Entrepreneurship can be a long and exciting journey, but it doesn’t have to be a complicated one. It’s unwise (and in some cases, illegal) to start a business without getting the ID numbers and registrations you need, but thankfully, the process is simpler than it sounds. In this article, you’ll learn how to properly register your Mississippi business- and get started with the right paperwork.
Steps to getting a Tax ID (EIN) Number and Forming Your New Business in Mississippi
- Mississippi Means Business
- Forming a Business in Mississippi
- Federal Tax ID (EIN) Number Obtainment
- Mississippi State Tax ID Number
- Localized Licenses and Permits in Mississippi
Mississippi is a strong southern state with plenty of opportunities for the entrepreneurs willing to look for them. Currently, Mississippi is home to more than 244,000 small businesses, and there are more than 425,000 people working for small businesses in the state.
In the past few years, Mississippi’s growth has left something to be desired. Unemployment in the state is a bit higher than usual, and its economic growth rate is a bit slower than average. However, this could be a prime opportunity for a business owner looking for an in; there are plenty of new employees to choose from, and a state population that’s hungry for more development.
Mississippi is also a favorable state for small businesses as they fit into local communities. While big cities and urban areas like Jackson and Southaven may be hotbeds of startup activity, your business may just as easily find a home in a rural area, or in a small town with a limited population.
When you start making moves to officially create your business, you’ll need to decide on a specific business structure. There’s no "right" answer for how to structure your business, but each type of business offers strengths and weaknesses you’ll need to consider if you want to improve your odds of success.
There are a few major considering factors here. First, there are taxes. Some businesses offer distinct tax advantages, which allow you to make more total income. Then, you need to consider liability; some businesses offer their owners greater protection from debts and legal accountability. Finally, there’s simplicity; some businesses are simply easier to start and manage than others.
Sole proprietorships and partnerships are definitely the simplest businesses to start. You won’t need to file annual reports or any complicated paperwork, and you’ll report any income you make as personal income for year-end taxes. The weakness here is that you won’t have any protection from personal liability.
The next step up is a limited liability company (LLC). LLCs are treated as separate legal entities, so you won’t have to worry about being personally held accountable for their debts. You’ll also have more control over taxes, since you’ll pay taxes on personal income you withdraw from the business, only once you withdraw it.
Corporations are the most complicated business, and for good reason. Corporations can raise funds by issuing public shares, and must file annual reports. They’re treated as separate legal structures, just like LLCs, but are required to pay federal taxes on any eligible income they make.
Mississippi has a few unique rules for LLCs and corporations; they’re required to pay a franchise tax based on the value of the business (with a minimum of $25), and must pay income taxes to the state.
After you’ve decided on a business structure, your next step will be making your business official with a federal tax ID number, sometimes called an employer identification number (EIN). No matter how you refer to it, this official number will function like a social security number (SSN), but for your business. You’ll need it to file taxes at the end of the year, and you’ll use it when hiring new employees, or taking on new clients, vendors, or partners.
Many applications and forms require you to record your EIN. For example, with most financial institutions, you won’t be able to open a bank account without one. It’s also valuable for tracking your business’s credit, so you can apply for more loans and better terms with other companies in the future.
Even if you think you may not need one, it’s a good idea to get an EIN for your business. The best way to do it is through our federal tax ID (EIN) services; once you contact us, we can get your business registered and get you an EIN in mere hours- so you can worry about your other business needs.
Remember, Mississippi requires LLCs and corporations to pay state taxes, so you’ll need to register your Mississippi business with the state as well. The corporate tax rate falls somewhere between 3 and 5 percent of your taxable income, depending on the nature of your business. Depending on what you sell, you may be responsible for excise taxes (limited to specific products) or sales taxes (on almost any kind of consumer product).
The process for getting a Mississippi state tax ID and registering with the state is similar to the federal process. Make use of our services, and we’ll get you everything you need in short order.
To make it easier for entrepreneurs to get started with their new businesses, Mississippi doesn’t require companies to obtain a general business license before starting. However, that doesn’t mean you don’t need to worry about licenses or permits.
Like in most states, Mississippi allows cities and local regions to dictate standards for licensing and permits. Depending on what type of business you’re starting, and where you’re starting it, you may be required to obtain one or more permits. There are too many variables to list here, so make sure to talk to economic authorities in your specific city before starting.
Assuming you’ve followed the tips in this article and made use of our services to get your own federal tax ID and Mississippi state tax ID, you should have everything you need to start making money in your business. From there, it’s on you to turn your startup into the full-scale business you dreamed it would be.