Definition

What is an LLC?

An LLC, or Limited Liability Company, is a business structure that combines the flexibility and pass-through taxation of a partnership with the limited liability of a corporation. This creates an entity that offers owners personal asset protection while paying taxes at the individual level. LLCs are often used when starting businesses because they provide more protection than sole proprietorships while also avoiding the cumbersome requirements of corporations. Depending on the state or country, LLCs can choose between different types of taxation and customize their operating agreement to fit the needs of their owners. 

Additionally, an LLC has no maximum number of members and is relatively easy to form compared to other corporate structures. With so many benefits, it’s no wonder LLCs are becoming one of the most popular options for entrepreneurs looking to get their businesses up and running.

As LLCs become more mainstream, states and countries have begun implementing rules governing them. For example, most jurisdictions require that an LLC register for a business license before conducting any commercial activity. Some require members to pay annual fees or taxes to comply with government regulations. Companies should be aware of their jurisdiction’s laws before forming an LLC, as failure can result in serious legal consequences.

An LLC is a great way to protect yourself while enjoying a partnership’s flexibility and tax benefits. With the right guidance, forming an LLC is relatively straightforward and can help you get your business up and running in no time.

Advantages

Advantages Of an LLC In Mississippi

Mississippi has its own unique features when it comes to forming an LLC. Let’s discuss the five main benefits of forming an LLC in Mississippi.

Disadvantages

Disadvantages of Starting a Mississippi LLC

A limited liability company provides the flexibility of a partnership with the corporate protections of a corporation. But before creating an LLC, it’s important to understand its cons. Let’s see some of the drawbacks of forming an LLC in Mississippi.

LLC Formation

How to Form an LLC in Mississippi

You have an idea for a business venture and want to formalize it in Mississippi. One of the best ways to do this is to form an LLC (limited liability company). Forming an LLC might seem like a long and complicated process, but it doesn’t have to be. Below we will have a complete breakdown of the process of forming an LLC in Mississippi.

1. Choose a unique name for your business
2. Choose a registered agent in Mississippi
3. File your articles of organization
4. Create an operating agreement
5. Apply for an EIN

Choose a unique name for your business

When forming an LLC in Mississippi, it’s important that you choose an appropriate and unique name for your LLC—not only should it reflect the nature of your business, but it will also serve as a vital part of registering and branding your company.

While the state of Mississippi does not have many restrictions on business names, there are certain measures that you should take to ensure your chosen name is legally available for use.

First, ensure that your proposed business name does not infringe upon any existing trademarks or service marks. To check for existing trademarks, visit the U.S. Patent and Trademark Office (USPTO) website and search for potential matches. It is also important to ensure that a similar business does not exist in Mississippi with the same name by searching the Mississippi Business Name Database at sos.ms.gov/Business-Services. Once you’ve found a name that meets all of these requirements, it’s time to reserve the LLC name with the Mississippi Secretary of State.

You can do this by filing an Assumed Name Certificate (Form 4729) with a $25 fee for the reservation. There is also an option to file online at sos.ms.gov/Business-Services. Your name should include an appropriate legal ending such as ‘LLC,’ ‘Corp,’ or ‘Inc.’ and be distinguishable from any existing business entities in the state.

Choose a registered agent in Mississippi

Forming an LLC in Mississippi requires the appointment of a registered agent. A registered agent is responsible for receiving official documents from the state, such as service of process notifying your business of legal action or tax forms. The agent must have a physical address in the state and be available during normal business hours to receive documents.

When choosing a registered agent in Mississippi, you should ensure they are reliable and will be available when needed. Ask if they have experience dealing with business documents and how quickly they can forward them to you. It is also important to ensure the agent is aware of their responsibilities and can take appropriate action when necessary.

Once a registered agent is chosen for an LLC in Mississippi, the name and address of the agent must be included in the Articles of Organization when filing with the Secretary of State.

Take your time to ensure you have chosen an agent who can handle official documents appropriately to ensure your LLC is properly formed and complies with state regulations.

