1. Do I need a sales tax number and how do I register for one?
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
2. Do I need a business license?
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:
3. How do I register my small business?
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.)
4. How do I finance the start-up of a small business?
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.
5. What legal form of business should I choose?
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.
We have a free video to help you learn more about the legal form of your business.
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.
6. Do I have to register my business name? How do I determine if the name I choose is okay to use?
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.
If you have a name for your service or product, you may need a Trademark (TM) search. The MSBDC State Office can do a federally registered search and provide you additional information. Call 1-800 725 7232 or 662 915 5001.
7. How do I register to become an employer?
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 Unemployment Security Commission web site has information on who is liable for unemployment taxes in Mississippi. That web site has the employer registration form on line.
8. If I am self-employed, how do I report my taxes?
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 Resource Guide.
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. For additional information on completing the forms or understanding the requirements, please feel free to call your local Small Business Development Center.
9. What type of insurance should I obtain for my small business?
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.
10. How do I get a small business grant?
The following statement is quoted from the U.S. SBA FAQ page.
"The U.S Small Business Administration does not offer grants to start or expand small businesses, although it does offer a wide variety of loan programs. While the SBA does offer some grant programs, these are generally designed to exapand and enhance organizations that provide small business management, technical, or financial assistance. These grants generally support non-profit organizations, intermediary lending institutions, and state and local governments. For more information, visit the SBA Grants section." An additional resource is the SBA Loan and Grant Search Tool.