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A limited liability company (LLC) is one of the easiest businesses entities to form and maintain. Mississippi business owners can get their LLC set up within minutes, allowing them to operate a legal business as quickly as possible. However, many don’t know where to start when forming one. That’s why we’ve created this detailed guide with each step to get a Mississippi LLC up and running.
Why Starting an LLC in Mississippi is Worth It
Aside from a sole proprietorship, an LLC is the simplest business entity to form. Unlike more complicated structures like corporations and partnerships, an LLC doesn’t have several tax implications and regulations. Startups choose this business model frequently because they can get it running quickly without needing a legal expert to guide them through setting it up.
Most states make the LLC formation process simple so that you can do it on your own. Mississippi is no exception. You can register, renew, and pay all associated fees for your LLC on the Mississippi Secretary of State website.
LLCs offer several benefits for companies, like being a pass-through entity, which prevents you from getting taxed on your income and shareholder dividends. An LLC also keeps your business and personal assets separate, allowing protection over your personal cash flow and assets, should your business ever get involved in legal issues.
Furthermore, Mississippi is one of the cheapest states to form an LLC in. Currently, the state requires a $50 filing fee for the initial setup and no annual or biannual fees. This is highly affordable compared to other states, like California, which requires LLCs to pay an annual $800 fee after the initial $70 filing fee.
The Investment Needed to Start an LLC in Mississippi
Because of the simplicity of the LLC structure, you don’t need to worry that forming one will postpone the start of your business or interfere with your budget, especially in Mississippi. The state allows you to file your LLC online using a digital questionnaire that asks for all the details you need to set up your business legally.
And with just a $50 initial filing fee, Mississippi business owners can form their business affordably. There are no annual or biannual LLC fees you’ll need to worry about. You’ll also need to pay $25 to reserve your business name and should budget between $99-$300 a year for a registered agent service, which Mississippi requires LLCs to have. Finally, your LLC’s annual report filing costs $25.
You can save time and money by filing with Incfile if you’re unsure about doing it yourself. Incfile charges only the Mississippi filing fee for its basic Silver plan, which includes preparing and filing your Articles of Organization and unlimited business name searches. You’ll also get one free year of a registered agent service, saving you some initial startup costs.
6 Steps to Start an LLC in Mississippi
Below, find a step-by-step guide to starting your LLC in Mississippi.
#1 – Choose Your Business Name
You’ll need a name in place for your LLC when you file, so solidifying your business name should be your very first step. Start by jotting down a few ideas of business names you like. Mississippi requires LLCs to include Limited Liability Company, LLC, or L.L.C. in their business name, so make sure the names you choose will work well with the addition.
With your list of potential name contenders in hand, head to the Mississippi Secretary of State website to perform a name search. The free tool lets you search business names that already exist in the state, ensuring that you have a unique name for your business. Mississippi will not allow duplicate business names or names that could be confused with an existing company.
Mississippi also doesn’t allow its LLCs to include the name of a member or manager or any words that could confuse the type of business it is, like partnership or corporation.
Before deciding on your final business name, we suggest taking a few more steps to determine if your choice is the best one. First, search the United States Patent and Trademark Office to ensure your business name or part of your business name isn’t already trademarked. This can help you prevent legal troubles later.
Also, check to see if a domain name is available for your shortlist of business names. Long names can turn into long domain names, which can be challenging for people to remember. However, shorter names might already be used as domains. Check with a domain registrar to see if your business name is available as a domain before filing the name with the state.
#2 – Form the LLC Structure
Next, you’ll legally form your LLC by filing its papers. First, you’ll need to name a registered agent. Mississippi requires a registered agent to receive business communication regarding your LLC, and you’ll need to have one ready to go when you file for LLC formation.
You can search for a registered agent in Mississippi on your own or use a business formation service like Incfile to provide the service for you. Most registered agents cost at least $50, but it’s more common to pay between $99 and $300 a year.
If you’re using Incfile to file your business papers, you’ll get a registered agent service for free for the first year. After that, the service renews at $119 annually.
You can choose to file your LLC papers yourself via the Mississippi Secretary of State website portal. Register an account to access the portal, choose your business entity, register your business name, and file your papers. The state will notify you when your filing has been accepted and send reminders when it’s time to renew via your portal account.
Filing LLC papers isn’t necessarily complicated, but it can give you some peace of mind to have an experienced company take care of it for you. Incfile makes it easy to set up your business following Mississippi’s guidelines in just minutes.
