theft, vandalism, and other perils.

Commercial Auto Insurance: If you use vehicles for business purposes, this policy will cover any damage caused to them due to an accident or other perils. It will also provide coverage for medical expenses incurred by passengers in case of an accident.

Related: Types of insurance your business may need

Step 9: Set up an Accounting System

A good accounting system plays a crucial role in recordkeeping and tax compliance, directly impacting your business’s financial health and long-term success. In Mississippi, common tax compliance issues include failure to report income or expenses accurately, incorrect filing of taxes, late payment of taxes, underpayment of taxes, or nonpayment of taxes altogether. Having a good accounting system in place helps small businesses identify potential issues early on so they can take corrective action before any penalties are incurred. Additionally, having accurate financial records allows businesses to make better decisions based on reliable data and forecasts.

There are various accounting systems available for businesses in Mississippi depending on their size and needs. Generally speaking, small businesses may benefit from industry-specific software solutions or standard accounting programs such as Quickbooks, Xero, Wave, and others.

Related: Setting up accounting for a business

This material is property of StartingYourBusiness.com

Common questions when starting a business in Mississippi

Is Mississippi a good state to start a business?

Mississippi is an excellent place to start a small business. The state has seen economic growth, low costs of living, and abundant resources for entrepreneurs. It’s also home to diverse industries that can provide the perfect backdrop for a successful small business.

Low Costs of Living: Mississippi has some of the lowest costs of living in the nation.

Abundant Resources: The state of Mississippi offers a variety of resources to support small business owners, along with support from the Small Business Administration (SBA) playing a crucial role in providing technical assistance. The SBA offers guidance and financial support through loans, and counseling services through the Small Business Development Center and SCORE network to help businesses in the state grow and succeed. In addition, the Mississippi Development Authority (MDA) provides entrepreneurs with valuable information on financing, tax incentives, and other resources to help establish and maintain their businesses. Moreover, numerous business incubators, accelerators, and networking groups are available to help entrepreneurs connect with others and foster a supportive business community.

Diverse Industries:
Mississippi’s diverse industries offer ample opportunities for entrepreneurs to establish their businesses. The state’s strong agricultural sector includes thriving businesses in the areas of soybean farming, poultry production, and catfish aquaculture. Additionally, Mississippi’s advanced manufacturing industry continues to grow, with companies specializing in automotive, aerospace, and shipbuilding. Moreover, the healthcare, tourism, and creative industries provide numerous opportunities for small businesses to thrive.

What are the steps to starting an LLC in Mississippi?

There are three main steps to starting an LLC in Mississippi. These include:

1. Making sure the LLC name is available
2. Appointing a Registered Agent
3. Filing the Certificate of Organization

There are a few more details to learn about, so be sure to check out how to start an LLC in Mississippi.

How much does it cost to start an LLC in Mississippi?

The cost to start an LLC in Mississippi is $50 to cover the state filing fee to file the Certificate of Organization with the Mississippi Secretary of State.

What licenses do I need to start a business in Mississippi?

There isn’t a general business license required by the state, however, there are potentially several different licenses and permits a business will need to obtain before starting.

Related: What business licenses and permits are needed in Mississippi?

How To Start A Business in Mississippi [2023]

How To Start A Business in Mississippi [2023]

Greg Bouhl

Greg Bouhl

Welcome! My name is Greg Bouhl, and I am a serial entrepreneur, educator, business advisor, and investor.

StartingYourBusiness.com is here because of the many clients I worked with who made decisions based on inaccurate and outdated information.

Starting a business is hard, but here you will find the practical tools, resources, and insider tips to help you successfully start a business.

If there is a question about starting a business or help finding a resource, I'm here to help!

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