Starting an LLC in Mississippi
If you're starting your own business, you've probably given a lot of thought to the type of business structure that you'll create. If you want to form an LLC (limited liability company), you should gain an understanding of the relevant law and the requirements of LLC formation. Understanding the steps you need to take to form and maintain an LLC in Mississippi will help you make the right decisions for your small business.
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Benefits of Mississippi LLCs
LLC is short for "limited liability company," which is a business structure that combines aspects of both corporations and partnerships. An LLC provides limited liability protection to its owner/members in the same way that a corporation does; owners aren't generally personally responsible for the company's debts and liabilities. If you operate your business as a sole proprietorship, on the other hand, you could potentially lose your personal assets in a lawsuit against your business.
Additionally, LLCs offer flexibility. The management structure is not as rigid as that of a corporation. LLC owners also get to have flexibility regarding how the business is taxed.
Steps for Forming an LLC in Mississippi
Step 1: Name Your LLC
The name that you choose for your limited liability company is essential because it has both marketing and legal implications. You don't want to choose a business name that misses the mark with potential customers. You also don't want to choose a business name that runs afoul of Mississippi LLC laws.
It's best to start with a list of potential names that you think will be appealing to your target audience. Next, narrow your list down based on the state naming requirements.
In the state of Mississippi, LLC names:
- Must contain the terms "limited liability company" or the abbreviations "L.L.C." or "LLC"
- May include the name of a manager or member of the organization
- Must be distinguishable from business names already registered or reserved with the state
Since your business name must be unique and distinguishable from all other names on record with the Secretary of State, you should conduct a name search to check for name availability. If you come across a name on your list that's not available, you need to choose a different name. You can apply for a name reservation if you discover that a name you like is available but you're not ready to register your LLC just yet.
Step 2: Choose a Registered Agent
You'll need to have a registered agent for service of process to comply with state law. A registered agent has the duty and responsibility of accepting legal papers on your behalf if the company gets sued.
There are requirements for a Mississippi registered agent. For example, the registered agent must be a person or company with a physical street address in Mississippi, and the agent must be available during regular business hours. Significantly, it would help if you chose someone who's a resident of Mississippi or a company authorized to do business in Mississippi. Some business owners choose to use a registered agent service for a fee.
Step 3: File a Certificate of Formation
You'll need to file a Certificate of Formation with the Mississippi Secretary of State to form your Mississippi LLC. Many business owners take advantage of the online filing system, but you may also submit your filing through the mail. The filing fee is $50.
Be prepared to include the following in your filing:
- LLC name and e-mail address
- Registered agent name and address
- NAICS code
- Effective date
Step 4: Draft an Operating Agreement for Your LLC
An LLC operating agreement is an essential internal document. Although you won't file this document with the state, it's crucial to have it because you may need to reference it in times of conflict. Without it, state LLC laws would apply in case of a dispute.
Operating agreements typically include provisions on: voting procedures, rights and responsibilities of the members, liabilities, ownership of the LLC, and guidelines for the admission of new members. Keep this document in a secure place after it's drafted.
Step 5: Get an EIN
Most businesses need to get an EIN (Employer Identification Number) or Tax ID number. This number identifies your business, much like a social security number. Without an EIN, you may be unable to hire employees or open a business bank account.
Fortunately, it's easy and free to get one. Apply for an EIN on the IRS website.
Step 6: Open a Business Bank Account
To maintain personal liability protection, you'll need to maintain a separate account for your business funds. Getting a business credit card and debit card also helps keep your personal and business funds separate. Be prepared to provide your formation documents, EIN, and certificate of good standing when you go to open your new account.
Frequently Asked Questions About Mississippi LLC Formation
1. How much does it cost to form an LLC in Mississippi?
It costs $50 to file the Certificate of Formation that creates your Mississippi LLC.
2. Do I need to get business licenses or permits for my LLC in Mississippi?
You may need to get licenses or permits based on the location of your business and the specific type of business that you have. It's best to check with local and state authorities to find out what you may need for your type of business.
3. How do I handle business taxes for my LLC?
On the federal level, you may be able to select how your LLC is taxed. On the state level, you'll need to contact the Mississippi Department of Revenue about state business taxes.
4. Do I need to file an annual report in Mississippi?
Mississippi LLCs are required to file an annual report. The filing is free for LLCs established within the state of Mississippi.
Note: State laws are always subject to change through new legislation, rulings in the higher courts (including federal decisions), ballot initiatives, and other means. While we strive to provide the most current information available, please consult an attorney or conduct your own legal research to verify the state law(s) you are researching.
Want Help Forming Your Mississippi LLC?
Fortunately, forming an LLC in Mississippi can be a straightforward process with FindLaw's Business Formation Service. However, your situation may require something more complex that needs professional assistance. If you need help creating your LLC in Mississippi, then contact a business organizations lawyer immediately.
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