Starting your own Limited Liability Company can feel like a massive undertaking. But honestly, a lot of the work has already been done if you’ve researched different business entity types and chose an LLC over a corporation. The biggest hurdle is all of the paperwork. But how long does it take to get an LLC after you’ve submitted all of your paperwork? We’ll tell you all about the LLC formation time frames in Mississippi, the formation process, and the business environment in the state in this complete guide.
Discovering Mississippi
Mississippi is often called the magnolia state because of the numerous magnolia trees growing in the state. It’s bordered by Tennessee, Alabama, the Gulf of Mexico, Louisiana, Arkansas, and the Mississippi River.
Some of the geographic features you can find in the state include the Mississippi Alluvial Plain, which is a flood plain starting at the Mississippi river and stretching to the eastern part of the state. It has super rich, fertile soil. There’s also the Gulf Coastal Plain that includes most of the state and is home to the Red Clay Hills, as well as Holly Springs National Forest. There are also more than 160 miles of marine forests, beaches and bayous.
Around 65% of the state is covered in forests. Mississippi’s oak and hickory woods are coveted because of their stunning grains and are often used for flooring and furniture. Its other top resource is its fertile soil, where soybeans, sweet potatoes and more are grown.
Economic Overview of Mississippi
The GSP, or Gross State Product, of Mississippi is $105.1 billion, which has experienced a growth rate from 2018-2023 of 15.9k%.
The top industries in Mississippi according to revenue are hospitals, Petroleum Refining, New Car Dealers, Gas Stations with Convenience Stores and Electric Power Transmission. The biggest employers in the state are Walmart Inc., the State of Mississippi, Toyota Motor Corp, Amazon.com, Inc., and North Mississippi Health Services. And the sectors that contribute the most to the state’s GDP (Gross Domestic Product) are Manufacturing, Real Estate & Rental & Leasing, Retail Trade, Healthcare & Social Assistance, and Wholesale Trade.
The top industries in the state are forestry and agriculture. It’s one of the top producers of farm-raised catfish in the nation, as well as cotton, sweet potatoes and pulpwood.
Business Environment in Mississippi
According to Usnews.com, Mississippi ranks #50 in the nation for business environment, #48 for employment, and #48 for growth. It’s rated #42 for long-term fiscal stability and #46 for short-term fiscal stability.
It’s rated #2 for affordability, #50 for economic opportunity and #36 for equality. The cost of living index in the state is 87.3 (the national average is 100.0), the median household income is $52,719 (national average is $74,755) and the state’s poverty rate is 19.1%, which is well above the national average of 12.6%.
In regard to infrastructure, it’s rated #46 for transportation. 30.0% of the state’s roads are in poor condition, while the national average is 18.3%.
State-Specific Regulations and Incentives for Forming an LLC in Mississippi
Here’s a look at some of the programs and incentives provided by Mississippi to help businesses.
- Advantage Jobs Incentive Program: Businesses that qualify and create a minimum of 25 jobs that pay at least 110% of the state or county’s average wage, or businesses in information processing or data that create a minimum of 200 jobs could receive a rebate for a percentage of the business’s payroll for as long as 10 years. The rebate amount is as much as 90% of the state income taxes that are withheld from employees.
- Jobs Tax Credit: Businesses that increase the population of the state can qualify for a tax credit designed to offset as much as 50% of the corporate income tax. The credits can be obtained for a 5-year period after the jobs are created. You get a credit for 10% of payroll for projects located in a Tier 3 area (less developed) which creates a minimum of 10 new jobs over a one-year period. A credit of 5.0% of payroll for projects located in a Tier 2 area (moderately developed) which creates a minimum of 15 new jobs over a one-year period. A credit of 2.5% of payroll for projects located in a Tier 1 area (more developed) which creates at least 20 new jobs over a one-year period.
- National or Regional Headquarters Tax Credit: A business that establishes or expands either regional or national corporate headquarters in the state can get a tax credit of $500-$2,000 for every full-time job that’s created. The credit amount is determined according to the wage levels of the jobs created. You must create a minimum of 20 new jobs at the headquarters to qualify for the credit. And you can use the credit to offset as much as 50% of the company’s tax liability during a given year.
- Research and Development Skills Tax Credit: These tax credits equal $1,000 per employee per year during a 5-year period and can be claimed by businesses for positions that require research and development skills. The Research and Development Skills Tax Credit can offset as much as 50% of income tax.
- Manufacturing Investment Tax Credit: Mississippi provides an investment tax credit for companies that have maintained upkeep of manufacturing facilities in Mississippi for the past 2 years. Requirements to qualify for the credit include an investment minimum of $1 million in equipment and/or buildings. The tax credit can range from 5% of the investment, or a maximum of $1 million per project. The tax credits can offset as much as 50% of the company’s tax liability for the year.
