If you want to start a limited liability company (LLC), you need to know how much it will cost. But often, this is easier said than done. It can be a challenge to identify all of the different expenses you will need to cover.
That’s why we are here to help. This article will help you understand the true cost of forming an LLC in Mississippi.
By the end of this article, you will know:
- The expenses associated with starting a Mississippi LLC
- Extra costs that you may want to consider
- How to choose the right LLC formation method
Read on to learn everything you need to know about the cost of Mississippi LLC formations.
Total Mississippi LLC Cost – Starting at $50
According to the Mississippi Secretary of the State’s fee schedule, the bare minimum cost of starting an LLC in Mississippi is $50.
This only includes one item:
- Certificate of Formation filing fee: $50
You may also need to obtain a sales and use tax permit, which is free, from the Department of Revenue, as well as professional and local business licenses, the costs of which vary.
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Mississippi LLCs – the Basic Costs
The total cost of forming a new LLC varies based on several factors. However, the bare minimum cost is $50. We’ve explained your potential mandatory costs in the sections below.
Certificate of Formation Filing Fee — $50
A Certificate of Formation is a legal document that officially starts an LLC. To create an LLC in Mississippi, you must file one with the Secretary of the State. While the name makes it sound complicated, all you really need to do is list some basic details about your company.
The filing fee for a Mississippi certificate of formation is $50. You must file online.
Sales and Use Tax Permit — Free
Not every LLC will need a sales and use tax permit. However, Mississippi law says that every business that makes retail sales must charge sales taxes. You must apply for a permit in order to collect these taxes from your customers.
You can read more about sales and use taxes on the Department of Revenue’s website.
Professional Licenses and Business Permits — Various
Depending on the type of business you are starting, you may need to apply for a professional license from the state. Different cities and counties have different requirements, so you may also need to obtain permits or licenses from your local government. For instance, the city of Jackson requires most companies to obtain a business license.
We suggest using the Secretary of State’s Business One Stop to learn more about the licenses your LLC will need.
Mississippi LLCs – Optional Costs to Consider
On top of the required costs outlined above, you may want to consider making a few extra expenditures. While not mandatory, these optional expenses can be very helpful.
Expedited LLC Filing Fees — N/A
Mississippi does not offer expedited service. This is because your documents will usually be processed on the same day you file them, sometimes within minutes.
Registered Agent Fee — about $100 per year
Under Mississippi law, every LLC must have a registered agent in the state to accept legal documents on the company’s behalf.
You will list information about your registered agent on your Mississippi certificate of formation for no additional fee. However, there is a $10 charge if you ever want to change your Mississippi registered agent.
New business owners often choose to name themselves as the registered agent for their LLC. While this might seem the easiest route, it can cause problems. Registered agents must always be available to accept papers during regular business hours. Their addresses are also made publicly available online.
To avoid these issues, we suggest hiring a professional registered agent service. These businesses typically only charge around $100 per year, and they handle all of your registered agent duties for you.
Check out our Best Registered Agent Services article for some of our recommendations.
Operating Agreement — Variable
Operating agreements are legal contracts that set rules for how LLCs will operate. These contracts typically outline important info like the members’ rights and duties and the processes for joining or exiting the business.
Mississippi does not require LLCs to have operating agreements. Still, we strongly suggest that you get one. You are permitted to draft your own operating agreement, but it’s not advisable to do so unless you have prior legal experience.
One possibility is to engage an attorney to write an operating agreement for your LLC. While this option can be pricey, you will get a superior operating agreement that is drafted by a legal expert. But if you’re looking to save some money, you can pay an LLC formation service to make you an operating agreement for as little as $39.
DBA Fee — $25
Often, LLC owners choose to run their business using a different name than the one they register. For instance, many drop the “LLC” from their company’s name to make it more approachable. Or, a business may change enough over time that a brand new name is needed.
If you want to run your business using a name other than its official legal name, you must register a “doing business as” or “DBA” name. In Mississippi, DBAs are called “fictitious business names.”
To use a DBA in Mississippi, you must file a Fictitious Business Name Registration with the Secretary of State online. There is a $25 filing fee.
