How to Start a Business in Mississippi (Updated 2024)

If you want to establish a business in Mississippi, you need to be aware of the state's business laws and requirements. The steps below provide a general outline for getting your business up and running in the state.

1. Choose a Business Idea

The first step in starting a business is picking a business idea and creating a business plan. You'll need to take time to evaluate your business idea to see if your business venture can be profitable. When considering your idea, ask yourself questions like:

• Is there demand in my geographic region for my proposed goods or services?
• How much competition is already out there? Has a well-known brand already cornered the market?
• Do I have experience in the industry I want to start a business in?
• What would the startup costs be?
• Do I have enough capital to sustain my business until I can make it profitable?

Creating a business plan should help you map out your vision and answer these questions. In addition, investors and lenders will want to review your business plan before providing financial assistance. Check out our section on business financing, loans, and capital for ideas and guidance on financing your small business.

2. Decide on a Business Legal Structure

As you plan out your business, you need to select a legal structure. Your business's legal structure determines how it's owned, organized, and operated. Legal structures differ in their startup and maintenance costs, filing and organizational requirements, tax structures, and liability protections. Every entity has its advantages and disadvantages so you'll need to figure out which structure is the best fit for your business.

The most common legal structures for a small business are:

• sole proprietorships
• partnerships
• limited liability companies (LLCs), and
• corporations.

You might have other options for your business structure: States have specific business ownership structures they recognize.

Other types of partnerships: In Mississippi, you can form a limited partnership, limited liability partnership (LLP), or limited liability limited partnership (LLLP), which are types of partnerships where some partners have limited liability.

Professional corporations and LLCs: If you provide a professional service, you have the option of forming a professional corporation or professional LLC in Mississippi. In general, a "professional service" is a service that requires a license or other legal authorization from a state licensing authority.

Depending on which business structure you choose, you might be able to elect to become an S corporation, a tax entity. Different types of businesses, such as LLCs and corporations, can elect to be taxed as S corporations but legally remain corporations or LLCs. If you have specific legal questions, talk to a tax attorney or other tax professional.

3. Choose a Name for Your Mississippi Business

It's time to pick a name for your Mississippi business. When choosing a business name, make sure you pick one that's unique and memorable. You'll want to make sure your business's name sticks in customers' minds and won't get confused with another business.

You should also choose a name that's marketable and reflects your business image. Your business name will appear on advertisements, business listings, store signs, and your company's website. So you should make sure it's a name that can grow with your business and is easy for customers to find and identify.

In Mississippi, like in most states, your business name must be distinguishable (different enough) from the names of other business entities already on file with the Mississippi Secretary of State (SOS). You can see which business names are already in use by doing a business search on the SOS website.

Entity name designators: In Mississippi, you must include certain words that identify your business's entity structure (like including a word such as "LLC" for LLCs or "Incorporated" for corporations). See our article on how to form a Mississippi LLC for more information about naming your LLC.

Reserving your business name: You can reserve an available name for 180 days by filing an Application for Name Reservation with the Mississippi SOS. You'll need to register with the Mississippi SOS's online filing system to get the name reservation application form. You can also renew your business name reservation.

Registering a fictitious business name (FBN): If you do business under a name other than your or your business's legal name, then you're using an FBN (also called a "DBA," "trade name" or "assumed name"). A "legal name" is the name on the owners' birth certificates (for sole proprietorships and general partnerships) or the name on the company's formation paperwork (for example, its articles of incorporation or articles of organization). You can, but aren't required to, register your FBN with the SOS. You can apply for your FBN registration online. As of 2024, the filing fee is $25 to register an FBN. (Miss. Code §§ 75-93-1 and following (2024).)

If you do business online, you might want to register your business name as a domain name. Moreover, to avoid trademark infringement issues, you should do a federal and state trademark search to make sure the name you want to use isn't the same as or too similar to a name already in use.

4. Register Your Business Entity With the Mississippi Secretary of State

Register your business in Mississippi using the SOS's online filing system. You must create an account to become a registered filer. You can then access the formation documents and submit your filing online. Some business types don't require you to file any paperwork.

