How to Start a Business in Mississippi in 11 Easy Steps

Mississippi has garnered a few nicknames over the years, but it’s known as The Magnolia State first. It’s also called The Hospitality State due to its welcoming nature. The state has an incredible range of cultural attractions and industries alike. In the north is the Mississippi Delta, birthplace of the blues. Meanwhile, the south rests on the Gulf and features shipping ports and recreational beaches. The state is also business-friendly, which makes it a great place to start a business and add to the local economy. 

In this guide, we’ll look at what it takes to get your business started in Mississippi. Read on to learn more about how your business plan is the backbone of your business and how to initiate the many steps that are needed for success. 

1. Form your business idea and make it actionable.
2. Create a startup plan to bring together the various aspects you need to open your doors
3. Create your business name to reflect the purpose of your business and create a brand
4. Choose a corporate structure to protect your personal assets and build your corporate hierarchy
5. Open bank accounts, apply for business credit cards, and start basic accounting practices
6. Secure funding for your Mississippi-based business
7. Get insurance to cover the various aspects of your business
8. File for and obtain the appropriate permits and licenses 
9. Build a team of trusted people to support your business goals
10. Start marketing the business in the time that leads up to your official opening date
11. Throw open the doors on your planned opening date

1. Fine-tune your business idea

Once you’ve formed a concept of a business you’d like to run, you have to work out how to make it happen and open the doors. Start by writing down your ideas, make sure they’re reasonable, and keep your mind open to different points of view. It will serve you well as your business grows, and help build the foundation that your company rests on. 

Ask yourself the following questions as you work on forming your business idea:

• Should you focus on a core idea, or are there multiple ideas that can be brought together?
• What are your personal strengths, and how can you apply them to the business idea?
• Is your business idea viable on its own, or does it need work to become viable?
• Are you going to provide a product or service-based business, or a combination of both?
• Will your business rely on seasonal tourism?
• Are you thinking of growing a crop for a specialty product?

Mississippi’s climate and geography makes it a great place to start a small business that benefits from the state’s strengths. It’s up to you to determine how you can combine your business idea, your personal strengths, and what the state has to offer for business opportunities. 

2. Create a business plan 

A business plan is your roadmap for getting the operation started and navigating its future. It includes actions that you refer to as you move through each phase. Here’s a look at some of the items you should put into your business plan. 

Executive summary

The executive summary is an overview of your business plan. It introduces your business plan to the reader by highlighting key points. Be concise with each point and let the business plan answer the remaining questions. 

Products and services

This section is where you lay out the products and/or services you provide. If you’re doing both types, make sure to show how both are linked together. You don’t have to be in-depth in your explanation, especially if you have trade secrets. 

Market research

You need to identify and target your ideal audience. That involves researching your ideal customer down to their age range, income levels, and demographics. 

Financial plan

The financial plan covers everything from startup funding to spending. Here is where you lay out where you intend to find money to get started, and plans to borrow when income falls short. You’ll also explain your plans for profits, IE expanding your inventory selection or opening new locations 

Choose a location for your business

It can be a challenge to find a space for a business that requires a brick and mortar presence. Ideally, you want a space that has high visibility, whether from the road or a large parking lot. The goal is to make it as easy as possible for customers to find you and access your location. Balance out the cost of rent with estimated footfall and parking spaces. 

Keep in mind that you may have to comply with zoning laws in order to operate. The state of Mississippi has few statewide zoning laws, and leave that work to the local municipalities. Check with your local government to make sure you’re in compliance with its zoning laws before you sign a lease. 

Decide if you’re an online-only Business

It’s best to make a decision about the physical status of your business during its start-up phase. This way, you can plan for the immediate future in terms of what you need to do. In the event that you feel the business works best as an online-only operation, focus on building up your internet presence. You can always add a brick and mortar presence in the future. 