Name Reservation Fee — $25
If you know the name you want to use but aren’t ready to start your LLC, Mississippi lets you reserve a name for 180 days. This will keep others from registering the name during this time frame.
You can reserve a name by submitting an Application for Name Reservation to the Secretary of State. You must file online, and there is a $25 filing fee.
Domain Name — about $20 per year
In this day and age, it’s vital that you make a website for your business. In order to make a website, you will need to purchase a domain name. Luckily, domains are now cheap and easy to buy.
Make sure to get your domain ASAP, though. You might be out of luck if someone buys it before you do. A speedy purchase will also help you avoid “domain squatters” who buy domains they think new LLCs will want and resell them for a profit.
You can buy a domain from GoDaddy.com or a similar website for around $20 to $50 per year. And these businesses often offer sales and discounts, so you can usually get your domain for even less.
Getting an Employer Identification Number (“EIN”) — Free
An EIN is a 9-digit identification number that the IRS assigns to businesses. Think of it as a social security number for your LLC. The law requires some LLCs to get an EIN, while others don’t need one.
Still, we suggest that all LLCs get an EIN. Firstly, most banks require an EIN to open a business account. Plus, using an EIN can help you avoid identity theft because you won’t have to give out your SSN.
Foreign LLC Qualification Fees — about $100 per extra state
If you plan to expand your business into additional states, you will need to budget for some extra costs. You don’t have to start a new LLC in each state, but you will need to register as a foreign limited liability company wherever you want to do business.
Foreign LLC filing fees vary, but they are often about $100 per state.
Writing Formation Costs Off
Your LLC formation expenses can typically be deducted as business startup costs on your income taxes. The IRS offers substantial guidance on this issue, so we suggest that you check out the IRS website to learn more.
LLCs are normally categorized as “pass-through” tax entities. This status allows LLC owners to deduct up to $5,000 in startup expenses in the first year.
Isabelle decides to start a single-member LLC and open a craft store in Jackson, Mississippi. She plans to have four employees. Her formation costs are as follows:
- Mississippi LLC Certificate of Formation: $50
- Jackson Privilege License: $30
- Operating Agreement: $40
- Registered Agent Fees: $105
- Name Reservation Fee: $25
- DBA Fee: $25
- Web Domain Costs: $35
Because LLCs are pass-through entities, the business itself won’t have to pay income taxes. Instead, Isabelle will report her profits from the LLC and any deductions on her personal state and federal income taxes.
Isabelle’s total formation costs were $310. Before she deducted these expenses, her total taxable income was $46,000. However, by deducting her start-up costs, she reduces her taxable income to $45,690. This will reduce her 2022 federal income taxes from $5,869 to $5,800.
While this is not a significant decrease, LLC owners who consistently deduct their expenses will accrue tax savings over time.
Cheapest Way to Start an LLC in Mississippi
When deciding on the best formation approach for your Mississippi LLC, make sure that you consider the unique needs of your business. To help you out, we’ve explained some of the most popular methods in the sections below.
Formation Service – $39 + state fees
One option is to hire an LLC formation service to handle the entire process. Even though they aren’t attorneys, these businesses specialize in starting LLCs and other business entities, so you can trust them to do it right.
A formation service is the most cost-effective choice for most LLCs. The benefits of this approach include:
- They’re easy. In most cases, a formation service will have helped hundreds of people through the exact process you are struggling with now. They have all the documents, information, and expertise you need right on hand.
- They don’t cost much. Because formation services have such a large volume of business, they don’t have to charge their clients that much money.
- They’re reliable. All of the formation services’ products and procedures have been tested hundreds of times over in the real world. That kind of experience should give you peace of mind and confidence going forward.
- They’re fast. Formation services have seen almost every business formation situation already. Chances are, they have many solutions for you that are ready right now before you even know you need them.
However, formation services aren’t the right fit for every business. Some of the negative aspects of going with this option include:
- They’re not the best solution for complex LLCs. If you are forming a complicated company or one in a heavily regulated industry, you will have concerns that probably need more focused expertise in that area of business.
