The limited liability company (LLC) is a hybrid business entity that provides the liability protection of a corporation with the tax advantages of a partnership. Therefore, if you’re based in Mississippi LLC, an LLC can be an excellent choice for your new business venture.
If you wish to protect your personal assets from a lawsuit and do not plan to sell shares of stock or raise capital, an LLC in Mississippi is easy to create. If you work on your own, you can also set up a single-member LLC, or include several members – it’s up to you.
Why Form a Mississippi LLC?
The most important reason to form an LLC has to do with protection and savings. If someone gets injured on your property or sues you for breach of contract, the assets owned by the LLC and not held in your personal name are at risk.
If, for example, a customer slips and falls on your store’s floor and sues you, they can only go after the assets of your company — not your personal assets. This is also true if your company borrows money and fails to repay it.
In either case, your savings account, your retirement account, or your home the formation of an LLC protects them all. This is perhaps the most important reason to form an LLC – asset protection.
Tax Advantages of a Mississippi LLC
The member-owners of an LLC are taxed on a pass-through basis. Therefore, the profits or losses of the company are reported on the owner’s personal tax return. This means you’re not double-taxed. The IRS treats LLCs then as a pass-through entities.
For instance, if your business makes $100,000 in profits, you’ll report it on your tax return, and you owe $25,000 in taxes. You won’t pay any taxes on your LLC.
Management Flexibility
If you run your business as a partnership, you have to decide how to divide profits and manage the partnership. You can dissolve the partnership and end the relationship between the partners at any time.
If you elect to run your business as a corporation, you must set up a corporate charter and bylaws.
If you run your business as an LLC, you have the best of both worlds. The members of the LLC must abide by the rules established in the certificate of formation and operating agreement. For example, you can set the rules in the operating agreement to dissolve the company if a member stops contributing to the company.
Setting Up a Mississippi LLC
To set up an LLC in Mississippi, you need to choose a unique name that you can add to the Mississippi Secretary of State’s database. You’ll need to check for availability first. The name may be reserved for up to 180 days by filling out a name reservation application.
You can access the state’s online filing system to get started. You don’t necessarily need to use the official name of your LLC in the state’s required Certificate of Formation. You can use a fictitious business name which is called a DBA. DBA stands for “doing business as.” Regardless of the name used, you’ll need to pay a $25.00 filing fee.
You must also appoint a registered agent to process your filing information during the business week. They are also retained to accept any paperwork from the state government. You can attain the services from a person or entity that serves in this capacity. Your registered agent must have a physical address in Mississippi.
File the Certificate of Formation
You’ll also need to file a Certificate of Formation with the Secretary of State in Mississippi. This document is called the “Articles of Organization” in some states. Make sure this document includes the following details:
- The name of the LLC with the designation of “LLC” or “L.C.C.”
- The email address for the LLC (the email may be personal)
- The future effective date for the LLC – leave this section blank if you want your company’s effective date to be the filing date of the Certificate of Formation (this date may be slated for up to 90 days after the certificate’s filing)
- A NAICS code – used to confirm and identify the line of business for the LLC
- The resident’s agent’s name and address
- The signature of the LLC member, manager, or organizer
In Mississippi, LLC filings must be done through the Secretary of State’s office online filing system. You can either complete the paperwork online or print out the application and send it through the mail with a check of $50 (the filing fee). It takes three to five business days to process the paperwork.
Summary
The most important reason to form an LLC in Mississippi is for the limited liability protection it gives you. While corporations have this type of protection, the members of the corporation must follow the rules in the corporate charter and bylaws.
If you operate your business as an LLC, you get the limited liability protection of a corporation with the looser rules of a partnership. You can even choose to operate your LLC as a single-member LLC if you’re currently a sole proprietor. Now that you know the benefits of forming a Mississippi LLC, it’s time to get started!
Contact the Corporation Center to Simplify Everything
You can focus on doing business and let the Corporation Center take care of setting up your business as a Mississippi LLC. For all the details, call (800) 580-4870 right away.