- Do I need a sales tax number?
- Do I need a business license?
- How do I register my small business?
- How do I finance the startup of a small business?
- What legal form of business should I use?
- Do I have to register my business name?
- Is my business name ok to use?
- How do I register to become an employer?
- If I am self employed, how do I report my taxes?
- What type of insurance should I obtain for my small business?
- Are grants available for starting my business?
If you sell tangible personal property, or provide certain fabrication, rental, or other particular services, you must obtain a sales tax identification number, also known as a seller's certificate, from the Mississippi Department of Revenue. The appropriate forms may be downloaded from Mississippi Department of Revenue, or if you have additional questions or need assistance you can call (601) 923-7000 .
If wholesalers and retailers are reselling your product(s) you would not charge sales tax, but would provide them your sales tax number for a resale certificate. Additionally, you would not charge sales tax to consumers who purchase your product outside of Mississippi . Keep in mind that after you register, your sales, regardless if sales tax is charged or not, must be reported regularly to the Sales Tax Division.
The Mississippi Department of Revenue sales and use web site has much additional information.
Corporate and franchise tax FAQs are at http://www.dor.ms.gov/info/faqs/faqs_corporatefaqs.html. The State Tax Commission has district offices located across the state for you convenience. They are located in Senatobia, Tupelo, Columbus, Greenwood, Meridian, Brookhaven, Hattiesburg, and Biloxi with the main office in Jackson. Contact information for each of them is on the web site at http://www.dor.ms.gov/perl/ContactUs_new.pl
The State of Mississippi does not license all businesses; however, your business may need state and/or local licenses or permits depending on the particular activity you are engaged in. Links to some of the Mississippi agencies for specific licensing requirements are below. There may be others. You will also need to check with your Town or City Clerk to determine local licensing requirements. Your local SBDC counselor can help you decide what licenses, if any, you may require. SBA has a Business License Permit Search tool to help identify the required licenses and permits.The official Mississippi government website maintains this incomplete list of professional licenses. Some (note, this is not a complete list) required licenses and web sites with information are:
- Automobile dealers Mississippi Motor Vehicle Commission
- Bail Bondsmen Licensing Licensing Division, Department of Insurance
- Commercial Vehicle Permits Mississippi Department of Transportation
- Health Facilities Licensure and Certification Mississippi State Department of Health
(includes child care and nursing homes plus others)
- Insurance Agents-Licensing Licensing Division, Department of Insurance
- Insurance Companies-Licensing Licensing Division, Department of Insurance
- Managed Care-Licensing Licensing Division, Department of Insurance
- Private Ambulance Service Mississippi State Department of Health
- Check Advance State Department of Banking and Consumer Finance
- Building Contractors Mississippi State Board of Contractors
- Restaurants/Catering Mississippi State Department of Health (any business that has a food service permit must also have the ServSafe Food Sanitation Certification)
- Mortgage Lenders and/or Mortgage Brokers (no specific license but important info on this site) State Department of Banking and Consumer Finance
- Professional Engineers and Land Surveyors
Mississippi State Board of Registration for Professional Engineers and Land Surveyors
- Professional Geologists Mississippi State Board of Registered Professional Geologists
What you need to do to register your business depends on what type of business entity you choose and what activity you are going to be engaged in. If you decide to incorporate or become a limited partnership or a limited liability company, you will need to register that entity with the Business Services Group at the office of the Mississippi Secretary of State. That office can be reached at 1-800-256-3494 or 601-359-1633.
If you organize your business as a sole proprietorship (a business owned and operated by an individual) or a general partnership, you do not need to register your business entity with the state. However, there may be certain state, city, or town permits or licenses that are required to operate your business (see question #2.)
To determine financing needs, you should first prepare a business plan with a complete set of financial projections including a balance sheet, income statement, and cash flow statement. With a properly completed business plan, you will have identified your funding needs. Keep in mind that most small business start-ups are funded through personal resources including savings, equity or loans from family, friends or other investors, home equity loans, cash value of life insurance, or other personal resources. Banks will lend to some business start-ups if they are satisfied with your business plan, your level of equity investment, the collateral you have to pledge to the loan, and your credit history and experience. If your request is denied, ask your bank if they would consider the loan with a guarantee from the Small Business Administration (SBA). In addition, there are number of local and regional economic development agencies that have revolving loan funds that you may apply for. We recommend that you contact your local Small Business Development Center for free help on writing business plans and assistance in finding the type of financing that best suits your business.
There are four primary legal forms of business from which to choose: sole proprietorship, partnership, limited liability company, and incorporation (both C-corp and Subchapter S.)
