If you would like to start and learn how to form a corporation in Mississippi, there are a few things that you should do now. However, in a professional corporation, professionals must create a special organizational structure to establish a professional or service corporation. Among the appropriate professions to organize a professional corporation in Mississippi are accountants, physicians, engineers, architects, and attorneys.
Forming a professional corporation in Mississippi or any business organization needs a certain number of steps. In this article, Webinarcare Editorial Team is going to share those steps. Keep in mind that these are general procedures. Depending on local law, it may be modified. For instance, your professional corporation may be subject to city or county-based rules.
On this page, you’ll learn about the following:
- What is a Professional Corporation in Mississippi?
- How to Form a Professional Corporation in Mississippi
- Step 1: Verify If You Are Qualified for a Professional Corporation
- Step 2: Name your Professional Corporation in Mississippi
- Step 3: Choose the Mississippi Registered Agent
- Step 4: File the Articles of Incorporation in Mississippi
- Step 5: Write an Operating Agreement in Mississippi
- Step 6: Designate the PC Board of Directors in Mississippi
- Step 7: Write the Corporate Bylaws
- Step 8: Hold the First Board of Directors’ Meeting
- Step 9: Request an EIN in Mississippi.
- Step 10: Open a Bank Account and Prepare for Taxes.
- Step 11: Get a Business License in Mississippi
- Step 12: File Your Taxes in Mississippi
- Main Characteristics of a Professional Corporation
What is a Professional Corporation in Mississippi?
A professional service corporation (PSC), often known as a professional corporation (abbreviated as PC), is a particular type of organization that is permitted by state law to allow owners of specifically licensed professions to practice in the Mississippi. A professional corporation’s owner is answerable for their own negligence or wrongdoing but is not held personally liable for the actions of other owners. The abbreviation PC or P.C. is frequently used to denote professional corporations.
This structure allows professionals to enjoy some of the benefits and protections of a traditional corporation while maintaining their professional status and abiding by the regulations of their respective licensing boards.
LegalZoom is the recommended corporation formation if you are thinking of forming a professional corporation from scratch. However, you can always start an LLC in Mississippi, if you changed your mind.– WEBINARCARE EDITORIAL TEAM
How to Form a Professional Corporation in Mississippi
To form a Professional Corporation in Mississippi for the professional service you provide, you must follow a few steps that include verifying if you are qualified for a PC, naming your business, hiring a Registered Agent, filing the Articles of Incorporation, outlining an operating agreement, requesting for an EIN, opening a bank account, getting a business license, and filing for an Annual report and taxes.
Step 1: Verify If You Are Qualified for a Professional Corporation
In forming a professional corporation in Mississippi, you should know if you are qualified. There are specific professions that are allowed to form a professional service corporation, including-
- Lawyers and others
To provide your service, you must be qualified and have a license. In most cases, you can now form a professional corporation after finishing your studies, passing the exam, and receiving your license. If you work in an industry that does not provide a license or professional certification, you should consider starting an LLC or corporation.
Step 2: Name your Professional Corporation in Mississippi
After you have decided to form a professional corporation in Mississippi, you must choose a name for your corporation. Here are some pointers to consider when naming your professional corporation.
- The business name should have the word PC, frequently followed by the name of the principal owner in place of Inc or LLC. (Example. John Doe, MD, PC)
- Limit of restricted words that need a license.
- A unique name is needed with no match
- No confusion with a government entity name.
In Mississippi, if you do not wish to file your professional corporation right away but want to hold the name that you have decided on, then you can reserve your corporation name for 180 days. You must file a name reservation application in the Mississippi Secretary of State to keep the name.
If not already present, a professional corporation, professional association, service corporation, or professional service corporation must be included in the name. You may register your business under a different legal name if your preferred legal name is unavailable. Once you’ve decided on a name, you can apply for Mississippi DBA (doing business as). This way, you can run a clinic or law firm under your name.
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Step 3: Choose the Mississippi Registered Agent
The next step in forming a professional corporation is hiring a Registered Agent, who accepts legal paperwork for your business. This person or business will receive important tax forms, legal documents, all notices of lawsuits, and other official government correspondence in Mississippi. Forming a professional corporation for your service will be easier if you have Registered Agent in Mississippi.