Here's how to form each type of business:

• Sole proprietorship: You don't need to file any organizational documents with the state to establish a sole proprietorship in Mississippi.
• General partnership: To create a general partnership in Mississippi, you don't need to file any organizational documents with the state. You should draft a partnership agreement to establish the rules for how your partnership will be managed and how the assets and liabilities will be divided among the partners.
• Limited partnership: To form a Mississippi limited partnership, you must file a Certificate of Limited Partnership with the SOS.
• Limited liability partnership (LLP): A partnership can become an LLP in Mississippi by filing a Statement of Qualification with the SOS.
• Limited liability limited partnership (LLLP): You can create an LLLP in Mississippi by filing a Certificate of Limited Partnership with the SOS and indicating on the form that the partnership is an LLLP.
• LLC: To create an LLC in Mississippi, you must file a Certificate of Formation with the SOS. You should also prepare an operating agreement to set out the basic rules for your LLC's operations.
• Professional LLC: Licensed professionals of qualified services can form a professional LLC in Mississippi by filing a Certificate of Formation with the SOS. The certificate must state that the LLC is a professional LLC and that its purpose is to render the specified professional services.
• Corporation: To create a Mississippi corporation, you must file Articles of Incorporation with the SOS. You should also prepare and adopt bylaws for your corporation. A corporation's bylaws, like an LLC's operating agreement, establish your corporation's internal operating rules. You don't need to file your bylaws with the state.
• Professional corporation: Licensed professionals of qualified services can form a professional corporation in Mississippi by filing Articles of Incorporation with the SOS. The articles must state that the corporation is a professional corporation and that its purpose is to render the specified professional services.

To form some of these businesses, you need to appoint a registered agent in Mississippi for service of process. A registered agent agrees to accept legal papers on the company's behalf.

After you form your corporation or other applicable business with the SOS, you can file IRS Form 2553, Election by a Small Business Corporation, with the IRS to elect S corporation tax status.

5. Apply for Mississippi Licenses and Permits

You'll probably need to apply for at least one license, permit, or registration for your business. You can find more detailed information in our article on Mississippi business licenses.

Tax registration. If you sell taxable goods or services in Mississippi, you must register with the Mississippi Department of Revenue (DOR) to report and collect sales tax and obtain a sales tax permit. If your business has or will have employees, you must register with the DOR for a withholding account number. For both types of tax, you can register online using the Mississippi Taxpayer Access Point (TAP).

Employer identification number (EIN). If your business has employees or is taxed separately from you, you must obtain an EIN from the IRS. Even if you're not required to get an EIN, there are often business reasons for doing so. For instance, banks often require an EIN to open an account in the business's name and other companies you do business with could require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There's no filing fee.

Regulatory licenses and permits. You might need to apply for permits or licenses related to health and safety, the environment, building and construction, and specific industries or services. Different departments and agencies oversee various regulatory licensing. For example, the Mississippi State Department of Health (DOH) regulates the health industry, and the Mississippi Department of Environmental Quality regulates air, wastewater, hazardous waste, geology, underground storage, pollution and other environmental areas. For information about local licenses and permits, check the websites for any cities or counties where you'll do business.

Professional and occupational licenses. You can get licensing information about your profession or occupation from the agency that regulates your field. You can search the agency directory on the Mississippi state website. The directory has contact information and links to the agency's website.

6. Pick a Business Location and Check Zoning Regulations

Once you've satisfied your initial legal requirements, you should choose a business location. You'll need to consider several factors when picking a location for your business:

• Affordability. Picking a business location you can afford now—in your company's early months—and in the future. You can refer to your business plan to see how much you can invest. If you want to buy a spot for your business, you'll need to budget for a mortgage, utilities, and property taxes. If you want to lease a commercial space, you'll probably have to pay rent, a security deposit, utilities, and other potential shared or individual costs. When leasing, negotiate terms that'll work for your business in the long term.
• Location and layout. Consider what kind of space and location would benefit your business most. You might need to compromise a central location for more square footage or vice versa. If you want to invest heavily in the right space, make sure your investment will translate into a higher profit. If you find a great location but the space needs some work, you could negotiate for improvements, repairs, or expansions in your lease.
• Zoning. Confirm that your desired location is properly zoned for your intended business activities. Cities and towns are divided up into different land uses marked by zones. For example, your town might have residential, mixed residential, commercial, industrial, and agricultural zoning. You can usually find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department.

