Professional Advice for Forming an LLC in Mississippi
For anyone starting a business, the legal aspects can be intimidating. The first step is to choose your business’ structure. If you’re here, it means you’re thinking of starting an LLC in Mississippi.
An LLC, or “limited liability corporation,” is one of the simplest and easiest ways to protect your business or assets against legal actions. Forming an LLC in Mississippi is especially simple. Here’s what you need to know!
Naming Your Enterprise
The very first step is to choose a name for your Mississippi LLC. There are some basic ground rules you need to follow for doing this.
- The name must contain the words “LLC” or “limited liability corporation”
- A Mississippi LLC’s name cannot be confused with that of a government agency, such as the Treasury.
- Certain words, such as “Bank” or “Attorney,” can only be used under special legal circumstances.
- Now, search for your name in the state database to make sure it’s available.
After choosing a name, it’s time to choose a Registered Agent for your LLC Mississippi. A Registered Agent is someone authorized to receive legal documents for your business. It can be anyone who can legally do business in the Magnolia State. You can be your own Registered Agent, or you might consider hiring a Registered Agent service.
Certificate of Formation
The next step for any LLC in Mississippi is to file a Certificate of Formation. This can be done online or by mail. In either event, it costs a $50 filing fee.
You will need an NAICS code when filing your Certificate of Formation. This is a 6-digit number used to officially classify the line of business you’re in. Feel free to figure out your NAICS code here.
An operating agreement sets our the basic structure of an LLC. It states in writing who owns the business and how it is to operate on a daily basis. It’s not strictly necessary to have for your Mississippi firm, and you don’t have to file it with the state, but it is a really good idea!
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Obtaining an EIN
An EIN is a number the government uses to identify your business. It is needed for tax purposes, and you also need it to open a bank account and hire employees.
You can do this online, or you can fill out a form.
You don’t need to enter your SSN to get an EIN, if you so choose. While most people use the default tax option when getting an EIN, some find other options preferable. Feel free to ask an accountant which is better for your business.
Further Protecting Assets
The whole point to forming an LLC, of course, is to protect your business assets against legal problems. There are two additional steps you must take, however, to assure this result: opening a business bank account and obtaining a business credit card.
Both help separate your personal assets from your business assets and improve accounting and tax filing. The credit card will help your company build credit, as well. You may wish to shop around for the best credit card for your business.
Another important, though often overlooked, step in protecting your personal assets is to be very careful how you sign your LLC’s legal documents. Make sure you’re signing as the business owner or representative and not as you yourself!
Here is a simple formula to use when giving your John Hancock on behalf of the business:
I- Formal business name
II- Your signature
III- Your printed name
IV- Your business title
Finally, you must consider protecting your business’ assets through insurance. Most small business owners purchase general liability insurance. You may need to consider professional insurance and worker’s comp insurance, which are sometimes legally mandatory.
Beyond this, any insurance you purchase will reflect the specific needs of your enterprise. Depending on what type of business it is, who your clientele are, and what area of the state you live in, you may consider buying flood insurance, boiler and machinery insurance, product liability, business interruption insurance, overhead expense, or disability insurance.
So, now you’re finally ready to launch your business, right? There are still a few important bases to cover. You may need to obtain a license and permits for your business enterprise, in accordance with federal, state, and local requirements. For instance, you may need to get health, building, signage, and other permits.
The precise fees and requirements vary by location. Here is the State of Mississippi’s list of businesses for which permits are required.
Obtaining necessary licenses can become a difficult and complicated chore. You may wish to hire a professional to assist you.
Taxation is an ugly word to many Americans, and a challenging reality for a Mississippi entrepreneur. Your business is liable for a number of state, local, and federal taxes. Remember, your LLC faces automatic dissolution if you miss any major tax filings, meaning the loss of your legal asset protections!
The first and most outstanding obligation is state and local sales tax. You’ll need to register for a seller’s permit with the State of Mississippi. You’ll also need to register for unemployment insurance tax, and witholding tax. And don’t forget to file your annual report with the Mississippi Department of State. As for Federal taxes, most multi-member LLCs file here, whereas most single-member LLCs file here.
It’s not fun, but it has to be done!
Whether you’re making sure your expenses are covered, undertaking the pleasant task of counting your profits, or the unpleasant task of preparing for an audit, proper bookkeeping practices and software are vital to keeping your Mississippi enterprise afloat.
It’s important to consider the merits of double-entry bookkeeping. Even for a small business, this method has important advantages. In single-entry bookkeeping, one record is made for each transaction, as in a checkbook. This might work for very small concerns.
Most businesses, however, even small businesses, use double-entry bookkeeping. In this system, two entries are made, a debit signifying the amount owed and a credit signifying the asset value gained. Double-entry has enormous advantages to businesses for keeping track of their own profits, as well as amounts owed to lenders, vendors, and the tax authorities.
There are a wide number of software programs that can help entrepreneurs balance their books. These range from top-rated commercial software like QuickBooks to free, open-source programs such as GnuCash or Wave.
Most small businesses are started with money from a person’s own savings, with financial assistance from friends and family members, or with loans from a bank or other lending institution. If a bank turns down a loan application, the applicant might consider seeking an SBA loan or assistance from the Mississippi Small Business Administration. Whether one seeks a loan from a public or private institution, a well-formed business plan is essential for success and LLC Formations is here to help!
Hiring the right employees is essentially to the health of a growing business. Make sure you keep your hiring practices in accordance with the law by going through the following steps.
- Verify that your employees are eligible to work in the U.S. with an I-9 form.
- Report your employees as new hires to the State of Mississippi.
- Make sure that your employees are covered by workers’ compensation.
- Withold payroll tax from your employees in accordance with the FICA provisions.
- Pay your employees in accordance with the Mississippi minimum wage of $7.25. Remember that employees in MS must be paid bi-weekly. Specifics can be found here.
- Finally, if you’re self-employed, you might want to take a look at the IRS’ self-employed individuals tax center.
A business is its people, and hiring the right people is key to the success of any growing concern. Make sure to clearly post signs around your premises explaining to your employees their rights and obligations under the law.
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Starting a business is a struggle. One must deal with any number of problems, costs, and bureaucratic complications. Many Mississippians find it worth it to be their own employers and to build their own futures.
Remember to have a plan, an long-term goal for where you want your business to go over, perhaps, the next 10 years, and then break it into smaller, achievable pieces. Have a 5-year goal, a 1-year goal, and then some quarterly goals. Think of the profits you need to get to, and the steps you need to take to get there.
Most importantly, rely on your support network. Not only might your friends and family — and the people they know — be able to offer financial support in the form of loans and traffic to your business, they will support you emotionally as well. Because at the end of the day, business really is about people. Check out the new Missouri LLC guide next!