Congratulations on your decision to start up a business in Mississippi. Before you start offering services or products to eager customers, you must ensure all your paperwork is in order. If you thought you only needed a business license, think again.
Depending on your industry, the type of services or goods you offer, and the number of employees you have, you still need to do quite a bit before opening your doors. Never fear! This guide will outline the steps you need to take and help you launch your new endeavor on the right foot.
Start with a Plan and a Name
No matter how simple your sales model might be, launching a company without any planned direction for your brand, goals, management, financials, and other important details is never wise. You want to be a success, which means you need to lay the foundation to build it upon. A business plan is a carefully written document outlining these aspects to steer your venture.
Another important step is choosing a company name that shares everything your brand represents with the public. However, Mississippi law has specific requirements for naming a business. For example, if you are an LLC or corporation, one of the following must be part of the title you choose:
- Limited Liability Company
Finally, when choosing your new company name, also do your research! If another organization already uses it, you will need to pick something else.
Picking a Business Entity Structure
Another crucial decision you need to make is the type of business structure you want to create. Again, there are many to choose from, and all have unique characteristics that can benefit your company depending on the goals you have for it.
Below is a quick overview of the most popular:
- Single person membership
- The owner has total personal liability
- Self-employment and personal tax liabilities
Limited Liability Company (LLC)
- One or more members
- Business liabilities are separate kept separate from the owners’ assets
- Self-employment and personal or corporate tax liabilities
- Two or more members
- Members share personal liability unless a limited structure is used
- Self-employment tax (doesn’t apply to limited partnership) and personal tax liabilities
- Up to 100 members
- Owners have no personal liability
- Personal tax liability
- One or more members
- Owners have no personal liability
- Corporate tax liability
To determine the best option for your business, consider speaking with a knowledgeable tax law attorney or accountant familiar with entity formation.
Next on your to-do list is creating an insurance package to protect your Mississippi small business from risk. It’s never something you want to think about, but the reality is that things beyond your control can happen and cause significant damage to your brand, customers, employees, and assets.
It would be best to have insurance to pay for defense costs, compensation judgments, and repair or replace any losses you experience stemming from these incidents.
This type of policy is the most popular in Mississippi and throughout the United States. It protects your company against bodily injury claims made by customers and any property damage you or your employees may have caused.
If you are opening a floral shop, you can’t rely on your personal insurance to protect your car when out delivering orders. Commercial auto policies are specifically designed for these activities and provide a higher level of coverage. In Mississippi, you must have this coverage if you have company vehicles.
Businesses must carry Mississippi workers’ comp insurance if they have five or more employees. This coverage protects your company against on-the-job injury claims made by employees. It will even pay for legal fees associated with defending against negligence suits.
Business Owners Policy (BOP)
BOPs combine several commercial insurances into a single policy to provide you with maximum protection against perils. General liability and property insurance are bundled together, but many insurers will let you add on additional coverages.
This policy is a must for startups that provide professional services, such as dentists or hairdressers. It protects your company against mistakes that cause your customers’ financial harm. This includes negligence claims and payment of legal fees associated with your case.
Your business will be responsible for sensitive customer data, including their addresses, payment information, etc. So how will you keep it safe, and what happens if your network gets breached? Cyber policies address the fallout after a hack event and the damage your customers may suffer from their stolen data.
Get Registered and Licensed
Your business is official once you submit your formation paperwork to the Mississippi Secretary of State. However, you will still need to get the necessary licensing to operate. Which permits you will require depends on what business activities you are conducting.
Some standard license/permits that small businesses need in Mississippi:
- Liquor and/or Tobacco
- Planning and zoning
In addition to being properly licensed, you must also choose a registered agent to act as an intermediary with the Secretary of State. This ensures that you have a designated party to receive legal communications on your behalf.
Whomever you choose for this role must meet the following requirements:
- Be a Mississippi resident or an authorized corporation doing business there
- Physical address in Mississippi
- Have a Mississippi mailing address
Determine What Your Tax Obligations Will Be
Mississippi has several taxation requirements for businesses though some are industry-specific. You must familiarize yourself with those that apply to your company and create a financial plan to help you handle this burden.
Some of the more common businesses taxes in Mississippi include:
- Sales and Use
- State Income
- Corporate Income Tax
- Alcohol Beverage Control
In addition to your state tax obligations, you will also need a federal Employer Identification Number (EIN). It acts similar to a social security number in that it helps identify your business for tax purposes. Therefore, even if you opt to form an LLC that operates as a “pass-through” entity so you can file on your personal return, an EIN is necessary if you have employees or pay the state taxes mentioned above.
Open a Business Bank Account
Finally, on our checklist, make sure you keep your company finances separate from your personal ones. This is essential, especially for those who choose an LLC or corporation business structure. If you blend your accounts, you could lose the personal asset protection of these entities.