Mississippi boasts one of the lowest costs of labor in the nation, making it an attractive place for businesses small and large. The state also has a low corporate tax rate, as well as great access to funding and venture capital. All these factors combine to make Mississippi a great place to do business!
If you’re looking to start your own Mississippi company, this guide is for you. The instructions below will walk you through every step you need to take in order to start a business in Mississippi.
Decide on a business idea
First and foremost, you’ll need to decide what kind of business you want to start. Chances are you already have something in mind, but if not, here are some things to consider:
- What are you talented or naturally skilled at? Could this talent make you well suited to a certain type of business?
- What business does your community need? Have you talked to people to find out?
- What are you interested in? Can you combine any of your passions with a business idea?
- Is this going to be a full time business, or more of a side hustle?
These are questions to ask yourself when deciding on a business idea. Once you have decided, move on to the next step.
Plan your Mississippi business
Now it’s time to start planning. This means coming up with a business plan, naming your business, researching locations, and more. There’s a lot to cover here, so let’s break it down:
Select a business name
Naming your Mississippi company is the first concrete step you must take. And it’s a very important step – you want to select a name that is relevant to your type of business, memorable for your customers, and professional sounding.
It’s also very important to choose a unique name for your business. “Unique” means that it should be distinguishable from other businesses already registered in the state. To confirm the availability of your desired name, you can conduct a business entity name search online.
Finding a unique business name is the most important rule to follow, but there are other guidelines, as well:
- Names for LLCs need to contain “limited liability company”, or select approved abbreviations such as “LLC” or “L.L.C.”
- Names for corporations need to contain “corporation”, “incorporated”, or select approved abbreviations such as “corp” or “inc”
- The use of certain financial words, such as “bank” or “trust”, may require additional written permission
- Other rules may apply. See this page for more information.
Once you have found an available name that you would like to use for your business, you can move on to the next step.
If you’re not quite ready to register the business yet, you can also reserve the name temporarily through the MS Secretary of State website.
Mississippi trade names
Mississippi allows businesses to use fictitious names, otherwise known as DBAs or trade names. These are secondary names that you can attach to your business, once the business entity has been formed. You must register a fictitious name (after you have formed your business). This gives you more flexibility in how you market your company and allows you to legally use more than one business name.
Register a domain name
Once you choose a name, you should immediately register a domain name for your new business. In most cases, getting a .com domain name is ideal, but there are many other extensions (.biz, .net, etc.) that are worth considering.
You can use a tool like Namechk to search for an available domain name and find a great deal on the registration cost. You may find that your desired names are taken, so you may need to get creative.
Complete market research
Once you have an idea, you’ll want to do some market research. You want to gain a better understanding of who your customers – and competitors – are. You can achieve this by conducting online research, running focus groups, sending out surveys, and more. There are also companies that can help you complete market research, for a fee.
Select a business location
Unless you plan to run a remote/virtual business, you will need to find a physical location for your company. Research commercial property in your area, and take note of typical costs. For customer-facing businesses (retail and some services), location is very important, so take your time in selecting the right area for your business.
Create a business plan
You will now need to create a detailed business plan for your new venture. This plan is helpful for your own purposes, and will also be necessary in order to obtain funding from a bank. A good business plan should contain these elements:
- Finances: How much funding does the business need to get started? How many sales does it need each month to break even on expenses?
- Product: What do you plan to sell? Is it a product or a service? What problem does your business solve, and how is it distinct from your competitors?
- Marketing: How will you drive sales? What marketing and sales efforts do you plan to employ? How much money will you set aside to fund marketing efforts?
- Staff & Partnerships: How many people will you need to hire, and what skill sets do they need to have? Will you have any partnerships or arrangements with other local businesses?
If you need help, you can find business plan templates online that will help walk you through the steps you need to take to draft a detailed business plan. If you plan to seek funding, you may also wish to call your bank to see what they require in terms of business plans.
Decide on a business structure
Before you form your business as a legal entity, you will need to decide which business structure you will use. There are a few different types of businesses, each with its own pros and cons.
Sole props are single-person operations. Examples include freelancers, gig economy workers, and consultants. A sole proprietorship business is very easy and inexpensive to form, and tax reporting is also fairly simple. As a sole proprietor, your business taxes are reported as part of your personal tax return.