File your Articles of Organization

The process of filing your Mississippi LLC Articles of Organization is an important step in the formation of your new business. You must obtain a Certificate of Good Standing from the Secretary of State’s office to get started. This document verifies that no outstanding debts or liabilities are associated with your company. Once you have obtained this certificate, you must prepare and file your Articles of Organization with the Secretary of State. The form can be found online, or you may contact the office directly.

When filing your Articles of Organization, you will be required to provide certain basic information about your company, such as its name, purpose, mailing address, registered agent’s name, and address, and the names and addresses of each member. You will also need to designate the number of shares or units authorized by your company. Once you have completed and signed the form, it must be filed with the Secretary of State’s office within one hundred twenty (120) days with a filing fee of $25.

Upon receipt of the Articles of Organization, the Secretary of State will review them for accuracy and completeness. If your filing is approved, you will receive a Certificate of Organization, and your LLC will officially be formed. Your LLC’s Articles of Organization must also be part of your company’s records.

You may consult a qualified business attorney or accountant to ensure that all the necessary steps are taken to form your LLC. They can provide additional guidance and advice on forming your Mississippi LLC.

By filing your Articles of Organization and obtaining a Certificate of Good Standing, you will be well on your way to forming a successful business.

Create an Operating Agreement

An Operating Agreement for an LLC in Mississippi is important. This document serves as the governing agreement for the LLC and outlines all of the necessary business operations, including voting rights, roles, responsibilities, and other important matters. This agreement should be customized to fit the needs of each specific business, taking into account the members, their roles, and any other pertinent information.

Creating an Operating Agreement in Mississippi is a simple process that consists of five components:

1. It’s important to determine the purpose of the LLC and list any necessary business structure information, such as each member’s name, address, and percentage of ownership.
2. All parties should agree to each member’s duties, rights, and responsibilities.
3. The LLC should have a voting procedure that outlines how decisions will be made and by whom.
4. Including provisions for dispute resolution, such as mediation or arbitration, is important.
5. All members must agree on the procedures for winding down the LLC should that become necessary in the future.

Apply for an EIN

If your LLC is based in Mississippi, you must apply for an Employer Identification Number (EIN) from the Internal Revenue Service. An EIN is a nine-digit number the IRS uses to identify and track businesses for tax reporting purposes. Your LLC must have an EIN to open a bank account, process payroll, and file taxes.

To apply for an EIN in Mississippi, you must complete Form SS-4. You can access this form online or by requesting a paper version from the IRS. You will need to provide information about your LLC, such as its name, business address, and entity type. Once you have completed the form, you can submit it online or mail it to the IRS.

Obtaining an EIN in Mississippi may take up to four weeks, depending on how your application is submitted. Once you receive your EIN, you should keep it securely and use it when filing taxes or setting up bank accounts.

Types of LLC

Which type of LLC is ideal for me?

If you’re interested in forming a Limited Liability Company (LLC) in Mississippi, it’s essential to know about the different types of LLCs available in the state. An LLC is a popular choice for business owners because it offers personal liability protection, tax flexibility, and a relatively simple management structure.

In Mississippi, there are a few types of LLCs to choose from:

1. Single-Member LLC: This is the most straightforward type of LLC, suitable for entrepreneurs who want to start a business on their own. A single-member LLC is owned by one individual, who is responsible for the management and operation of the company. This structure provides the owner with liability protection, meaning their personal assets are separate from the business assets.
2. Multi-Member LLC: A multi-member LLC is owned by two or more individuals, who are referred to as members. This type of LLC is perfect for business partners, groups, or families looking to start a company together. Each member has a stake in the company, and the management structure can be customized to suit the needs of the business. Members share liability protection, and the LLC can choose to be taxed as a partnership or a corporation.
3. Series LLC: Mississippi also allows for the formation of a Series LLC. This unique structure allows the creation of separate “series” within a single LLC, each with its own assets, liabilities, and management. Each series operates independently of the others, providing a level of asset protection between the different series. This type of LLC is well-suited for businesses with multiple divisions or assets that need to be kept separate, such as real estate investments.
4. Professional LLC (PLLC): In some cases, professionals like doctors, lawyers, and accountants are required to form a Professional LLC (PLLC) instead of a regular LLC. A PLLC functions similarly to an LLC but is specifically designed for licensed professionals who are subject to certain state regulations.