An online business needs:

1. A website that acts as an online catalog for the business and is SEO optimized
2. Social media presence for customers to follow and engage with the business
3. Supply and distribution plan for order fulfillment
4. Check for the tax laws that apply to your business, such as sales tax
5. Contact your local municipality for online business license requirements

3. Choose a business name

There’s a lot riding on the name of your business because it’s also your brand. Your customers immediately associate the name of your business with the goods and/or service you provide. Come up with different names, test how people react to the name, and narrow down your list to the ones that get the best reactions. Once you have your short list of names, it’s time to find out if they’re in use by existing businesses in Mississippi by conducting an MS business search.

The Mississippi Secretary of State (SoS) has a business name database that you use to find out if someone’s using your desired business name or not. The SoS requires that your name is distinct from currently registered business names. You also have to include the corporate entity designator in the name. For example, you find that you can use the name XYZ Widgets because no other business is using that name. If you decide to incorporate as a limited liability company (LLC), you have to register your business name as XYZ Widgets, LLC or a variation on the abbreviation. 

Make sure that your name doesn’t include a restricted word. These words include bank, trust, insurance, and charity. You can’t use these words unless you’re authorized and licensed to work in these industries. 

4. Choose a business structure

The business structure, or corporate entity, serves to remove you and your co-owners or members from legal liability. It also enables you to take care of financial obligations to all levels of government, obtain permits and licenses, and get funding. Mississippi requires all business entities to register with the Secretary of State and get licenses and permits from the appropriate agencies.

The common types of business structure

You have different options for incorporating your business in the state of Mississippi. They include:

• Sole proprietorship
• General partnership
• LLC
• S corporation
• C corporation

You don’t have to do anything to form a sole proprietorship, but you do have to file a doing business as (DBA) if you want to use a different name. A sole proprietorship doesn’t give you corporate protection, but an LLC does. Forming an LLC in Mississippi is straightforward and gives you limited protection against legal actions. S and C corporations offer stronger protection from personal liability. 

Tax advantages of each option

A sole proprietorship allows you to lower your tax liability by deducting business costs. After you’ve made your deductions, you pay the personal tax rate on the remaining amount. An LLC is a pass-through corporation which works the same way as a sole proprietorship in terms of taxes. The difference is that you can opt to be taxed as an S or C corp under the LLC. 

S and C corporations have different taxation structures. An S corp is also a pass-through tax entity, and pays no federal or Mississippi tax on profits. However, a C corp has a 21% automatic tax rate at the federal level, and features double taxation of both the corporation and its officers. 

Mississippi features a graduated corporate tax rate that starts at 0% and climbs to 5%. The first $5,000 of business income is taxed at 0%, then rises to 4% for income between $5,000 and $10,000, and 5% for anything over $10,000. Mississippi also has a corporate franchise tax of $1.00 for every $1,000 of value claimed by the corporation for 2025. The franchise tax is being phased out by the year 2028, and will be eliminated by 2029.  

5. Set up banking, credit cards and accounting

You’re going to need bank accounts, credit cards, and a basic accounting system to get started. There are no state requirements or guidelines that apply to business financial accounts, which means you’re free to get the accounts you need. It’s a good idea to get two bank accounts in the beginning to keep income and payment streams separate. One credit card is sufficient as long as it has a reasonable maximum credit limit. Resist the urge to open up too many accounts of all kinds as this makes it more difficult to track spending and repay debt. 

When it comes to keeping track of your spending and income, a straightforward accounting program is sufficient. Look for software that lets you upload your financial transactions, then reconciles them. You’ll spend less time looking for information, and it’s easier to check the inputs for accuracy. 

6. Get funding for your Mississippi business

You have many options for outside funding that includes crowdfunding, grants, and loans. One option is the Mississippi Small Business Development Center network, where you can apply for SBA loans and Mississippi grants. The state also has a program to help you with equity crowdfunding, but also suggests that you try donation crowdfunding to help your business move forward. Private financial institutions are another good resource for startup money in the form of loans.

Make sure you have your business plan ready to go when you start looking for funding. Many financial resources require one as part of the application process. 

7. Get insured

Mississippi has two mandatory insurance requirements for worker’s compensation and commercial fleets. A business that has more than five employees has to carry a worker’s compensation policy. Commercial vehicle insurance is required for any business that uses a vehicle for business purposes. All other types of insurance for businesses are recommended, but not required. However, the state strongly suggests that businesses get a general business liability policy to cover common calamities. 

