How to start a business in Mississippi in 8 steps
While learning to spell the word “Mississippi” can be difficult, starting a business in the state can be relatively seamless. Typically referred to as the birthplace of blues music, the state of Mississippi offers a wide variety of arts, culture, and environmental infrastructures that make it a bedrock for those looking to begin their entrepreneurial journey.
If you have aspirations to form a Mississippi business, the following 8 step guide will help you get your new company up and running so that your launch in The Hospitality state can start with a splash.
1) Think about the type of business you want to start
Deciding on the type of business you want to create is just as important as the work required to sustain it, which is why taking a thoughtful approach to selecting your business idea is ideal. As an entrepreneur, you are your business, so it’s essential that whatever startup you choose is aligned with your internal compass and is within an industry that excites you.
If you know starting a business is the path for you but are unsure of which business to create, a careful review of your interests will reveal potential industries for you to pursue rooted in what you already enjoy. If you like baseball, perhaps you start a baseball apparel company or form a food vending company that contracts with baseball stadiums. Creating your business based on what excites you will help you develop a business that also excites you.
To help you transform your business idea into a tangible entity, you’re going to need to figure out how to make money. After all, isn’t that what a business is supposed to do? By spending some time drawing up a business plan and figuring out the best way to monetize your idea, you’ll be positioning yourself for success from the ground floor up.
2) Set up your legal structure
Once you’ve mapped out your business plan and have a deep understanding of what your company aims to accomplish, you’ll then need to choose a legal structure—or business structure—for your business. Your company’s business structure serves as the rubric for how it will be taxed, and in the state of Mississippi, there are 5 main types of business structures for you to consider:
- Sole Proprietorship: A sole proprietorship acts as a “pass-through” entity, whereby any profit or loss is entirely shouldered by you, the business owner, utilizing your Social Security Number. While being a sole proprietor in Mississippi is the most straightforward business structure because there are no forms to file, selecting this option does not offer the legal protections that come with a corporation or an LLC. The process does become slightly more labor-intensive if you choose to use a fictitious name—or “Doing Business As” (DBA)—since you’ll need to file the name with the Mississippi Secretary of State and pay a filing fee.
- General Partnership: You’re essentially combining two or more sole proprietors under one roof with a general partnership or limited partnership. As such, general partnerships operate like sole proprietorships in how they’re taxed as pass-through entities that are easy to set up, but also in their lack of legal protections. General partnerships are thus best utilized by casual business owners with low-risk operations.
- Corporation: For a more intricate and “serious” business structure, consider a corporation. Corporations are their own separate entities, offering business owners both liability and legal protections that prevent a business owner’s personal assets from being affected in the event of a lawsuit. The two main types of corporations in Mississippi are the C corporation and S corporation, each of which adheres to its own tax rules and regulations. To set up a Mississippi corporation, you’ll need to submit Articles of Incorporation to the Mississippi Secretary of State along with a $50 filing fee.
- Limited Liability Company (LLC): If you’re looking to enjoy the liability protections of a corporation but with the tax implications of a sole proprietorship, the Limited Liability Company is a happy medium between the two. To set up a Mississippi LLC, you’ll need to submit a Certificate of Formation—or Articles of Organization—to the Mississippi Secretary of State along with a $50 filing fee.
- Nonprofit: If your venture consists of business services that help society’s greater good, forming a nonprofit might make the most sense for your business structure. Nonprofits typically are tax-exempt, which could be a massive benefit to your operation. Registering as a nonprofit in the state of Mississippi requires you to select board members and draft bylaws, which is minor work to complete in the bigger picture of your company’s future if it helps you achieve tax-exempt status. To set up a Mississippi nonprofit, you’ll need to submit a Certificate of Formation to the Mississippi Secretary of State along with a $50 filing fee.
Deciding which business structure best fits the needs and functionality of your company is not an overnight decision. On the contrary, it involves research into your competitors' business structures and a thorough analysis of how each of the different business structure options affects your organization. Ultimately, your business structure setup should be your decision, not what someone else thinks is best for your business. After all, it’s your business, so you’ll want to choose a business structure that instinctually meets your company’s needs and makes sense to you.
3) Name and register your business
With your business structure selected, it’s now time to name your new company and register your organization with the state of Mississippi. Once you’ve chosen your business’s name, you’ll need to confirm its availability by conducting a Business Search on the Mississippi Secretary of State website. If the business name is available, you can then register the name with the state, which is a different process depending on the legal structure you’ve established. However, suppose you’re not ready to move forward with the name but want to prevent another party from securing it. In that case, you can fill out an Application for Name Reservation, also through the Secretary of State website.
Except for sole proprietorships and general partnerships, you’re going to need to appoint a registered agent to handle all of the legal and tax paperwork for your company. A registered agent is required by Mississippi law and can be either an individual or a company. If the registered agent you’re appointing is an individual, the person must possess a physical Mississippi address. If you’re opting instead to use a registered agent service, the company must legally be able to conduct business in the state of Mississippi.