Incfile offers three plans: Silver, which is free aside from the state filing fee, Gold for $202 plus the state filing fee, and Platinum for $352 plus the state filing fee. You’ll get basic preparation and filing, unlimited name searches, and the free registered agent service with Silver.
Gold adds a free operating agreement, business banking account setup, a business tax consultation, and an online dashboard. With Platinum, you’ll also get expedited filing, business contract templates, and a domain name.
The benefit of using a service like Incfile to file your business is that it walks you right through each step. You’ll also get notifications about your business, like when your annual report is due and when to renew your business licenses.
#3 – Get an Employer Identification Number (EIN)
An EIN is a federal tax number used for businesses. It works similarly to a person’s Social Security number to identify the company for tax and legal purposes.
Single-member LLCs do not necessarily need to obtain an EIN unless you plan to have employees or want to get taxed as a corporation rather than a sole proprietorship. Multi-member LLCs are required to get an EIN in every state.
But even if you aren’t required to get an EIN, you should consider it anyway. Without using an EIN, you’ll need to put your Social Security number on business documents, leaving it exposed to vendors, clients, and other business contacts. With an EIN, your Social Security number stays protected. You’ll also need an EIN if you hire staff members in the future or want to open a business-specific bank account.
Some business entity formation services—Incfile included—add a fee for you to get an EIN through them with some plans. However, you don’t need to pay for an EIN. To get one, visit the IRS website and complete the application process. It’s quick and free.
If you choose to get an EIN, do it in conjunction with filing your business papers to easily add it to the documents. Otherwise, you’ll need to modify your documents later.
#4 – Prepare an Operating Agreement
Mississippi does not require LLCs to develop or file an operating agreement. However, it’s still a good idea to have one if other members are involved in your LLC.
An operating agreement details critical information about your business, who’s involved, and its policies. Here are some of the key points you’ll include in your operating agreement:
- The names and contact information of each member
- How each member is involved in your LLC and any official titles
- Each member’s rights and responsibilities, including the owner
- Policies and rules regarding the admission of new members
- Rules for business meetings and notes
- Your business’s purpose
- Member voting powers
- How profits and losses will be split
- How members will settle any problems that arise with the business
- Dissolution procedures
Why is all this information important? Basically, it proves that your LLC is a legitimate business that’s separate from your person. If you happen to get involved in legal matters, the operating agreement shows that you have a thought-out business model that should be treated as a separate entity from yourself. It also helps you do risk mitigation and plan for the future.
You can find free sample operating agreements online to use as templates for your own. However, if you’re already using Incfile’s Gold or Platinum plan, the service will help you fill out and file your operating agreement.
#5 – Get a Business Bank Account
Like an operating agreement, a business bank account isn’t something Mississippi requires you to have for your LLC. But it’s another thing that could make your business run more smoothly.
If you have an accountant, they’ve probably already mentioned the benefits of having a business bank account rather than moving your business revenue through your personal accounts. Keeping your finances separate makes it easier to show that your business is a separate entity, which is important if you have a legal issue with your business.
Plus, come tax time, you’ll appreciate not having to sift through all your personal records to pull out income and expense information to file your business taxes.
Our guide to the best business checking accounts can help you find one that fits your business needs. We recommend Novo as an excellent option for most businesses. It’s a fintech company that delivers free and simple-to-use small business banking powered by Middlesex Federal Savings F.A. And, conveniently, it integrates with top financial tools like QuickBooks and Gusto.
#6 – File Annual LLC Reports
Mississippi requires LLCs to file an annual report with the Mississippi Secretary of State. These reports are due on the same day as taxes, April 15th, each year.
The annual report serves as a way to keep your business information updated each year. In it, you’ll list your business name and contact information, the purpose of your business, the LLC’s members, and your registered agent’s information. You must also include the name and address of the person filing the report.
Missing the filing deadline of your annual report can lead to the dissolution of your LLC by the state of Mississippi. Fortunately, filing it is easy. You can file your report on the Secretary of State website or use your Incfile account to do it with guidance. Mississippi charges $25 for annual reports.
Depending on your business goals, there are several other steps you might want to take after forming your LLC. First, consider if you wish to trademark your business name. This could be a good move to protect your branding and keep similar brand names from popping up. You can also trademark your business to protect your business model and purpose.
If your LLC is hiring employees, consider getting started with HR software to help you recruit and manage your staff.
And, although you just started your Mississippi LLC, it’s a good idea to know how to dissolve your LLC if the need arises. Visit our step-by-step dissolution guide to help you prepare for the future.