LLC Taxes

Applicable LLC taxes in Mississippi

LLCs operating in Mississippi are subject to certain taxes. Understanding applicable taxes means you can better plan for your organization’s future. Let’s discuss the state’s three main taxes applicable to LLCs: 

Franchise Tax

The Mississippi Franchise Tax is a levy on businesses operating in the state of Mississippi. The tax rate depends on the type of business, its gross receipts, and other factors. For example, businesses with less than $5 million in gross receipts are subject to tax at $2 per $1,000 of gross receipts. Businesses with more than $5 million in gross receipts are subject to tax at a rate of $2.50 per $1,000 of gross receipts. This tax is generally paid quarterly, with the filing due date being the 15th day of the third month following the end of each quarter. Every business must register with the Mississippi Department of Revenue before filing a return and paying any taxes due. Mississippi Franchise Tax is a privilege tax and not deductible for federal income tax purposes. 

Sales Tax

The Mississippi sales tax is 6.00%. This applies to the sale of tangible personal property and certain services. The state also has a local option sales tax that can range from 0.00% to 7.00%, depending on the county, city, or municipality where the sale is made.

The Mississippi sales tax rate is 6.00%, plus applicable local option taxes. Some goods and services are exempt from the Mississippi sales tax, including most food and food ingredients, medicine and medical equipment prescribed by a licensed physician or dentist, certain manufacturing machinery and materials, and agricultural equipment.

Businesses that sell goods or services in Mississippi must register with the Department of Revenue and collect the sales tax from their customers. Businesses are responsible for remitting the tax to the Mississippi Department of Revenue monthly, quarterly, or annually.

Corporate Tax

LLCs registered in Mississippi must also pay between 4% and 8% corporate income tax. This amount will depend on how much profit your business made over the year and other relevant factors, such as investments made into research & development activities or property purchased for business use. Corporate income taxes should be reported on Form 355S Corporation Excise/Income Tax Return which must be filed annually by all corporations operating in Mississippi regardless of their taxable income amount for that year.

Costs

Cost of forming an LLC in Mississippi

Mississippi’s corporate income tax is based on a graduated rate structure. The corporate income tax rate ranges from 3 percent to 5 percent, depending on the income earned. Mississippi also levies an alternate minimum tax, equal to 1 percent of federal taxable income for corporations with apportionable income of more than $10,000.

Additionally, all corporations in Mississippi must pay a franchise tax to the state Department of Revenue. The franchise tax rate is $2.50 per $1,000 capital employed in the state.

Foreign LLC

Forming a Foreign LLC in Mississippi

A Foreign LLC registered in Mississippi is a business entity organized outside the United States and registered to do business in the state. Registering a foreign LLC in Mississippi is the same as registering any other business entity, with some extra steps due to the company’s foreign status.

The registration process begins with filing an Application for Registration and other required documents with the Mississippi Secretary of State. These documents must include the company’s name, address, type of organization, and purpose. Other documents that may be required are a copy of the articles of organization, a certificate of good standing from the foreign jurisdiction, and an affidavit of authority.

Once all documents have been filed, they are reviewed by the Secretary of State. The foreign LLC must obtain a Certificate of Registration from the state and pay applicable fees if approved. After all, documents have been filed and approved; the foreign LLC may begin conducting business in Mississippi.

Foreign LLCs registered in Mississippi must also comply with all applicable state laws, including taxes and other regulations. Additionally, they may be required to register with the Internal Revenue Service (IRS) and obtain an Employer Identification Number. The LLC must also maintain an updated registered agent in the state to ensure that all official documents and notices are received promptly.

Comparisons

Is LLC The Best Entity For Me?

Maybe, LLC isn’t the right entity for you. Maybe it is a C-Corp. Only way to find out is to directly compare them all.