Are you looking to form a professional limited liability company (PLLC) in Mississippi, but you’re not sure how the formation process works? There are several important steps when it comes to creating a Mississippi PLLC that is compliant and able to do business in the state.
What is a Mississippi Professional LLC?
The professional limited liability company (PLLC) is a specialized type of LLC that is intended for licensed professionals to offer their unique services. A PLLC in Mississippi is an LLC formed for the purpose of providing a service that may only be lawfully rendered by a person licensed or otherwise authorized by a licensing authority in Mississippi to render such service, such as certified public accountants, dentists, architects, veterinarians, osteopaths, physicians, surgeons and attorneys at law.
The Mississippi PLLC is typically more popular than a professional corporation (PC) because it’s a more flexible business type, but it still includes the personal asset protection and professional qualifications that make the PSC valuable.
PLLCs in Mississippi have relatively simple formation and maintenance requirements, several options for how they want to be taxed, and flexible management. From one-person businesses to multi-member PLLCs with several owners, the PLLC is a popular choice for a reason.
An important detail of the PLLC that differs from a traditional LLC is that liability protection is not shared across all members of the company. For example, if you operate a PLLC for physicians, your business structure does not shield each individual member from malpractice suits. Instead, each member is liable for their own malpractice insurance, and no member is liable for another member’s malpractice.
Forming a PLLC in Mississippi (in 6 Steps)
Step One) Choose a PLLC Name
Your PLLC’s name is often the first impression you get to make on potential customers, and therefore it goes without saying that this is an important step. There are a few different aspects to take into consideration when selecting a name for your business:
In Mississippi, the name of a professional limited liability company must contain the words “professional limited liability company” or the abbreviations “P.L.L.C.” or “PLLC.” The name may not contain language stating or implying that the PLLC is formed for a purpose other than a purpose authorized under Minnesota law and the PLLC’s certificate of formation. In addition, the name must conform with any rule adopted by the licensing authority having jurisdiction over the professional service for which the PLLC is formed.
Another aspect to consider is including language that explains what your business does. For example, if you’re a doctor, put the word “physician” or the initials “MD” in your PLLC name. Additionally, if your business has strong values like being environmentally friendly, you can indicate that by including the word “green.”
Do You Like It?
At the end of the day, this is your business, and you should choose a name that makes you proud. You should also make sure your PLLC name both sounds good when spoken out loud, and looks good when written down.
The most important consideration for naming a PLLC is to not get too attached to any one business name until you know that it is available for use. You can search for business names on the Mississippi Secretary of State’s website to check if your desired name is available. Once you have chosen a name, you can reserve the name for $25 for 180 days (renewable for another 180 day period by filing a renewal application within 30 days before the expiration of the initial 180 day period). Name reservations can be completed through the Secretary of State’s online filing system.
Step Two) Designate a Registered Agent
Every PLLC in Mississippi is required to designate a registered agent, which is the individual or business entity that receives government correspondence on behalf of your business, then forwards those documents to you.
Under the Mississippi Code, each LLC is required to maintain a registered office and a registered agent for service of process on the LLC. The registered agent can be a commercial registered agent registered with the State of Mississippi or a noncommercial agent. Noncommercial registered agents must be one of the following: an individual Mississippi resident; a Mississippi corporation, nonprofit corporation or limited liability company; or a foreign corporation, nonprofit corporation or limited liability company authorized to transact business in Mississippi. The registered agent’s business office must also be the same as the registered office.
Without a registered agent, you could lose your good standing with the state of Mississippi, and the state also has the right to dissolve your PLLC if they decide to. In a worst-case scenario, the state could fail to alert you regarding a lawsuit against your company, which could even lead to a judgment against your business because you didn’t defend yourself.
At the end of the day, we recommend hiring a dedicated registered agent service to handle these requirements. Doing so will help eliminate junk mail and more importantly, keep your personal and/or business address off public record.
Step Three) File Formation Documents with the State
Once you are ready to form your Mississippi professional limited liability company, you will fill out the Certificate of Formation on the Secretary of State’s online filing system.
This is THE document that will register your PLLC with the state. You’ll want to ensure all of the following information is correct on the form:
- Name of your PLLC
- Name and address of your PLLC’s registered agent
- Dissolution date, if applicable
- Any other matters the members determine to include
Your Certificate of Formation must be filled out online on the Mississippi Secretary of State’s online filing system. You can also file the completed document online, or print and mail the completed form with a check or money order. Note that you will need to register in order to use the online filing system.
Cost to Form a PLLC
The filing fee for the Certificate of Formation in Mississippi is $50.
Most filings are processed the same day they’re submitted online, often within minutes. Mailed filings may take longer.
Step Four) Create an Operating Agreement
After you register a PLLC in Mississippi, create a detailed outline that explains how you will run and manage your new business. Even though it doesn’t need to be filed with the state, put one together and keep it for your records.