- Rural Economic Development Tax Credits: These credits are designed to reduce the corporate income tax in Mississippi. They’re for companies that use industrial revenue bonds from the Mississippi Business Finance Corporation. The amounts are based on the amount of bond-related debt service that has been paid on these bonds. These credits can be used to offset as much as 80% of state corporate income tax liability every year throughout the life of the bond. There are other eligibility requirements based on your company’s industry sector, as well.
- Sales and Use Tax Exemptions: Depending on the county a half or full sales and use tax exemption is available to businesses, particularly manufacturing, that locate new facilities or expand their facilities to Mississippi. It can be used for machinery and equipment purchases and building materials used during construction of the new or expanded facility. There are also exemptions for component building materials, as well as their equipment and machinery. Exemptions are provided for businesses which establish regional or national headquarters in the state. Projects in clean energy, aerospace or data centers that meet job creation requirements and capital investment minimums, or projects using industrial revenue bonds from the Mississippi Business Finance Corporation, can get exemptions and other types of incentives.
- Property Tax Exemptions/Abatements: Local government agencies have the authority to issue tax exemptions for up to 10 years on both tangible and real property. This exemption can be issued for local property taxes, with the exception of school district taxes on property, excluding rolling stock and finished goods. This exemption doesn’t apply to land, buildings, equipment, machinery, raw materials, works in process, furniture and fixtures. They can also grant free port warehouse exemption for property taxes on finished good inventory that leaves Mississippi. A fee can be granted in place of property taxes for some new businesses or expansion projects in Mississippi which make capital investments of over $60 million. This fee is allowed to be paid in place of and is due when you’d typically pay property taxes and can be awarded for up to 30 years, can’t be less than ⅓ of the property tax levy (which includes property taxes for school districts.)
Pros and Cons of Establishing an LLC in Mississippi
There are both good and bad aspects of forming an LLC. We’ll tell you about both so you can make a proper decision.
Pros:
- Compared to other states, Mississippi doesn’t have as many reporting or operational requirements for LLCs.
- Mississippi doesn’t have state income taxes. As pass through entities, this benefits LLCs.
- To form an LLC in Mississippi, you need only file fairly ordinary paperwork and pay filing fees. There aren’t things like publishing requirements in place.
Cons:
- The liability protection provided to Mississippi LLC members could be weaker than that offered by other states.
Procedure of Establishing an LLC in Mississippi
This section is a step by step guide on how to start an LLC in Mississippi. We’ll tell you everything you need to know about the LLC formation process.
Necessary Documentation for Filing an LLC in Mississippi
Business owners will need the following documents in order to form an LLC:
- Name Reservation Application: Before you file your LLC documents, you need to find out if your LLC name is available for use. If another business in the state is using it, or if they’re using a very similar name, then it’s not legal for you to use it. You can run a search on the Secretary of State’s Business Name Database on their website. Once that’s done, you need to file an Application for Name Reservation and submit it to the Secretary of State.
- Certificate of Formation: This is your application to receive an LLC, so it’s a crucial part of the formation process. It includes information like your business name, purpose, duration (if applicable), address, and information for your registered agent. It will also ask for contact information for each LLC member, and an explanation of your LLC’s ownership style.
- Employer Identification Number: You’ll need an Employer Identification Number, or EIN, for tax purposes. It’s also necessary for a lot of important business activities, like opening a business bank account, filing tax documents, or qualifying for certain incentives. You can get your EIN from the IRS’ website for free.
- Operating Agreement: An operating agreement isn’t a legal requirement for LLCs, but it’s just as important as your Certificate of Formation. It’s a detailed list of instructions for how your company will run, as well as an agreement between LLC members regarding how they will behave. Some of the information included in the form includes your business name, address, registered agent address, your formation date, the duration of your business, the roles, contribution and ownership shares of each LLC member, as well as their contact information, and an explanation of the distribution of profits and losses. It also includes the names of managers and their contact information, details about member voting rights and a schedule for meetings, and a section that breaks down the process for adding or removing members.
- Tax Registrations: Regardless of the activities your company takes part in, you should register your business with the Department of Revenue. You’ll be required to do so if you hire employees, collect sales tax or sell goods.
- Business Licenses: Mississippi doesn’t require a general or state business license. Instead, you’ll need to check in with county and local clerks to find out about the licenses and permits your business will need.
- Initial Report: Every LLC in the state is required to file an annual report. The first one you file is due when you file your Certificate of Formation. After that, you’ll file your annual report online each year between January 1st-April 15th.
Legal Requirements for Starting an LLC in Mississippi
Here are the steps to start an LLC in Mississippi.
