Mississippi Sole Proprietorship

How to Become a Mississippi Sole Proprietor

In Mississippi, becoming a sole proprietor is straightforward. You don’t need to follow any formal setup process or pay fees. Simply start working, and you’re operating a sole proprietorship. However, even though it’s easy to start, consider some extra steps. They’re not necessary, but many sole proprietors find them helpful.

DBA Acquisition

A doing business as (DBA) name is a crucial part of many sole proprietorships, as it enables you to use an assumed name for your business, rather than your own personal name. The advantages of acquiring a DBA start with image ― most customers feel that an assumed name is more professional and trustworthy than doing business with a company that uses its owner’s personal name instead.

That said, sole proprietors can sign up for a business bank account using their DBA name, which is another step that goes a long way toward making customers feel more comfortable doing business with you.

Before filing a DBA (or “fictitious  name”) you’ll first want to check the name’s availability with the Mississippi Business Search. Although your fictitious name is not required to be absolutely distinguishable from other businesses in the state, it’s advisable to select a name that has not already been claimed.

Next, you’ll need to register the fictitious name with the Secretary of State through the Mississippi Corporations Registered Filer.

Determine Taxation Requirements

Sole proprietors without employees usually don’t need to acquire a federal tax ID number (EIN), because as a one-person business, you can typically just use your own social security number for most things an EIN is used for. Still, if you would rather not use your SSN for privacy purposes, it would be a good idea to get an EIN regardless.

Beyond that, the nature of your business will determine which taxes apply to you as a sole proprietor.

Mississippi has a number of taxes that may apply to your sole proprietorship. The most common include sales and use tax as well as other industry-related taxes. Thankfully, the state makes paying all state-level taxes easy through the TAP Online Registration. After registering, you will be informed of all tax requirements and how to go about paying them.

Obtain Business Licenses and Permits

There isn’t a requirement in Mississippi for sole proprietors to acquire a general business license, but depending on the nature of your business you may need other licenses and/or permits to operate in a compliant fashion.

Mississippi has several state-level business licenses that may apply to your sole proprietorship. These licenses are sometimes related to health and safety, agriculture, the environment, and other industry-related practices; they are issued by a wide range of state and local agencies, so there’s no single-step process to covering all your license requirements. More information on your business’s state licensing needs can be found in the Business Section of the Missouri State website.

In addition, you should check to see if your business needs any licenses or permits on the local level.

Some counties and cities have their own licensing requirements. For example, Jacksonville and Biloxi each have their own permits and licenses which apply to businesses operating within their jurisdiction.

What Is a Mississippi Sole Proprietor?

As opposed to a corporation or limited liability company (LLC), the sole proprietorship is not a legal business entity. The sole proprietorship is a one-person business that is not considered to be a distinct entity from the person who owns it, and it is frequently operated using the owner’s personal name.

Here are the three main things you need to know:

Tax Responsibilities

Because there’s no distinction between the owner and the business itself, sole proprietors don’t need to file business tax returns ― they instead simply claim any business profits or losses on their personal tax returns.

Contracts

Sole proprietors are allowed to sign contracts using their personal name, and along those same lines, customers can write checks to the business by using the sole proprietor’s name.

More Flexible

The other big difference between sole proprietorships and more formal business structures is the fact that sole proprietors are allowed to commingle business and personal assets as much as they want to. With LLCs and corporations, ownership is required to keep their assets separate from those of the company. The downside of this aspect for sole proprietors is that if your business is sued, creditors are free to pursue your personal assets like your house, car, personal bank accounts, etc. For corporations and LLCs, creditors are limited to your business assets.