Alternatively, you can serve as your own Registered Agent if you have the time. Usually, in Mississippi, a Registered Agent costs is ranging from $50 – $150. To make it easier, you can hire Mississippi Registered Agent Services for your professional corporation.
Step 4: File the Articles of Incorporation in Mississippi
After you hire a Registered Agent to form a professional corporation, the next step is to file the Mississippi Articles of Incorporation. In writing the Articles of Incorporation, the business name, owner’s contact information, corporation address, and Registered Agent contact information, should be written. Include the names of all co-owners as well. All owners must demonstrate that they have the necessary licenses to practice the profession in question.
Filing the Articles of Incorporation in Mississippi may be done with one method, that is online. The Articles of Incorporation fee may vary from different state. However, in Mississippi, it costs $50 for filing online. Create an account/Log in to the SOS site, get the online form, fill it, and submit online. For offline filing, there’s no offline method of filing the documents.
Step 5: Write an Operating Agreement in Mississippi
An operating agreement in Mississippi is a document that contains all of your company’s organizational details. It is optional to draft an operating agreement in most states. Yet, having one as an internal document is strongly advised. The operating agreement includes information like-
- About Business
- Members and management
- Capital contribution
- Profit Distribution
- Change of membership
Step 6: Designate the PC Board of Directors in Mississippi
The next step is to form the first board of directors for your PC in Mississippi. All of the initial directors must provide the owner with their contact information. The owner must keep records and submit them by the Mississippi Secretary of State. As a shareholder and owner, you must ensure that a provision for appointing a new director is included in the By-laws. In Mississippi, you must have One directors in forming your Professional Corporation.
Step 7: Write the Corporate Bylaws
Now that you are done forming the team of the board of directors, the next step is to draft corporate bylaws. Corporate bylaws are the basic rules that control a corporation. It includes the organization’s structure, processes, laws, and rules. As a result, all personnel, managers, and corporation members must obey the firm’s rules.
Creating comprehensive corporate bylaws requires specific knowledge about the company, its structure, and operations. However, I can provide you with a general outline of what corporate bylaws usually include. It is crucial to consult with Mississippi Business Attorney or a legal expert to ensure that your bylaws comply with the laws and regulations governing your jurisdiction and industry.
- Name and Purpose of the Corporation
- Registered Office and Agent
- Board of Directors
- Indemnification and Insurance
- Conflict of Interest
- Records and Reports
Step 8: Hold the First Board of Directors’ Meeting
Gather the board of directors for the first meeting after drafting the corporate bylaws. This meeting will conclude with the appointment of directors to manage the company’s daily operations, approval of the bylaws, selection of the corporation’s financial reporting year, and approval of the stock issue. Minutes should be taken at all board meetings and kept with the company’s records.
Step 9: Request an EIN in Mississippi.
After the operating agreement’s documentation, you should get or request an Employer Identification Number (EIN) in Mississippi. The tax ID for your professional corporation will be an EIN. The Internal Revenue Service can provide an EIN (IRS). It has nine digits and is comparable to a social security number. Nevertheless, EIN is different from SSN. Only business-related tasks, primarily filing general taxes, are performed using it. The form needs to be filled out and submitted online to the IRS.
The application of an EIN in Mississippi can be through the following:
- Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
- Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that the Form SS-4 contains all of the required information.
- Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
- Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.
After you have your EIN number, you can benefit in several ways. It will give your professional corporation the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.
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Step 10: Open a Bank Account and Prepare for Taxes.
You should open a business bank account as soon as you have applied for and received your Employer Identity Number because you will use this account for yourself, your clients, and your staff. Check out the Best Banks in Mississippi for you to decide on which bank you are going to open an account.
Due to your organization’s increased legality and liquidity, having a US business bank account may make conducting business in Mississippi easier. Most banks require an EIN for businesses other than sole proprietorships to open a business bank account. Also, keeping your accounts separate will prevent you from merging your personal and business finances. Also, filing taxes is simpler when you have an EIN. You can expect to pay employee and corporate taxes when you form a professional corporation.