- Get Your Certificate of Formation Form: The first thing you need to do is get your application to form an LLC, called a Certificate of Formation form. It’s available from the Secretary of State’s office.
- Pick a Business Name: Thinking up a clever business name isn’t enough. It must meet all of the state’s legal requirements. To find out if you can use your chosen business name, you’ll need to run a search on the business name database provided by the Secretary of State. Once you’ve found a name that you can use, you can lock it in by filing an Application for Name Reservation form.
- Select a Registered Agent: A registered agent is a person or business that will receive official government correspondence and accept service of process on behalf of your company during normal business hours. They can do this at their address, and they must have a physical address in the state. You can also hire an employee to fulfill this duty, who will receive mail and legal notices at your business. You’re allowed to designate anyone you wish for the role. However, since your registered agent can cause a lot of financial and legal problems if they don’t perform their duties well, many business owners choose to hire a professional registered agent service.
- Choose a Business Address: Choosing a business address isn’t as simple as jotting down your home address. Your business address is a matter of public record, which means everyone on the internet will have access to it. If your business doesn’t have a physical address, then you can either look into virtual offices in your area, or ask your registered agent about using their address.
- Sign and File Your Certificate of Formation: Once you’ve double or triple-checked that all of the information on your Certificate of Formation is included and correct, it’s time to sign the document and file it with the Secretary of State. If you want to maintain the privacy of your personal information, then you could hire an LLC formation service to assist in this. They’ll fill out and file the paperwork for you, without retaining any information once the documents are submitted on your behalf. Additionally, some formation services also offer an accuracy guarantee, which will protect you from filing and documentation errors.
Now that your documents are submitted, it’s time to play the waiting game until you hear back from the Secretary of State’s office.
Time Frame for Establishing an LLC in Mississippi
Once you’ve submitted your formation documents to the Secretary of State, you’ll have no choice but to wait for them to contact you and confirm the acceptance of your LLC. This is what is referred to as the “formation time frame”. Here’s a detailed look at the formation time frame of Mississippi.
How Long Does the Initial Paperwork Take in the State of Mississippi?
You can’t file by mail in Mississippi. Your only option is to file online. Because of that, there aren’t any transit times to deal with.
Processing Times in the State of Mississippi
Processing times to file online are 1-2 business days.
Common Delays in the LLC Formation Process in Mississippi
Here are some of the factors that can slow the formation process.
- Processing Errors: Since all filings are online in Mississippi, you’ll have to deal with things like network issues, websites going down, lag, processing errors and more. Any of these technological headaches could delay your formation time.
- Issues with Documents: The information on your documents must be accounted for and correct. Incorrect information or information that isn’t included will take longer to correct, so it’s important to double-check all of the information before submitting the form online.
- When You File: Government workers aren’t in the office to process filings on weekends or government holidays. Furthermore, the highest volume of filings occurs at the beginning and the end of the year.
Expedited Processing for LLC Formation in Mississippi
If you want to know how to get the fastest approval for your LLC, then you will want to hear about expedited service. This is everything you need to know about expedited processing in Mississippi.
What Are the Expedited Options Available?
Mississippi doesn’t offer expedited processing. Processing times for online filings are only 1-2 business days, so it’s likely that the state government doesn’t find expedited filing as a necessity.
Additional Costs for Expedited Services in Mississippi
Ordinarily, you would have to pay a fee for expedited services on top of your filing fee. It’s an extra. But since Mississippi doesn’t provide expedited services, then you won’t have to face this extra charge.
Comparing LLC Formation Time Frame in Mississippi with Other States
One of the most important things you can learn about formation is how your state’s formation times compare with other states. From this information you can decide whether a domestic LLC is the best option for you, or whether you’d like to form a foreign LLC instead.
Brief Comparison with Key States
Mississippi only offers online filing, which takes 1-2 business days. There’s no expedited processing.
In Texas, online processing can take 13-15 days. It’s 12-14 days in Washington, 2 weeks in Maryland and Arizona in 14-16 days. And Mississippi isn’t alone in its decision not to offer expedited processing. Many other states don’t offer the service, either.
Alabama, Alaska, Colorado, Kansas, Kentucky, Minnesota, Missouri, New York, South Dakota, Tennessee, Wisconsin and Wyoming all offer immediate processing on online filings. And some of the states with the fastest expedited processing are Delaware, Michigan, Montana, Nevada, Pennsylvania and West Virginia can all get it done in as little as 1 hour.
Why is Mississippi a Favorable Place for Forming an LLC?
Mississippi is a good place to form an LLC because there aren’t as many filing operational or reporting requirements for LLCs. There aren’t a lot of filing requirements, either. And the cherry on top of favorable conditions for LLCs in Mississippi is that Mississippi doesn’t have state income taxes.
