How to Incorporate in Mississippi vs. How to Start a Mississippi LLC
A Guide to Choosing the Best Business Entity in Mississippi
Are you interested in starting a business in Mississippi, but not sure if you should form an LLC or start a corporation? Active Filings has the guide for you! We’ll walk you through the advantages and disadvantages of incorporating or forming an LLC in Mississippi. Throughout this Mississippi-specific corporation and LLC formation guide, you’ll discover exactly how to form either an LLC or corporation in Mississippi, and learn the disadvantages and advantages of each business type.
Then, after choosing which business formation best meets your needs, you can hire Active Filings to incorporate your business in Mississippi for you. We’ll streamline the process and make it painless. Our starter package begins at only $25 (plus Mississippi fees), and we’re sure that you’ll find out in no time why Active Filings is America’s most reliable business incorporation service.
Mississippi LLCs vs. Mississippi Corporations (Which is Better)
People looking to start a business often ask whether they should set up an LLC or incorporate for their new venture. Like everything else in life, the answer depends. Below you’ll find the three factors we think will help you make an informed decision.
- Ease of maintenance
LLCs are pretty easy to maintain. An LLC can opt to be managed by its members, which allows all owners to share in the business’s day-to-day decision-making, or by managers, who can be either members or outside managers. This is helpful if members aren’t experienced in running a business and want to hire people who are. Corporations have to hold meetings, keep minutes, record votes, and generally file more paperwork compared to an LLC. However, corporations are perpetual, which means they can exist as their own entity forever, whereas an LLC will generally dissolve and cease to exist upon the resignation, death, or bankruptcy of the member or members.
- Desired tax structureLLC is generally organized as a pass-through entity, meaning its profits go directly to its members without being taxed by the government on the company level. Instead, they’re taxed on members’ federal income tax returns. This makes filing taxes easier than if your business were taxed on the corporate level. Corporate profits are subjected to what can be referred to as “double taxation,” which means that a corporations profits are taxed, and then you get hit with taxes at the personal income level. The Wyoming LLC is where it’s at on tax structure.
If you plan to raise capital for your business, then incorporation probably makes the most sense. Investors prefer the favorable taxation rules of a corporations, and unlike LLCs, a corporation’s shareholders are not taxed on company profits unless profits are distributed. This means the dividends paid from the corporation can be structured to take advantage of the best tax scenario for the shareholders. LLCs If you plan to grow your small business into a larger entity and attract investors, forming a corporation is your best bet.
Let’s also not downplay the notion of prestige. When you hear the word corporation, many people think of Amazon, Apple, Walmart, and Nike. While the LLC is perfect for the small to medium-sized business, it doesn’t carry the same cache as the corporation. While LLCs first came into being in the late 1970s, the corporation is the oldest recognized business entity in the US.
Advantages and Disadvantages of Mississippi LLCs and Corporations
While we’ve already broken down the differences between an LLC and a corporation, we’re going to dig a bit deeper into the pros and cons of forming an Mississippi LLC or corporation. Take a look below to see what makes Mississippi LLCs and corporations unique:
- Low Corporate Taxes
Mississippi collects a graduated state corporate income tax of 3%, 4%, and topping out at 5%. This tax rate is the 3rd lowest in the United States, ranking directly below North Dakota’s 5.2%.
- Low Income Tax
With an income tax that graduates from 3% to 5%, Mississippi’s income taxes are lower than the national average. The state sales tax is slightly above the national average, while property taxes remain among the lowest in the nation. 5% is charged on income of over $10,000, so most LLCs will be subject to the max tax, but 5% won’t kill your business, especially considering the state’s business-friendly environment with various state tax credits for businesses.
- LLCs Pay $0 for Annual Report
Mississippi doesn’t charge LLCs to file the state’s annual report. Corporations only pay $25. Foreign LLCs pay $250. Most states charge LLCs for every little thing they can, but it is refreshing to find a state that feels LLCs don’t need to act as revenue streams for the state coffers.
- Jobs Tax Credit
Mississippi offers a 10% tax credit of payroll for a project located in a Tier 3 (less developed) county and that creates at least 10 new jobs in a one-year period. It also offers a 5% payroll credit for a project located in a Tier 2 (moderately developed) county and that creates at least 15 new jobs in a one-year period. Finally, the state will offer tax credits equal to 2.5% of payroll for a project located in a Tier 1 (more developed) county and that creates at least 20 new jobs in a one-year period. Mississippi wants jobs and aims to help eligible businesses increase employment.
Mississippi LLC or Mississippi Corporation? Our Final Answer.
Both corporations and LLCs offer excellent liability protection, but when you factor in an LLC’s ease of maintenance, desired tax structure, and not having to go out and woo business suit-wearing investors, the Mississippi LLC is a pretty awesome.
How to Incorporate in Mississippi
Filing your Mississippi Articles off Incorporation only costs $50, which is pretty inexpensive. However, if you fill out all the paperwork on your own, you’ll have to jump through a few hoops and offer up private information like addresses and emails, things you can keep private if you hire us!
Your first step, if you plan to file your Articles yourself, is to create a Mississippi Corporations Registered Filer account. You have to do this even if you plan to file mail, as Mississippi asks that paper forms must be first completed online. Also you won’t have access to the online forms without an account. You’ll need to provide your name, address, phone number and email to create an account. Hire Active Filings and we’ll do all this for you. Answer a few questions and we’ll do the rest.