The downsides to a sole prop are that you cannot hire employees, and you don’t have the legal liability shield that something like an LLC or corporation would provide. 100% of the debts and liability of a sole proprietorship go to the sole owner: you.
A general partnership is an unincorporated business structure similar to a sole proprietorship, except with two active owners/participants. Partnerships do not have liability protection.
Limited Liability Company (LLC)
A limited liability company, or LLC, is a popular choice for business owners because it provides liability protection to the owners. It separates the business from the owners, which means the personal assets of owners will not be at risk if the company gets sued or goes into bankruptcy.
LLCs are also a bit easier to form than corporations. Even so, there is definitely more work involved with an LLC than there is with a sole proprietorship.
A corporation is owned by its shareholders and is a separate entity. There are a few different types of corporations (C-corp, S-corp, etc), with the main differences being the way they are treated tax-wise.
Corporations are more regulated than LLCs, which makes them more attractive to outside investors. For this reason, most large companies are corporations. The downside is that it takes more effort, and more paperwork, to form a corporation.
A nonprofit is a legal entity that is set up with charitable status, meaning that its goal is not to make a profit, but rather to address a certain cause. Nonprofits are funded by donations, rather than investors, and are subject to many regulations. They are exempt from most forms of taxation, although tax returns must still be filed.
Register your business in Mississippi
Now it’s time to actually establish your company as a registered business entity. This process is handled by the MS Secretary of State. You will need to submit some paperwork and documents to the state, either through the website or by mailing in forms.
An alternative to filing the paperwork yourself is to use a business formation service. These companies specialize in forming new businesses and can help you register your business more efficiently.
Services like Northwest Registered Agent, ZenBusiness, and Incfile are all good options. They provide low-cost services and walk you through the entire process of registering your new company. They can also be your Registered Agent.
Using a service is not necessary, but it can save you a lot of time and hassle. If you choose to complete the formation process on your own, the process is explained below (the steps differ for each different business entity type).
Form a Mississippi sole proprietorship
Follow these steps:
- Decide if you will operate under your legal name, or use a trade name
- If you use a name other than your own, you may need to register a fictitious name
- Apply for a business license and/or other necessary permits from local governments (city/county)
- More information here
Form a Mississippi LLC
Follow these steps:
- Name your new LLC (see notes above)
- Choose a Mississippi Registered Agent (or use a service such as Northwest Registered Agent). The Registered Agent is responsible for receiving legal documents and other important items, on behalf of your company
- File the LLC Certificate of Formation online, and pay the $50 filing fee
- Draft an LLC operating agreement
- Apply for an EIN with the IRS
Form a Mississippi corporation
Follow these steps:
Apply for business licenses and permits
Registering your business and forming an LLC or corporation is an important part of starting your business – but in order to operate legally, you will likely also need to obtain certain permits and/or business licenses.
The specifics vary depending on the type of business you are running, as well as your location. For example, restaurants will need health permits, bars will need liquor licenses, and medical service providers will need various professional licenses and federal permits. You will need to research the specifics that relate to your business type.
There are different requirements at each level of government:
- Local: Cities and counties may require certain business licenses or permits. Contact your county clerk for details.
- State: Mississippi may require additional permits and/or licenses in order to operate legally in the state. Check the Mississippi Secretary of State’s website and the Mississippi SBDC website for details.
- Federal: Federal permits/licenses may be required for certain regulated industries, such as construction, medicine and legal services. Check the Small Business Administration (SBA) guide for more details.
At this time, you should also apply for an Employer Identification Number (EIN). An EIN is a federal tax ID that is required to hire employees. You can apply for an EIN online with the IRS – the application is free and quick.
For most businesses, some startup funding will be necessary in order to get started. In step #2, you should have calculated your funding needs while drafting a business plan. Use this information to determine how much funding you need to raise.
For bootstrapped companies, you may be able to get by with your own personal savings, or some seed investments from friends and family. If your funding needs are small, this is likely your best route.
If your business plan indicates that substantial funding is needed, you will likely need to apply for a loan and/or a grant.