Step 11: Get a Business License in Mississippi
Before your professional corporation operates in Mississippi, you must have Mississippi Business License first. A business license is a formal document issued by a state government agency that allows you to conduct business in the geographic area governed by that agency. The cost of business licenses and permits in Mississippi ranges from $50 – $300. You must check with the local authorities to see if any special licenses or permits are required.
Step 12: File Your Taxes in Mississippi
Finally, you’ve arrived at the final process. Remember to file your taxes when you have obtained a business license and are ready to begin operations. To avoid a large tax bill, you should begin paying taxes quarterly as soon as possible. Each state has different tax requirements. Start examining the Mississippi tax classification for the taxes that an LLC in Mississippi must pay.
Main Characteristics of a Professional Corporation
In forming a Professional Corporation, the main characteristics must be distinguished before forming it. These are the general characteristics of forming a Professional Corporation in Mississippi.
- Limited Liability Protection: A professional corporation provides its owners, shareholders, or members limited liability protection like a regular corporation. This means the shareholders’ personal assets are generally protected from business debts, obligations, and lawsuits, except in malpractice or professional negligence cases.
- Mississippi Licensing Requirements: All shareholders must typically be licensed professionals in the same field in a professional corporation. The corporation must also comply with specific state regulations and licensing requirements that govern the profession.
- Governance and Management: A professional corporation is governed by a board of directors, who the shareholders elect. The board appoints officers to manage the day-to-day operations of the corporation. All directors and officers must be licensed professionals in the same field as the corporation.
- Taxation: Professional corporations are taxed as C corporations, where the corporation pays taxes on its income, and shareholders pay taxes on dividends received from the corporation. However, some professional corporations may be eligible for S corporation status, allowing pass-through taxation. Income, losses, deductions, and credits flow to the shareholders, who report this information on their income tax returns.
- Restrictions on Ownership and Transfer of Shares: Professional corporations often restrict the ownership and transfer of shares to ensure that only licensed professionals in the same field can become shareholders. This helps maintain the professional nature of the corporation and adheres to state licensing requirements.
- Malpractice Liability: While a professional corporation provides limited liability protection for general business debts and obligations, it does not shield shareholders from liability for their own malpractice or professional negligence. Shareholders can still be personally liable for their actions in providing professional services.
In summary, a professional corporation is a specialized corporate structure designed for licensed professionals, offering limited liability protection and a formal governance structure while adhering to state licensing requirements and regulations.
Maintain Professional and Business License in Mississippi
You must maintain or renew your professional license regularly now that you have established your professional corporation. Even if your company is well-established, it is only meaningful if you have a valid operating license. And it makes no difference if your professional license is still valid for a year or two, but your business license has already expired.
Make time at least once a year to check the status of your licenses. You won’t miss anything important this way. You can address any issues that arise.
Filing Annual Report in Mississippi
In Mississippi, you must submit a report. The owners’ and Registered Agent’s names and contact details are listed in the Annual Report. Also, it should include all of your yearly financial activity. You must submit the report every 1 year (15th April) in the Mississippi Secretary of State.