8. Obtain permits & licenses 

You may need a permit or a business license Mississippi to operate legally and stay on the right side of the law. The state of Mississippi issues drivers’ licenses only, and leaves it up to local governments to handle the application and issuing of permits and licenses. Check your local municipality’s website for more information, or go to City Hall where you can find out what you need to comply with local requirements. 

Federal income tax and Mississippi local tax

You’re required to pay taxes as part of the operation of your business. However, the only tax that Mississippi applies to all businesses is sales tax. Tax is collected on most services and sales, and some industries are taxed specifically on the products they sell. You also have to pay employee taxes to the state and federal government. It’s a good idea to consult with an accountant about the taxes that apply to your business. 

Mississippi specific regulations

The state of Mississippi doesn’t have specific requirements for businesses outside certain industries. Consult with a lawyer to find out about regulations that are specific to your business, and how to comply with them. 

9. Find your team

Mississippi’s labor laws primarily follow federal guidelines that are found in the Fair Labor Standards Act (FLSA). It’s also an at-will state, which means employer and employee are free to part ways for most reasons. When hiring or re-hiring an employee, you have to report to the Mississippi State Directory of New Hires within 15 days of on-boarding the employee. You also have to use E-Verify to make sure the potential employee is eligible for employment. 

It’s a good idea to become familiar with the FLSA to make sure you’re following employment laws. By and large, you’re free to set your own standards for breaks and vacation time, but there are areas where the FLSA has the final say. An employer has to comply with the following federal and state laws:

• Americans with Disabilities Act
• Age Discrimination in Employment Act
• Title VII
• Military Protection (can’t discriminate against military service)
• Equal Pay for Equal Work 

Employees are the lifeblood of all businesses. Treating them fairly and respecting their legal rights helps build loyalty and a positive work environment. 

People are the backbone of the business

It’s not possible to run a business by yourself and get everything done on a given day and still be effective. Businesses need to keep up with administrative work, make sure everything is working as intended, and keeping on top of employee output. You may find yourself turning to experienced business owners for mentoring as well. 

Look for experience in the people you want to work with. That is, fine an accountant that’s helped many businesses get started. The same goes for an attorney who can help you avoid legal issues. When it comes to the people you hire, consider their previous experience with the role you’d like them to fill. Also, assess them on their skills when it comes to taking care of customers and how their ethics align with that of yours. 

Trust your instincts when it comes to the people you work with and hire. Most people are looking to do a good job, and they’ll reward you when you give them the opportunity to be a part of your business. 

Comply with Mississippi payroll regulations

If you hire employees, you have to follow state and federal payroll regulations. The state defers to the federal minimum wage of $7.25, and requires employers to pay one and a half that amount for overtime. Overtime begins once an employee has completed 40 hours of work in a week. Federal payroll taxes, or FICA, are paid at a rate of 7.65%. The Mississippi state income tax rate is 4.4% after the first $10,000 of income. The state unemployment insurance tax ranges from 1% to 5.4%.  

Your business has to obtain a state tax ID number via the Mississippi Taxpayer Access Point (TAP), and get an employer identification number (EIN) from the IRS. Both of these numbers are used to identify your business and register the taxes you remit to the state and federal agencies. You’ll report and remit state and federal withholding taxes on behalf of your employees to these agencies. 

 The payroll process can be done on paper, or you can invest in a quality payroll program. Using good payroll software streamlines the work and maintains accuracy in pay and reporting. 

Hire contractors

Contractors are people you hire for a short period of time, or to do a specific task. In Mississippi, you can’t control their hours the same way as you can an employee, but you can put them under contract and lay out their duties. For example, you need an accountant to help you organize your business tax return. In order to get the work done, you’ll sign a contract with them, then pay a retainer. They’ll get to work shortly and deliver the final work to you by the date stated in the contract. 