“Corporation,” “Incorporated,” “Company,” “Limited,” or an abbreviation for one of these words are all acceptable, but the vast majority of corporations keep it simple and sweet with “Inc.,” or “Corp.” Example: Amazon, Inc.
This is where the Secretary of State will send any official notifications. Like everything in your Articles of Incorporation, the email you include here becomes part of the permanent public record of your corporation. Hire us and our email goes here.
Filing your Articles with the state means that your corporation has been born. Want to file now but wait a few weeks to legally be able to do business, you can enter an effective date up to 90 days in the future. Most people start their business ASAP.
Want to give your corporation an expiration date? Enter it here. Most LLCs skip this section.
For each stock class, list the number of shares you’d like to create. You must have at least one share.
Select at least one NAICS code—these are 6-digit codes for nearly every sort of business activity you could think of. Example: 178100 is the NAICS code for Water Well Drilling. Pick the best match for your business.
From the drop-down menu, choose either “organization” or “individual,” and list your agent’s name. The agent can be you or someone you hire, or you can hire a professional registered agent like Active Filings.
If you have a commercial registered agent, their information will already be in the system—just select your agent and the address will appear automatically. If you choose a noncommercial registered agent, you’ll have to enter the Mississippi street address where they will be available (and which will become a permanent part of the public record). Keep it simple, hire us, and select Active Filings from the menu.
Your incorporator is just the person filling out, signing, dating and submitting your Articles. Doesn’t have to be a member of your company, and in fact, if your hire Active Filings, we’ll be your incorporator.
How to Start an LLC in Mississippi
Mississippi’s Certificate of Formation costs $50 to file. You can file online or by mail and the process may be daunting the average person. If you hire Active Filings to start your LLC, we file online and do all the work for you, so you can chill poolside with a cold drink knowing your LLC formation is in good hands.
Your name must include “Limited Liability Company” or “LLC.” Mississippi doesn’t take too kindly to LLCs that use names suggesting you’re a different type of business than what you are. “Joe’s Gutters, LLC” can’t go around selling craft pork rinds.
This is where the Secretary of State will send any official notifications. Like everything in your Certificate of Formation, the email you include here becomes part of the permanent public record for your LLC. Want some privacy? Hire Active Filings and our email goes here.
If you want your LLC to start right away, you can skip this section. If you’d prefer to put off your start date (maybe the next tax period is right around the corner), you can put a future effective date up to 90 days in the future.
These are numerical codes that correspond to specific business activities. Choose the one that best matches what your business does. It’s okay if it’s not a perfect match. Example: If you were opening a tattoo parlor, you’d enter NAICS Code 812199 – Other Personal Care Services.
You can enter either an individual or a commercial registered agent. If you choose an individual, you must also include the Mississippi street address where they’ll be available during business hours. Our information is already on file with the state, which means if you hire us, our info will go here.
Your organizer is the person who signs and submits your Certificate of Formation. It doesn’t have to be anyone associated with your LLC. You can do it yourself, or hire us to file for you.
Maintaining Your Mississippi Business
Mississippi requires corporations and LLCs to file an annual report each year with the Secretary of State. Nonprofits, LLPs, and LPs don’t have filing requirements.
When is it due?
April 15th. No late fees are charged, but the state may administratively dissolve or revoke your business license if you fail to file a report within 60 days of the due date (April 15th).
How do I file my annual report?
Mississippi makes you file online, so if you’re not great with computers, it may pay to hire Active Filings to file for you.
Log into Mississippi’s online portal and go to the Annual Reports page.
-Select “File LLC Annual Report Online” OR “File Corp Annual Report Online.”
-Enter your username and password and click “Login.” If you don’t already have an account, you will need to create one by clicking “Register.”
-You need your business’ ID number to begin filling out your report. Forgot your ID #? You can easily find it by searching the Mississippi Business Database.
-To finalize your report, pay with your credit card.
How much does it cost?
LLCs pay nothing. Foreign LLCs pay $250. Corporations pay $25.
Understanding Mississippi Taxes
No one likes taxes. America was built on not liking to pay taxes. Nevertheless properly paying your business taxes is an important part of running a small business. While we’re not tax professionals, Active Filings hopes to give you a simple and informative overview of the way your LLC or corporation may be taxed.
Corporations: The profit of a corporation is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends. This is what we mean when we say corporations face “double taxation.” If you are forming a corporation, you’ll want to pay attention to not only the state’s corporate tax, but also the state’s income tax rate, as you will be on the hook for both.
LLCs: For income tax purposes, an LLC with only one member is treated as an entity disregarded as separate from its owner, unless it files Form 8832 and elects to be treated as a corporation. However, for purposes of employment tax and certain excise taxes, an LLC with only one member is still considered a separate entity. One of the most significant benefits of an LLC is that of pass-through taxes. LLC owners don’t have to file a corporate tax return. An owner simply reports their share of profit and loss on their individual tax return. This prevents double taxation, your business paying taxes and you paying taxes.
What are the Mississippi corporate net income tax rates?
10,000 + 5%
What are the Mississippi personal net income tax rates?
10,000 + 5%
What is the average Mississippi sales tax rate?
When are my taxes due?
Corporate income and franchise tax returns are due by March 15 (or by the 15th day of the 3rd month following the end of the taxable year for fiscal year filers) for calendar filers.
What if I need an extension?
Mississippi offers a 6-month business extension, which moves the filing deadline to September 15 (for calendar year filers). There is no Mississippi extension application to submit unless you owe Mississippi tax, in which case you can file and pay your extension using Form 83-180.