- Even if a formation service is a good fit, you can expect upselling. Formation services have to make money too, and some of them may pressure you to buy formation products or business services you don’t need. Even when you are using a formation service, you need to be a smart and informed consumer.
Using a professional LLC formation service can be a great way to set up a business. Check out our Best LLC formation services article for some of our suggestions.
If you choose to hire a lawyer, you will know that your LLC is being formed by a legal professional. But keep in mind that expertise does not come cheaply. Many lawyers assess hourly fees for their services, often several hundred dollars per hour.
Even though it’s expensive, there are significant advantages to hiring a lawyer:
- Lawyers help you manage risk. If you are starting a business with complicated legal issues, hiring a lawyer would be the best choice.
- Lawyers offer more customization when you need it. Do you need specific things put in an operating agreement? Is your company going to have a unique ownership structure? You may need an attorney to make sure these issues are handled properly.
Still, the drawbacks of this approach often outweigh the benefits for many LLCs:
- Lawyers cost more than any other option. The price tag alone should convince you that if you don’t need a lawyer, it’s not worth hiring one.
- Finding a lawyer takes a long time. Getting a lawyer who specializes in what you need, costs what you’re willing to pay, and can work with you well is a tall order.
- Lawyers also take longer to form a business than a formation service. Because lawyers are also very careful people, they will generally take much longer to form your company than non-lawyers would. Fortunately, most people don’t need a lawyer. In 90% of cases, a formation service will do just fine.
Do it Yourself
Another option is to start your LLC yourself. Just remember that your time is valuable. If you pour hours into LLC formation paperwork, you can’t put that time into growing your business.
Of course, there are benefits to the DIY formation method:
- Personal knowledge. A DIY business owner will learn a lot about the process while forming their own business, and they probably will retain that knowledge for years to come.
- It costs less upfront. If you don’t account for the value of your time, a DIY solution is the cheapest option.
But make sure you also consider the disadvantages:
- You’re losing money when you consider how much time it takes to DIY. If you figure out that your time is worth $30 per hour, and you take 20 hours to complete your business formation, you have essentially spent $600 on business formation.
- There’s the risk of making a mistake. DIY business owners can easily make a mistake with all the paperwork that can cost them even more time and money.
- It’s a headache. State workers are very helpful, capable people. But they will also tell you that the laws and rules governing business formation are not easy, and they follow those rules for a living. It’s going to be even harder for you.
Annual Mississippi LLC Fees: How Much Will it Cost to Maintain your LLC?
However, you may need to pay fees to renew your licenses and permits.
Optional costs can also be due annually. Some of your continuing expenses may include:
- Registered agent service fee: approximately $100
- Domain name registration: $20 to $60
How Much are LLC Taxes in Mississippi
By default, LLCs are pass-through tax entities. This means the business itself will not pay income taxes. Instead, LLC owners report their share of the profits on their personal income tax returns.
However, if you choose for your business to be taxed as a corporation, the business will be subject to Mississippi’s Corporate Income and Franchise Tax.
Mississippi LLC Formation Costs Quick Links
- Mississippi Online Filing
- Mississippi Business One Stop
- Mississippi Fee Schedule
- Mississippi Secretary of the State
- Mississippi Department of Revenue
- IRS — apply for an EIN online
- IRS information regarding the federal tax treatment of LLCs
Mississippi LLC Formation Costs FAQs
How much does it cost to start an LLC in Mississippi?
The minimum cost is $50. But depending on your industry and location, it may cost more.
What is the cheapest way to start an LLC in Mississippi?
The do-it-yourself method is the cheapest in terms of money spent. But if you account for the value of your time, the most cost-effective approach is typically an affordable LLC formation service.
Do I need to hire an attorney to form an LLC in Mississippi?
No. Most LLCs can be started without a lawyer’s help. It will often be sufficient to use a DIY approach or an LLC formation service.
Can I pay to form an LLC more quickly in Mississippi?
No. Mississippi does not offer expedited service, but most filings will be processed the same day they are submitted.