Do you need a physical location for your business? Your business will probably need a mailing or office address. Many states require you to provide a principal office address when registering your business. Your address can sometimes be your home address, a P.O. box, or a coworking space, among other options. Read our article on whether you need a physical address for your small business to learn more.

Can you run your business out of your home? Many kinds of businesses can be run out of a home. Home-based businesses are becoming more popular, especially for online businesses. Depending on your business activities and residential zoning laws, you could be able to run your business out of your home. Look over your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.

7. Register and Report Business Taxes

Visit the individual income tax forms section of the DOR website for downloadable resident tax forms. You can find business tax forms, instructions, and frequently asked questions through the DOR's business section. You can file returns and pay all taxes through TAP.

Sole proprietorships. As a sole proprietor, you'll pay state taxes on business income as part of your resident state income tax return (Form 80-105).

Partnerships. Partners pay state taxes on partnership income on personal tax returns. Most partnerships must also file Form 84-105, Pass-Through Entity Tax Return. In Mississippi, partnerships can elect to pay a pass-through entity tax on behalf of individual partners' state income who can then claim a tax credit on their personal returns. This pass-through entity election is made by filing form 84-381, Pass-Through Entity Election Form.

LLCs. By default, LLCs are considered "pass-through tax entities," meaning members pay state taxes on their share of LLC income on their personal tax returns. In other words, LLCs are taxed as partnerships by default. However, an LLC can elect to be taxed as a corporation by filing Form 8832, Entity Classification Election with the IRS. Depending on how your LLC is taxed, your company must file a separate state tax form—either a pass-through entity tax return or a corporation return—with the DOR. If taxed as a partnership, your LLC will follow the state's partnership tax laws (as discussed in the previous section). LLCs must also file an annual report with the SOS. For more, read our article on LLC annual report and tax filing requirements in Mississippi.

Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on their personal state tax return. Mississippi corporations and corporations with Mississippi-based income must file a corporate income and franchise tax return. Mississippi imposes a franchise tax on all businesses taxed as corporations. As of 2024, there's a $25 minimum franchise tax. Finally, corporations, like LLCs, must file an annual report with the SOS.

If you have employees, you must also deal with state employer taxes.

And, apart from Mississippi taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.

8. Obtain Insurance for Your Mississippi Business

Regardless of your industry or type of business, you should look into getting insurance coverage for your business. Business insurance can protect your business and your personal assets from unexpected events, such as personal injury lawsuits and natural catastrophes.

An insurance agent can help you explore the different coverage options for your business. You should consider getting general liability insurance to protect your business against claims related to bodily injury or property damage. Your business might also benefit from cyber liability insurance to cover litigation and settlement fees following a data security breach.

For further guidance, see our article on what types of insurance your small business needs.

9. Open a Business Bank Account

No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, including LLCs and corporations, a separate bank account is necessary to maintain your liability protection.

Additional Help With Starting Your Mississippi Business

When starting your Mississippi business, you should visit the Mississippi Business One Stop Shop (BOSS) website. Click the "Start Your Business" icon and answer a few questions about your business, including your business type and desired location. Once you've completed the questionnaire, BOSS will provide you with a personalized guide to starting your business.

The guide includes information about:

• business entity types
• business plans
• business financing and crowdfunding
• business registration
• local licenses and permits
• federal and state business taxes
• employer resources
• business insurance, and
• professional licensing and other registrations.

The SOS also provides a brief guide to starting a business in Mississippi that reviews the entity types, registration, and licensing.