A sole proprietorship is owned by an individual (or a married couple) and it may have one or more employees. Operating a sole proprietorship means that the owner is personally responsible for all liabilities of the business. Also, the owner is taxed on a personal level for all profits generated by the business.
A partnership occurs when two or more people agree to share ownership of a business. This form of business allows the partners to share complimentary skills and resources. The owners share, and pay personal taxes on, the profits of the business. Additionally, each partner is individually responsible for the liabilities of the business.
Another option is to form a Limited Liability Company is a combination of the corporate form (providing limited liability) and the partnership form (allowing you to be taxed as in a partnership). The corporate entity is created when your business registers with the Mississippi Secretary of State. This enables the owners to take advantage of the limited liability aspect of the corporate ownership and to raise equity by selling shares of the company. For profit entities have the option to chose either a C- corporation or Subchapter S-corporation status.
If you become a C-corporation, the corporate profits are taxed, and then the owners will be taxed on their share of the profits and compensation (i.e. dividends and wages) received from the corporation.
A Subchapter S-corporation does not pay a corporate tax.
If you have any questions regarding these forms of business entities, please feel free to call your local Small Business Development Center and/or seek advice from an attorney.
State statute requires that every business enterprise operating under an assumed name must register that name in the city or town in which it is located. This is often called filing a "D/B/A", which stands for "doing business as," a nominal fee is typically charged. What you do beyond this depends on a number of factors. If you incorporate, become a limited partnership or limited liability company, the name of the business would be registered with the Bureau of Corporations. To determine whether a name you're considering is in use by another corporation, or is protected by a trademark or service mark, again you should contact Secretary of State at 1-800-256-3494 or 601-359-1633. Unfortunately, proprietorship names are not tracked by any one central agency. However, you can employ the following tactics to safeguard against using another business' name. Check the telephone listings of surrounding communities. Your local library should have the various regional directories.
To register as an employer, you need to obtain a federal Employer Identification Number(EIN). This can be accomplished by filing IRS Form SS-4. You will also need to register for state income tax withholding and for an unemployment contributions. Employers must also keep on file a Employee's Withholding Certificate (Form W-4) and Employment Eligibility Verification (Form I-9). These can be obtained from the IRS and the U.S. Department of Immigration and Naturalization, respectively. Workers compensation insurance is necessary for all employees, whether part-time or full-time, and can be obtained with the help of your regular business insurer. The Mississippi Workmen's Compensation Commission web site has additional information on Mississippi requirements.
The Mississippi Department of Employment Security web site has information on who is liable for unemployment taxes in Mississippi. That web site has the employer registration form on line.
Federal Taxes - Visit the IRS - Self-Employed Individuals Tax Center for forms, workshops, and information on federal taxes. Also of interest is the IRS Small Business and Self Employed Tax Center.
State Taxes - Visit the Mississippi State Tax Commission for call the MSTC at (601) 923 -7000 to request forms.
Self-employed business owners are required to pay state and federal income taxes, Social Security, and Medicare based on the profits generated by the business.Profits in a proprietorship are determined before you draw compensation from the business (i.e. your draw or wages are not considered an expense of the business.) Once your liability for federal income tax and self- employment FICA exceeds $500, you will need to deposit the tax payments to the IRS (whether this happens in any one quarter or combination of quarters.) You can estimate and report your federal taxes by using the 1040-ES form, and your state taxes by using the appropriate Mississippi form. You can also derive an estimate of your tax liability from your most recently completed Schedule C (profit and loss statement for a proprietorship) or by completing a monthly profit and loss statement. Be aware that if you don't deposit the appropriate taxes for any individual quarter, or for the year, the IRS can and will impose stringent penalties and interest. If you need these forms, contact your local IRS office.
When you start your own business, there are various types of business insurance that should be considered essential and others that, while not essential, may be desirable and add to the security of a business. Most businesses will require some type of general liability insurance and many businesses obtain an "umbrella policy" that covers a variety of risks including personal property, liability, fire, theft, and medical payments. If you have employees, you will need to obtain workers compensation insurance. Additionally, if your business owns or uses vehicles for business purposes, automobile coverage is necessary. Beyond this, what other forms of insurance obtained depends on what risks are incurred in operating your business, and what kind of supplementary coverage you want to employ to provide additional security for your business. The following is a list of certain types of insurance that you may need to consider: Key Person Insurance, Flood Insurance, Fidelity and Surety Bonds, Boiler and Machinery Insurance, Product Liability, Business Interruption Insurance, Overhead Expense, Disability Insurance, and Life Insurance. The best course of action is to contact an insurance agent, or several agents, for a consultation regarding the appropriate types of insurance for you and your business.
Find information at the U.S. SBA FAQ page.