- Form a Professional Corporation in Alabama
- Form a Professional Corporation in Alaska
- Form a Professional Corporation in Arizona
- Form a Professional Corporation in Arkansas
- Form a Professional Corporation in California
- Form a Professional Corporation in Colorado
- Form a Professional Corporation in Connecticut
- Form a Professional Corporation in DC
- Form a Professional Corporation in Delaware
- Form a Professional Corporation in Florida
- Form a Professional Corporation in Georgia
- Form a Professional Corporation in Hawaii
- Form a Professional Corporation in Idaho
- Form a Professional Corporation in Illinois
- Form a Professional Corporation in Indiana
- Form a Professional Corporation in Iowa
- Form a Professional Corporation in Kansas
- Form a Professional Corporation in Kentucky
- Form a Professional Corporation in Louisiana
- Form a Professional Corporation in Maine
- Form a Professional Corporation in Maryland
- Form a Professional Corporation in Massachusetts
- Form a Professional Corporation in Michigan
- Form a Professional Corporation in Minnesota
- Form a Professional Corporation in Mississippi
- Form a Professional Corporation in Missouri
- Form a Professional Corporation in Montana
- Form a Professional Corporation in Nebraska
- Form a Professional Corporation in Nevada
- Form a Professional Corporation in New Hampshire
- Form a Professional Corporation in New Jersey
- Form a Professional Corporation in New Mexico
- Form a Professional Corporation in New York
- Form a Professional Corporation in North Carolina
- Form a Professional Corporation in North Dakota
- Form a Professional Corporation in Ohio
- Form a Professional Corporation in Oklahoma
- Form a Professional Corporation in Oregon
- Form a Professional Corporation in Pennsylvania
- Form a Professional Corporation in Rhode Island
- Form a Professional Corporation in South Carolina
- Form a Professional Corporation in South Dakota
- Form a Professional Corporation in Tennessee
- Form a Professional Corporation in Texas
- Form a Professional Corporation in Utah
- Form a Professional Corporation in Vermont
- Form a Professional Corporation in Virginia
- Form a Professional Corporation in Washington
- Form a Professional Corporation in West Virginia
- Form a Professional Corporation in Wisconsin
- Form a Professional Corporation in Wyoming
How to Save Money While Forming Mississippi Professional Corporation
The first step towards saving money while forming a professional corporation in Mississippi is by conducting thorough research and understanding the specific requirements and regulations. Obtaining the relevant licenses and permits is essential but can often come with associated costs. By knowing exactly what is required by the state, potential business owners can avoid unnecessary fees or penalties.
Choosing the right business structure is crucial in minimizing costs. Incorporating a professional corporation is often preferred due to its benefits of personal asset protection and limited liability. However, it’s necessary to consider the various costs associated with each structure, such as registration fees and ongoing maintenance expenses. Careful evaluation is required to choose the most cost-effective option that aligns with the long-term goals of the business.
Legal and professional services are integral to forming a professional corporation. While seeking legal advice is essential, entrepreneurs can mitigate costs by exploring alternatives to expensive attorneys. Some entrepreneurs opt for online legal service providers or consult with small business organizations to access affordable legal advice. It is important to remember that costs saved during the formation process can be reinvested into the growth of the corporation.
Cutting unnecessary expenses during the initial stages of a professional corporation is another area for potential savings. This could involve finding more cost-friendly office spaces or opting for virtual offices whenever possible. Embracing remote work and modern technology can reduce overhead costs significantly, allowing entrepreneurs to allocate their resources more efficiently.
Additionally, being vigilant during the financial management within the corporation is crucial. Keeping track of business expenses and properly categorizing them for tax purposes can enable businesses to maximize deductions and minimize their tax burden. Utilizing user-friendly accounting software or consulting with a reputable accountant can streamline this process while avoiding costly errors or misclassifications.
Forming strategic partnerships can also contribute to saving money while fostering growth. Collaborating with other professionals, sharing costs of services or marketing efforts can be an effective way to reduce expenses. By seeking out mutually beneficial partnerships within the same industry or complementary sectors, small businesses can access a wider customer base and achieve greater operational efficiency.
Finally, entrepreneurs should regularly review and optimize their expenses even after the formation of their professional corporation. Conducting periodic audits of the corporation’s activities can identify areas where costs can be reduced or eliminated. This can include negotiating better terms with suppliers or vendors or reassessing expenses associated with marketing efforts.
In conclusion, saving money during the formation and early stages of a professional corporation in Mississippi is crucial for its long-term sustainability. Entrepreneurs should prioritize conducting thorough research, choosing the right business structure, seeking cost-effective legal services, and optimizing expenses. By making smart financial decisions, new business owners can set a solid foundation for their professional corporation to thrive and achieve success.
In conclusion, forming a professional corporation in Mississippi is a strategic decision for licensed professionals who seek to combine their expertise and services under a single corporate entity. This business structure offers limited liability protection, a formal governance structure, and compliance with state licensing requirements. However, it also comes with certain restrictions on ownership, transfer of shares, and personal liability for professional malpractice. By carefully considering the advantages and disadvantages of a professional corporation, professionals can determine whether this structure aligns with their business goals, regulatory requirements, and risk management needs, ultimately contributing to a more organized, secure, and compliant professional practice.