10. Market and grow your businesss

The core purpose of marketing is to let the public know your business exists and is open for trade. This ties into your needs for customer traffic on opening day and steady growth over time. In order to achieve both, start planning your marketing strategies long before you open your doors, and begin advertising campaigns about a month ahead of your opening date. These actions increase awareness about your business, making it more likely you’ll have a successful opening day.

Invite customers to opt into a mailing list or newsletter

A newsletter or mailing list is a simple, yet effective, form of marketing. It lets the customer see the latest news and product offerings from your business at their own pace. The newsletter can be used to talk about a promotion, when a new product is going to arrive, and remind themselves of your operating hours. Consider a newsletter as a blank slate for your imagination. It can be as simple or complex as you’d like. Use graphics if it’s appropriate, or keep things professional. Work on striking a balance between the customer’s desires, the business, and your personal touches. 

Consider making special offers to attract your first customers

Special offers help draw attention to your business and generate sales. This can be done in a multitude of ways that include deep discounts, a special price on a potentially popular item, or a special gift for the first 50 customers. You can adapt these ideas to fit your business, but your core goal is to offer something of value at a good price to get people’s attention. 

Look for local businesses or brands to collaborate with

Look for a local business that could benefit from a collaboration with yours. For example, you’re opening up a retro arcade, but you don’t serve food. There’s a nearby pizza place that is popular with hungry teens. Ask the pizza place if they’d be interested in exchanging coupon flyers with a discount for a purchase at either business. 

Encourage word of mouth advertising (happy customers attract each other)

Ask your customers to spread the word about your business to their friends and families. Word of mouth is free advertising that helps you build your business. Treating your customers well makes them feel valued, increasing the likelihood they’ll tell people they know about their experience with your business. 

Pay attention to online reviews and ask happy customers to review you

Online reviews can make or break a business, and in very little time. Get ahead of negative reviews by tracking what people are saying online and providing reasonable replies. Also, encourage happy customers to leave a good review on social media and review sites. Collecting a large amount of positive reviews helps to drown out the occasional negative comment. 

Create unique, helpful content to show what your business offers

Interesting content helps you show your customers what your business does or sells. For example, your business centers around the sale of licensed products. Put up displays in your store or booth that highlight that product, and use videos that demonstrate how the product is used. You can add these visuals to your social media posts to extend their reach. 

Making unique and creative content is a great way to draw attention. However, some industries don’t benefit from a lot of creativity. Sometimes it’s better to not make waves and stay within accepted parameters. The reason is that customers tend to like familiarity over the unknown. Study the competition, figure out what can make you stand out from the competition, and use that knowledge to create fresh content. 

11. Open the doors! 

Once everything is in place, it’s time to show the world that you’re open for business. Ideally, you set an opening date when you created your business plan as well as put it in your pre-opening advertising. Interested customers are going to expect you to be open on the posted date, and will hopefully be waiting for you to open your doors, whether they be physical or virtual. 

Plan a launch event

A launch event can be virtual or physical, and you can get creative with both types. Physical launches often benefit from a soft opening the night before the official opening date. For a virtual launch event, look at using sites like Twitch or Zoom. Both sites make it easy for customers to drop in, chat, and watch presentations. 

Activities help get people excited in your business offerings. You can host activities with prize giveaways, have a raffle for popular products, or just about anything you can think of that results in a giveaway. Giving out consolation prizes, such as a discount coupon, helps people feel good about being rewarded for their attendance. 

Land your first sale

All the work you’ve done up until this point leads to your first sale. The preparation and advertising creates anticipation among your potential customer base. They’re waiting for that moment where they get to be the first person to make a purchase at your business. This is where you deliver on your promise of a quality experience, no matter if you’re selling a service or a product. Subsequent successful sales help keep the energy going and the customers coming through. 

Conclusion

There’s no denying that starting a business in Mississippi requires a lot of work and time investment. This guide is designed to support you by showing you the steps for each phase of the process and what to expect from state and federal requirements. You’ll have less stress to deal with because you know what needs to be done, and how to fulfill requirements. Successful completion of each step results in a smooth opening day and the beginning of the next phase of your business.  

FAQ