- Small business loans are offered by banks, credit unions and other lenders. They can range from as little as a few thousand to hundreds of thousands. Specifics will depend on your business, as well as your personal creditworthiness. Most small business loans are issued in a lump sum, and paid back on a monthly basis, with interest.
- Small business grants are offered by government agencies and some nonprofits. They are essentially business loans that don’t need to be paid back – but they usually have substantial fine print. It’s worth looking into, however, as there may be grants available, particularly for businesses serving an important social need, or for underprivileged entrepreneurs starting their first business.
Set up your business finances
Beyond securing funding, there are other routine tasks that you need to take care of to get your business’ finances in order. This includes:
- Opening a business checking account. You should have a separate business bank account that you use solely for business purposes. You can open this account at most banks, credit unions and financial institutions. Call ahead to see what documents will be required to open this account.
- Open a business credit card or line of credit. This is not strictly necessary, but most businesses can benefit from having a business credit card, and/or a business line of credit. This can be used for day-to-day expenses and purchases, and may also earn you some rewards.
- Set up your accounting system. As a business owner, you will need to keep very detailed records about all revenue and expenses. To do this, you’ll want to set up the proper foundation from day one. This could be investing in an account software such as QuickBooks or Xero, hiring a bookkeeper, or at the very least establishing a spreadsheet to track everything. If you do not have any accounting experience, it’s wise to hire a professional to help.
- Purchase business insurance. Most businesses should have some form of liability insurance, and potentially other forms of business insurance as well. Insurance policies can help protect your equipment and buildings from costly damage, and help shield your company from liability if a worker or customer is injured or otherwise harmed. Speak with a local business insurance provider to get started.
Create a business website
In this day and age, having a solid web presence for your business is very important. And social media profiles, while important, are no replacement for an actual website. You will want to build a professional business website that you can use to drum up business, inform your customers, and stay connected with your clientele.
The simplest way to build a website is to use a website builder from a web hosting provider. When you register a new domain name, look for a provider that also offers web hosting and a site builder, so that you can purchase everything at once and get your site set up quickly.
Unless you plan to operate a solo business (with you as the only worker), you will likely need to hire employees. To do this, you will need a federal employer identification number (EIN), which is a free tax ID number issued by the Internal Revenue Service (IRS).
Once your EIN is obtained from the IRS, you’ll need to ensure that you satisfy all state-level requirements for employers.
One important requirement is the reporting of new hires to the state. You must report any new or returning employees to the Mississippi State Directory of New Hires.
At this point, you also should look into setting up your payroll system – whether you handle it yourself, or use a payroll service.
Run and grow your business
Now it’s time to get down to business and engage with the day-to-day activities that are sure to bring your business success. This means marketing your products and services, maintaining good relationships with your return customers, and setting yourself apart from the competition.
Mississippi business FAQs
Still have questions about running a business in Mississippi? Here are some answers to frequently asked questions.
What are some business resources in Mississippi?
There are dozens of great resources for Mississippi entrepreneurs to take advantage of. The Mississippi Small Business Development Center (SBDC) is a great place to start. This valuable resource provides free business advisor services, webinars and training, and many other useful resources. SCORE Mississippi is another quality resource, as is the Mississippi district office of the Small Business Administration (SBA).
What is the minimum wage in Mississippi?
The Mississippi minimum wage is $7.25 per hour, which is the same as the federal minimum wage. The state has no specific minimum wage laws, so the federal wage laws apply.
Individual cities or counties are also able to impose their own minimum wage laws that may exceed Mississippi’s minimum wage. Check with local government officials in your area to ensure your business is compliant with all local rules.
What business taxes does Mississippi have?
Mississippi businesses may be subject to a variety of business taxes in the state. Any business that sells taxable goods or services must pay the Mississippi sales tax, and taxable goods consumed by a business may be subject to use tax.
How do I dissolve an LLC or Corporation in Mississippi?
To close a business in Mississippi, you must “dissolve” it. This will involve filing some dissolution paperwork with the Secretary of State.
There will most likely be other steps as well, including ensuring that outstanding tax returns are filed and likely shutting down your business tax accounts. It’s recommended to work with a CPA for this process, as closing a business can be complex.
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