Your chosen registered agent can now move forward and file your DBA, Articles of Incorporation, Certificate of Formation, or any other legal documents on behalf of your company’s formation in Mississippi. The agent can also help facilitate the federal application process for an Employer Identification Number—or tax ID number—from the IRS. Regardless of your business entity designation, it’s imperative to review and double-check that your registered agent submits all necessary forms and documents specific to your business structure.
4) Apply for business licenses and permits
Depending on the nature of your business, applying for additional licenses and permits—such as a sales tax permit from the Mississippi Department of Revenue—might be the next step for you. To make sure your business complies with all federal and state laws, check the Small Business Administration (SBA) website, the Mississippi Small Business Development Center (SBDC) website, and city regulations to better understand which licenses and permits apply directly to your type of business.
When it comes to business licenses and permits, location also plays a factor. Suppose you’re setting up an office in the city of Jackson. To run your business in Jackson, you’ll need to secure a business license from the Department of Planning and Economic Development. Alternatively, if you’re setting up an office in Hattiesburg, the requirement is to obtain a Privilege Tax License from the Hattiesburg Tax Department. There’s no general business license in the state of Mississippi, which is why it’s essential to keep in mind each city’s rules and regulations when deciding where in the state to run your business.
5) Choose a location
Even though Jackson and Hattiesburg happen to be two of the most well-known cities in Mississippi to start a business, many other factors outside the popularity of a given area will help you decide which real estate location is best for your business. The most significant variable is the type of business you’re running, as that will have both space and proximity needs that render certain areas of the state unserviceable while making other regions more ideal.
Suppose your business is a dine-in restaurant. You’ll need customers to survive and will thus thrive when there’s a high volume of patrons in your establishment. It therefore behooves you to exist in an accessible, central location instead of a remote area of the state where traffic is at a minimum. Alternatively, suppose you're an independent contractor. In that case, most of your work might be able to be completed remotely on your laptop, rendering a physical workspace unnecessary. Whatever industry you’re in, you should choose your business’s location based on: If you’re hiring employees, if a specific area of the state provides specific benefits to your operation, or if you can complete your work from home or in another remote locale.
6) Open a bank account and prepare for future taxes
Opening a business bank account and a business credit card is one of the most empowering tasks you—as a small business owner—can take to feel validated as an entrepreneur. There’s no better feeling than seeing your business name emblazoned across a small piece of plastic or a check being cashed that has your business name printed on it. While the feeling of opening your first business bank account can be exhilarating, the action of creating the business bank account is what’s important since keeping your personal transactions separate from your business transactions is one of the most timeless techniques for keeping your company’s accounting paperwork organized—especially when it's time to pay your taxes—and is a necessary step to take if you want to hire employees and issue payroll.
To set up a business bank account in Mississippi, you’ll need your Employer Identification Number, driver’s license, Certificate of Formation for your LLC, or Articles of Incorporation for your corporation. Bring those documents to the financial institution of your choice and proceed with any necessary paperwork. You’ll then want to register for Mississippi state withholding tax and unemployment insurance tax through Mississippi Works on the Mississippi Department of Employment Security (MDES) website.
You may also consider hiring a business accountant who understands the ins and outs of tax law. This will help ensure that your business complies with all Internal Revenue Service and state tax regulations when it’s time to file your income tax return.
7) Purchase business insurance
Just as you’ll want to hire a business accountant to help streamline your company’s bookkeeping and make sure it’s compliant with all state and federal tax laws, you’ll also want a business insurance company to handle all your business insurance needs. Your business insurance needs will vary depending on the type of business you’re operating, so you must choose a company with a trustworthy reputation so you can feel confident that the insurance you’re purchasing meets the requirements of your industry. In Mississippi, there are 3 main types of small business insurance that might be relevant to your operation:
- General Liability Insurance: A basic insurance policy that protects your business in the event of a lawsuit.
- Professional Liability Insurance: An insurance policy used primarily by service providers to protect them from malpractice claims.
- Workers’ Compensation Insurance: If you have employees, this policy protects your workers if they get injured on the job. In Mississippi, workers’ compensation insurance is required if you have 5 or more employees.
Understanding your company’s business insurance needs can be a complex process, which is why it’s crucial to choose a reputable company that knows what types of insurance are most applicable to your venture.
8) Create a marketing plan, hire employees, and more
You’ve tackled the formation process for starting your own business and can now pivot your focus to your company’s growth and marketing efforts. For many companies, this means creating a marketing plan, hiring employees, and crafting innovative strategies to advertise and promote your business to potential clients. There are many resources available to you in the state of Mississippi—particularly through social media—that can aid you throughout this process at little to no cost.
As you continue to guide your new business down the path of expansion and success, remember that Huckleberry is with you each step of the way. You can trust you’ll always have access to insurance quotes within minutes and that they’ll always have your back for all of your small business insurance needs.