Are there plans to kick-start a business in Mississippi soon? If yes is the answer, forming a Limited Liability Company (LLC) can be a wise decision. An LLC is essentially a hybrid combining the flexibility of a sole proprietorship or partnership with the limited liability of a corporation.
This means that as an owner of an LLC, you can expect to have a less complicated management structure and fewer formalities than a Corporation, but it also means that the owner has the assurance that his or her assets will in general be safe from the legal liabilities of the business.
Also, LLCs have the advantage of having pass-through taxation, which makes it possible for profits to be taxed at the level of individuals. This can help alleviate your taxation situation. With these benefits, an LLC can turn out to be very advantageous for business founders who wish to build their strong presence in Mississippi.
In this article, we will explain all the requirements that you need to meet to go ahead and form an LLC in Mississippi while focusing on the major benefits of that process.
Why Form an LLC in Mississippi?
Liability Protection: An LLC acts as a buffer between your personal property and your business debts and liabilities so that you do not suffer any financial loss.
Pass-Through Taxation: Most LLCs are classified as pass-through tax entities, thus, profits and losses are included in your income tax return. This may bring in lower taxes than a corporation.
Flexibility: LLCs provide a wide range of options National or foreign ownership, management and conduct of business activities as well as management of the entity may be done by the owners or even the third parties.
Credibility: Customers, investors, and partners find the business more appealing and professional given that the establishment is legal.
Step 1: Choose a Name for Your LLC
Abide by Mississippi Name Requirements: It is a requirement that your LLC name has to include the words ‘Limited Liability Company’ or short version “LLC” or “L.L.C.” which shows the legal nature of the business.
Make Sure the Name You’ve Selected Will Not Be Previously Registered: The name you have decided upon must be sufficiently different from the names of business entities already registered in the state of Mississippi. To confirm your chosen name, you may consult the database of the Secretary of State of Mississippi which is critical when looking for the availability of names.
Provisional Name Reservation (Optional): If you would like to distinguish your LLC’s name and do not want to go through the hassle of filing the LLC papers, you may reserve it for some time. This is done by filing an Application for Name Reservation where you can reserve the name for up to 180 days to enable you time to prepare the rest of the documentation for formation.
Step 2: Designate the Agent for the Service of Process
Definition: A registered agent is a person or a business rather who has been named to accept legal papers such as service of process notices, official correspondence from the government, and all other compliance documents on behalf of your LLC.
Requirements: The registered agent should be physically located within the state of Mississippi and should be properly briefed on the times he/she is required to be available to receive documents.
Selection: It is possible to fill the role of a registered agent for your Mississippi LLC but you can appoint any other person like other members of your company or even professional registered agent services. While each has its benefits such as cost, availability, and privacy, each of the options has its drawbacks too.
Step 3: Complete Filing the Certificates of Formation
Online Filing: The whole process of paperwork is completed through the web of the Mississippi Secretary of State where the filing of LLC papers has been greatly enhanced.
Details Required:
- Business name and address
- Name of registered agents along with address
- The life span of an LLC can be for a specific period or forever
- Form of control (whether the group is going to be managed by members of the LLC themselves or appointed managers will run the organization)
Filing Fee: A submission of this nature carries with it a filing fee. In this case, it can be settled with a credit card online. The fee information is essential and in this case, the fastest way to know the amount to be paid for any service is through the Mississippi Secretary of State’s official web page.
Step 4: Creating an Operating Agreement
Purpose: An operating agreement is a very important document that defines the management arrangement and working style of your LLC. It works as a contract between the members of the LLC on how the business will operate.
Contents:
- The functions and duties of every member
- The members’ voting rights and the ways of distributing profits
- The procedures of how new members can join, and members can leave, as well as how the leaving of the member will be dealt with
Not Mandatory but Recommended: Mississippi law does not provide for the existence of such an agreement, so it is not bound to maintain an operating agreement; however, it is advisable to have one. It helps to reduce conflicts amongst members, helps to explain the internal structure of the company, and also offers a legal umbrella in the presence of misunderstandings.
Step 5: Application for EIN
EIN (Employer Identification Number): This refers to a 9-digit number that the Internal Revenue Service (IRS) provides for tax reasons.
Application:
- Application for an EIN is simple and can be done within a short period using IRS websites without paying any fees.
- An EIN is required for a wide range of business activities such as creating business bank accounts and opening up the common payrolls before moving to filing returns that tip all business activities. it is very important to the financial setup of your business and so every person should have one.
Step 6: Meet the Tax and Regulatory Compliance Obligations of Mississippi for an LLC
State Taxes:
- Depending on your business activities, the Mississippi Department of Revenue requires you to register for different types of taxes.
- Most LLCs will be liable to pay sales tax, use tax, and employee withholding tax, among others. It is important to understand your tax liabilities and how to perform the obligations in a manner that does not bring exposure to penalties.
Business Licenses:
- Depending on your industry and business location, some local government or county shall require permits to conduct business legally. It is therefore good practice to consult with your local city hall or county government regarding the business setup requirements in your area.
Step 7: File Annual Reports
Requirement: To remain in good standing status with the state of Mississippi, a corresponding Report concerning the annual affairs of your company is required to be submitted by your LLC’s owners.
Deadline: The report has to be filed by 15th April of every year and any failure to file it may attract penalties or your LLC being dissolved by administration.
Filing:
- The document in question is the Annual report. This can be done online through the Mississippi Secretary of State’s office where a log-in system will be used to administer the procedure.
- Remember that this is an annual report, and it comes with a fee. Always attach the fee payment with your submission.
By following the aforementioned steps, one can easily set up an LLC in Mississippi state and enjoy the limited liability as well as operational flexibility that it presents. As a common practice in business, if you have particular legal worries or seek any help, a business attorney is always helpful to avoid non-compliance and mistakes.
Book a free consultation and learn in detail about how to set up an LLC in Mississippi as well as any relevant details that you may require.
Frequently Asked Questions (FAQs)
How long does it take to form an LLC in Mississippi?
Formation of an LLC in Mississippi state may take some time depending on the factors involved. however, if an application shoots and an online application has been submitted, it usually takes approximately a day or less than that. In the case of paper applications, they tend to take slightly longer, ranging around business several 5 to 7 business days.
Since the filing of an LLC in Mississippi has been completed, are there further requirements?
Yes, Mississippi LLCs must file an annual report with the Secretary of State to remain in good standing. This report is due on or before April 15 each year and can be filed online.
What taxes need to be paid by the owners of an LLC in the state of Mississippi?
Pass-through taxation is applied to LLCs by default which means that profits and losses would be reported at the member level on their returns. Nevertheless, if you wish to leave the profits and income of the LLC within the entity, and treat it as a corporation, you may do so.
Is it possible to create a single-member LLC in Mississippi?
Absolutely, in Mississippi, single-member LLCs are legal and provide the same liability and other benefits as LLCs with multiple members.
Nabin Adhikari