When you open a bank account, you may be asked for a copy of this document. You’ll also want to keep in mind that any future business partners or managing members may also be interested in seeing your operating agreement before joining your company. After all, this document essentially serves as your overall plan for success.
An attorney can help you outline your operating agreement, or you can create one from a free template online. You can read more about operating agreements here, but some of the basic information you’ll want to have includes:
- Individual members' ownership percentages
- Rights and responsibilities
- Voting powers and meeting guidelines
- Allocation of profits and losses
- Management rules for the PLLC
- Provisions for buying a member owner out, or transferring their shares in the case of illness or death
Step Five) Handle Taxation Requirements
The vast majority of PLLCs require a federal tax ID number, or EIN. An EIN is basically the business version of a social security number, and it’s used for a variety of important PLLC functions.
For instance, you’ll need an EIN if you want to hire any employees, and many banks require them to open business bank accounts as well. You’ll also need one for tax purposes, hence the name federal tax ID number. Get an EIN for your LLC for free through the IRS.
Your PLLC may be subject to certain state-level taxes in Mississippi, depending on how you elect to treat your PLLC for tax purposes. If you elect to treat it as a corporation, the PLLC may be subject to corporation income and franchise tax. Otherwise, LLCs are typically treated as pass-through entities, meaning the members pay the income tax instead of the entity. Your business may also be responsible for certain other Mississippi taxes, such as sales and use tax. You can learn more about the various state taxes in Mississippi by visiting the Mississippi Department of Revenue’s website. Once you’re ready to register for taxes, you can do so through Mississippi’s Taxpayer Access Point, or TAP. You can also use TAP to management certain tax accounts and file and pay certain taxes.
Depending on where in Mississippi your business is located, you may also need to pay some local taxes. You should contact the city and county in which your PLLC is located to confirm your local tax obligations. Contact information and certain business resources for four of the largest cities in Mississippi can be found online: Jackson, Gulfport, Southaven, and Hattiesburg.
Step Six) Obtain Business Licenses and Permits
Mississippi doesn’t require a general business license, but you may need to obtain one or more licenses, permits, or registrations based on your profession and/or business activities. You can review a list of professional licenses on the State of Mississippi’s website. You will need to contact the relevant regulating body of your profession for more information on how to obtain such licenses. Given the nature of a PLLC, you will likely need to obtain at least one of these licenses in order to legally operate your business in Mississippi.
Would You Prefer a Professional Form Your PLLC?
If you would prefer to have a professional handle the paperwork for you, consider hiring an online business formation service.
Because of the often-complex nature of professional limited liability companies, some of our favorite service providers don’t offer PLLC formations, but there are still plenty of quality companies that do provide this service. A couple of our favorites for PLLC formation are LegalZoom and MyCorporation.
Another option would be to hire a business attorney to handle your PLLC formation. While this is certainly a more expensive route than using an online formation service, a lawyer’s expertise could come in handy when you’re forming a specialized business structure like this.
Next Steps: What to Do After Creating a PLLC in Mississippi
Open a business bank account
We highly recommend that you establish a separate business banking account so that your business and personal finances are maintained completely separate. This is important because it helps protect your personal assets and also makes filing taxes much easier. Once you receive your EIN from the IRS, you’ll be able to use it to establish an account at the bank or credit union of your choice.
All employers in Mississippi with five or more regularly employed employees are required to provide workers' compensation insurance coverage. Certain industries are exempt from this requirement. You can find additional information about workers’ compensation in Mississippi by visiting the Mississippi Workers’ Compensation Commission website. Though not required, it’s probably also a good idea to pursue general liability insurance, as well as some industry-specific policies pertaining to the profession practiced by your PLLC.
Understand income reporting
Income reporting is just what it sounds like – reporting the income you made from your business. It’s important to note that you must file this form whether you made or lost money over the course of the year.
In Mississippi, you’ll need to report your income on the relevant income tax form. You can find these forms on the Mississippi Department of Revenue’s website.
Understand annual reporting
Under Mississippi law, all LLCs operating in Mississippi, including PLLCs, are required to file an Annual Report with the Secretary of State. The Annual Report is used to update certain information regarding your business on file with the Secretary of State. It can be filed any time between January 1st and April 15th of each calendar year and must be filed online through the Secretary of State’s online filing system.
Find an accountant
We don’t recommend that you attempt to manage your business finances without the help of a professional. There is too much room for error, and a professional can ultimately save you time and money by guiding you on how to best manage your business finances. At a minimum, enlist professional help to set you up with software and the steps for keeping up with your finances on a regular basis. Then, consult back with your accountant at least a couple of times per year – and especially at tax time – to ensure you’re keeping track of everything correctly.